Total Interest Income at Afreximbank Increases by 107.1% in H1’23 – Total interest income for the African Export-Import Bank (Afreximbank) increased by 107.1 percent, from $540.8 million in the first half of 2022 to $1.1 billion in the second half of 2023.
The bank and its subsidiaries showed a robust and resilient performance, coming in ahead of expectations despite global challenges, as shown in their consolidated financial results for the half year ended 30 June 2023.
Total interest income rose as a result of rising interest rates and a rise in the volume of interest-earning assets (mostly loans and advances).
From roughly $27.9 billion as of December 31 2022 to nearly $30.1 billion as of June 30 2023, Afreximbank Group’s total balance sheet assets increased by 8 percent. Loans and advances to consumers, which climbed by 13% to $26 billion by period’s end, were the primary driver of expansion.
With $3 billion in liquid assets, or 11% of total assets, and a Liquidity Coverage ratio of 3100%, the bank is in a very good liquidity position.
The sustained efficient control of interest costs contributed significantly to the 76 percent increase in net interest income to $663.6 million compared to the previous year. As a result, the Net Interest Margin went up from 3.47 percent to 4.77 percent.
Compared to FY-2022, the Group’s shareholders’ funds increased by 7.63 percent, reaching $5.6 billion. Existing and new shareholders have contributed $261 million in fresh equity to the ongoing General Capital Increase exercise, which aims to generate $2.6 billion in paid-in equity by 2026, a major contributor to the expansion.
After deducting the $209 million in dividends and other appropriations that were approved, the remaining $125.5 million in net earnings supported the increase in shareholders’ money.
Afreximbank’s Executive Vice President for Finance, Administration, and Banking Services, Mr. Denys Denya, commented on the results, noting that the bank had made progress in implementing its strategy by striking a good balance between being profitable and sustainable and keeping adequate liquidity, capital, and a high-quality portfolio of assets.
“During the period in which the bank celebrated its 30th anniversary, we have delivered a strong set of results,” the statement reads. “This was driven largely by a focused execution of our mandate as a countercyclical lender, which generated an increased volume of interest-earning assets, particularly loans and advances, and benefited from a rising interest rate environment.”
He went on to say that the half-year period saw some headwinds receding, such as relatively lower energy and food prices, reduced supply bottlenecks, and the re-opening of China, Africa’s biggest trading partner, despite the ongoing challenges caused by the Ukraine crisis, ongoing geo-political tensions, and persistently high inflation.
“We have had a good start to the second half of 2023, and we are confident that Afreximbank’s strong financial position will provide a solid base for the Group to continue assisting its clients and African countries in expanding trade and investments, meeting trade finance obligations, increasing production—particularly of food and export value-added products—and easing supply chain constraints so that the continent can adapt sustainably to the challenging effects of climate change.”
Mr. Denya noted that Afreximbank’s worldwide scale long and short-term issuer ratings of A/A2 and A-, with a “Stable” Outlook, were affirmed by Global Credit Rating (GCR) and Japanese Credit Rating (JCR), while Moody’s kept the Bank’s credit rating at Baa1.
Afreximbank was also honoured by African Banker with the 2023 African Bank of the Year and the DFI of the Year awards for their efforts to advance trade and economic growth on the continent.
Not only did the bank’s subsidiary FEDA turn a profit after only two years in business, but it also produced premium income on assets valued at over $2 billion through AfrexInsure during the first half of the year, showing substantial development.