via Bank profits surge to $43m – The Zimbabwe Independent August 7, 2015 by Fidelity Mhlanga
THE local banking sector’s total net profit increased by 62% to US$43,01 million during the first six months of 2015 compared to the same period prior year, buoyed by rationalising operations and growth of non-funded income.
In his 2015 mid-term Monetary Policy statement on Wednesday, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said liquidity in the market, as measured by total real time gross settlement account balances between January and June 2015, grew to US$483 million, up from US$338 million over the same period last year.
The central bank chief said this trend was largely underpinned by the slowdown in lending by banks and the increase in deposits.
“A total of 14 out of 18 operating banking institutions recorded profits for the half-year ended June 30 2015. Losses which were recorded by the remaining institutions were mainly attributed to increased levels of provisions. These provisions have been narrowing over the period under review,” said Mangudya.
The apex bank chief said in order to enhance earnings performance, a number of banking institutions continued to rationalise operating costs, while simultaneously implementing revenue enhancing measures which include growth of non-funded income through introduction of new technology driven products.
Total banking sector deposits have continued on an upward trajectory, increasing by 14,2% from US$4,9 billion as at June 30 2014 to US$5,6 billion as at June 30 2015.
Loans and advances amounted to US$4 billion, translating into a loans to deposit ratio of 71,4 % as at June 30 2015.
Mangudya said the banking sector’s aggregate ratio of non-performing loans to total loans improved from a peak of 20,45% in June 2014 to 13,15% as at June 30 2015, excluding Tetrad which is under provisional judicial management.
RBZ introduced Zimbabwe Asset Management Corporation which has so far acquired US$157 million of non-performing loans and is currently at an advanced stage in concluding the restructuring transactions of four distressed companies through acquisition of their bank debts amounting to US$58 million.
The central bank said Zamco would also play an instrumental role in resuscitating distressed companies through implementation of appropriate debt relief and debt restructuring measures.
“The ultimate objective is to prevent the unnecessary closure of companies and accompanying job losses. The goal of Government and the Reserve Bank, is therefore, to prevent companies from winding their operations and needless increases in unemployment,” he said.
“Zamco is, therefore, effectively complementing Distressed Industries and Marginalised Areas Fund(Dimaf) under the Ministry of Industry and Commerce to resuscitate distressed companies.”
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