(Alliance News) - African banking investor Atlas Mara Ltd on Tuesday reported a loss for 2019 and expects 2020 to be a "tough" year due to the Covid-19 outbreak.
Atlas Mara was founded by former Barclays PLC chief executive Bob Diamond. Diamond stepped down as Atlas Mara chair last year to take up a non-executive director position in the firm.
Atlas Mara recorded a pretax loss of USD21.1 million for 2019, compared to a USD47.0 million profit in 2018.
The lender saw adjusted profit narrow 78% to USD5.8 million. Atlas blamed the drop on lower revenue - from a shrinking loan book - lower margins, and higher impairments.
Atlas Mara booked a USD11.4 million loan impairment charge in 2019 versus just USD200,000 in 2018.
Total income was down 18% year-on-year in 2019 to USD189.8 million from USD231.4 million. Net interest slipped 35% to USD86.2 million from USD132.6 million.
Atlas Mara ended 2019 with a loan book totalling USD644.1 million, down sharply from USD1.15 billion at the same point a year before. The lender's net interest margin worsened to 3.3% from 4.4%.
Deposits slipped 56% to USD723.7 million from USD1.63 billion.
Non-interest income rose 4.9% year on year to USD103.6 million.
Atlas Mara's cost-to-income ratio worsened to 121.5% in 2019 from 104.0% in 2018.
Executive Chair Michael Wilkerson said: "We are pleased to report a strong performance from our largest investment, Union Bank of Nigeria, and a profitable year in each of our other two core markets, Botswana and Zimbabwe. Financial performance in our other banks was mixed, due in substantial part to acute macroeconomic and industry challenges. While we achieved an improvement in overall operating expenses, there is more to do in our critical efforts to streamline the platform, and overall our growth remains below where we aspire to.
"Notably, the company's reported net loss for 2019 was driven largely by a re-measurement of the assets classified as held for sale as part of a potential strategic transaction - an initiative that remains important to our plans in 2020."
In April 2019, Atlas had announced it planned to exchange assets in four different countries for a stake in Kenyan financial services firm Equity Group Holdings Ltd.
Atlas Mara will give up its holding in Banque Populaire du Rwanda, African Banking Corp Zambia, African Banking Corp Tanzania, and African Banking Corp Mozambique. In return Atlas Mara will receive 252.5 million shares in Equity Group, which represents a 6.3% stake.
Looking ahead, Atlas expects a short-term rise in non-performing loans, customer withdrawals, and other effects, including yield and fee compression as central banks cut interest rates and flood the debt market with liquidity, and as foreign exchange markets display extreme volatility.
"We know this year will be difficult. The global demand shock, low commodity prices, local currency devaluations, and current and potential future regulatory actions will likely affect our businesses," the bank said.
Wilkerson added: " It is too early to know the full impact of the crisis on our business, but we are already seeing effects on both our customers and the regulatory environments in which we operate, and we expect near-term negative impact on our performance. During this time of crisis, we are focused on liquidity and capital preservation while continuing to serve our communities."
Atlas Mara shares were down 12% midday Tuesday in London at USD0.50.
By Paul McGowan; paulmcgowan@alliancenews.com
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