AFC Defies Economic Headwinds, Posts Impressive Results

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The Africa Finance Corporation (AFC) has announced its 2015 fiscal year results. Despite a difficult operating environment, the corporation delivered strong underlying operating results, achieving 25 per cent growth in its balance sheet.

Also, a statement from the AFC showed that while its total assets grew to $3.2 billion, net interest income increased by 39 per cent to $108.4 million, with net interest margins growth to 4.4 per cent, a seven per cent improvement over the prior year.
Its fees, commissions and other income however declined by 85 per cent, largely due to one-off revenues of $46 million recorded in 2014.

In April 2015, as part of its efforts to diversify its funding base, the orporation successfully issued its maiden eurobond of $750 million as part of its established US$3 billion Eurobond Global Medium Term Notes (GMTN) Programme. Reception of the bond was strong, and it was six times over-subscribed, positioning AFC in the capital marketsas a strong African credit.

“As expected, as a result ofthe challenging 2015 economic environment there was the need to maintain a tight rein on costs. Management had strong oversight on operating costs resulting in a 22 per cent year-on-year decline to $30 million delivering a cost to income ratio of 22 per cent down from the 26 per cent recorded in 2014.
“Although no risk asset was impaired during the year under review, the corporation’s first portfolio impairment charge of $26.7 million was recorded, in light of increased default risks, particularly in the corporation’s oil and gas risk asset portfolio. Overall, the corporation remains strongly capitalised, with a capital adequacy of 50 per cent.

“AFC is also very liquid, with approximately $1 billion liquidity as at December 2015, positioning the Corporation to take advantage of investment opportunities in 2016,” the statement added.
In addition, the corporation recorded total comprehensive income of $70.3 million for the year, representing a decline of 38 per cent compared to 2014. However total comprehensive income, after the adjustments forthe exceptional fees accrued in 2014 represents a growth of three per cent, even after taking into consideration the Corporation’s first portfolio impairment charge.
2015 was characterised by a decline in commodity prices, in particular oil, minerals and soft commodities. Oil prices remained under pressure owing to a supply glut, a situation which saw prices plummet by approximately 50 per cent during the year. In addition China’s demand for raw material imports decreased as the country’s economy rebalanced away from manufacturing to services.
Commenting on the results, the President and CEO of AFC, Mr. Andrew Alli said: “We are pleased to report that despite the economic headwinds we have seen our total assets grow by 25 per cent. Support for the AFC and its mandate as an investor in crucial infrastructure across Africa has also been met with the launch of our US$750 million Eurobond, which was six times over-subscribed.
“As global economic uncertainty persists, the AFC is well placed to continue to deliver returns to shareholders and new infrastructure that will bolster economic growth and have real social impact across Africa.”