(Alliance News) - Atlas Mara Ltd late Monday posted a steep drop in profit for the first half of 2019 as the company's loan book contracted, generating less interest income.
The sub-Saharan African bank investor, which was founded by former Barclays PLC boss Bob Diamond, made an USD8.4 million pretax profit in the six months ended June 30. This figure represents less than a quarter of the USD36.1 million pretax profit recorded a year before.
Net interest income dropped 35% to USD44.5 million from USD68.3 million. Atlas Mara attributed this to "the decline in interest income on loans, as a result of contraction of the loan book, lower margins and higher cost of funds experienced in some of the subsidiaries."
A rise in non-interest income to USD51.0 million from USD43.9 million was not enough to offset this fall in net interest income, meaning total income dropped 15% to USD95.5 million from USD112.2 million.
Atlas Mara posted a loss after tax for the half-year period of USD125.6 million, swinging from a USD29.2 million profit a year before. This was caused by a strategic transaction with Equity Group Holdings, which then required Atlas Mara to reclassify its four subsidiaries in the transaction as discontinued operations or else non-current assets held for sale. This is required even though the deal is not yet complete, the company noted.
In April, Atlas Mara announced it has signed term sheets with EGH to exchange banking assets in four countries for shares in EGH.
"The company and EGH have made substantial progress and continue to anticipate mergers, subject to regulatory approval, of their respective banks within each of Rwanda and Tanzania. Due diligence has been substantially completed and the parties are now in the process of finalising definitive legal agreements. The transaction also remains subject to final board approvals, regulatory approvals and other final conditions customary for transactions of this nature," said Atlas Mara.
The stock was up 1.8% early Tuesday in London at USD1.16.
By Anna Farley; annafarley@alliancenews.com
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