HARARE - Zimbabwean banks’ aggregate profits surged by 182 percent to $13,84 million in the half year to June 2014 compared to $4,9 million in prior comparable period.
Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, said the banking sector remains generally profitable as at June 30, 2014.
“A total of 12 banks recorded profits for the period. The losses recorded by the few banking institutions are attributed to high levels of non-performing loans, lack of critical mass in terms of revenue to cover high operating expenses and deliberate strategy by some banks to clean up bad loan books through provisioning,” he said.
The performance is on the back of an expiry of a memorandum of understanding (MoU) between the banks and the central bank, which compelled the financial institutions to cap lending rates at 12,5 percent and slash withdrawal and service fees.
After coming into effect in February 2013, banks were concerned that the move would erode profits and wipe out revenue by as much as $72 million.
The MoU was not renewed after expiry in December.
Recent banks’ financials — mostly for the half year to June 2014 — indicated that the institutions’ profits are slowly improving.
In the six months to June this year, CBZ Bank, a subsidiary of CBZ Holdings, ruled the roost after recording an impressive $12,5 million after tax profit, which was 10 percent down from $14 million recorded prior year on the back of increased impairment charges.
Standard Chartered bank came in second having registered a 13 percent increase in profit after tax to $11,7 million, driven by growth in income and cost containment measures.
Interest income increased to $13,4 million from $12,7 million buoyed by increased lending. Operating expenses were flat at $23 million.
“The bank achieved a 16 percent increase in profit before tax compared to the first half of 2013 mainly due to the impact of loan impairment recovery partially offset by increases in operating costs,” said chairperson Samuel Rushwaya.
Stanbic Bank, a unit of South Africa’s Standard Bank Group, was among the top performers after reporting an after tax profit of $9,5 million for the six months to June from $8 million in the prior comparative period driven by growth in income.
Net interest income was up 11 percent to $18,1 million while loans and advances increased to $319 million from $312 million.
Deposits from customers and other banks also grew to $397 million from $388 million.
Barclays Bank Zimbabwe’s after-tax profit in the half year to June more than doubled to $1,7 million buoyed by growth in incomes and declining interest expenses.
The bank’s loan book grew by 14 percent year on year while deposits were up three percent to $238 million, managing director George Guvamatanga said. Last year, the bank posted a profit of $844 000.
“This performance was premised on income growth of nine percent. This is against the backdrop of interest yields trending down and transaction activity being subdued,” Guvamatanga said.
Interest income rose to $6,8 million from $5,7 million at a time when most financial institutions were cautious on lending due to liquidity constraints. Non-funded income also increased to $14,4 million from $13,6 million.
However, on the downward side was Allied Bank whose loss for the six months to June widened to $4,2 million from $1,6 million in the prior year after a sharp decline in interest income.
Net interest plunged to $186 000 from $666 800 as the bank’s lending fell nearly 50 percent despite growth in deposits.
Loans and advances to customers declined to $2,6 million from $4,1 million while deposits rose to $20,7 million from $18,4 million.
Operating expenses dropped marginally to $4,7 million from $5 million.
Chairperson Farai Mutamangira said the bank expects to recover in the last quarter of the year driven by ongoing recapitalisation and rationalisation exercises.
As at June 30, the bank’s assets were valued at $31,6 million, 18 percent lower than the comparative period.
MetBank, on the other hand, slid into an after tax loss of $3,5 million in the period under review from a profit of $1,9 million in the prior comparative period, weighed down by declining incomes and bad debts.
Interest income fell to $10 million from $12 million and the bank’s assets recorded a six percent decline to $159 million as at June 30.
Operating expenses marginally dropped to $9,4 million from $9,8 million. Loans and advances came in lower at $108 million from $111 million as the company took a cautious approach to manage its loan book while deposits were down five percent to $112 million.
Wilson Manase, Metbank’s chairperson was confident the bank would be out of the woods during the second half of the year.
“Our top priority right now, as the liquidity crunch continues to persist, is to build on the bank’s capital base so that the bank is in a good position to meet customer demands as and when they fall due,” he said.
Distressed State-owned Agribank recorded a loss of $1,2 million in the six months to June 2014, up from a loss $3,7 million posted in the same period last year.
“The loss was mainly a result of the reduced lending level due to the prevailing liquidity conditions and impairment charges,” said Agribank chairperson Sij Biyam.
In the review period, Agribank’s lending to customers was down to $86 million from $90 million in the comparable period last year.
Biyam said the bank, whose core capital stood at $11,4 million on June 30, recorded a jump in net interest income to $4 million from $2,9 million in 2013.