Banks buoyant on continued stability

Source: Banks buoyant on continued stability | Herald (Business)

Business Reporter
ZIMBABWE’s banking sector is optimistic of sustained economic stability anchored on the growth prospects for key economic sectors, stable inflation and foreign currency availability, supported by the US$961 million International Monetary Fund Special Drawing Rights (SDR) allocation.

Several banks and Zimbabwe Stock Exchange (ZSE) listed firms, which published their mid-year financials also believe that notwithstanding the varied impact of Covid-19 on the different sectors of the economy, the banking sector continues to be resilient to various shocks and dynamics.

FBC Bank, on its part, said the Government’s Covid-19 vaccination programme had resulted in significant progress towards the attainment of national herd immunity and will lead to the gradual relaxation of Covid-19 induced restrictions.

“Economic outlook for the near term is optimistic. There are hopes that the on-going inoculation exercises will downside risks relating to the possible resurgence of new Covid-19 variants which pose potential threats to both humanity and economic activity,” the bank said.

It noted that banks reviewed their business models with a thrust on digitalisation, to enhance customer convenience whilst Government support and regulatory measures implemented also provided relief against potential adverse impact.

FBC highlighted that annual inflation had maintained a downward trend since July 2020 and encouragingly, the policies being implemented by the Government and the Reserve Bank of Zimbabwe had managed to anchor inflation expectations as attested by a significant decline in inflation from 837,5 percent in July 2020 to 50,2 percent in July 2021.

“The environment brought about by foreign currency availability has greatly improved business confidence and the success of the conservative monetary targeting framework since 2020, has helped to contain money supply growth, which in turn stabilised the exchange rate and eased inflationary pressures in the economy,” the bank noted.

CABS said the year 2021 is projected to end on an improved note compared to 2020, despite uncertainties relating to the Covid-19 pandemic.

It said the Government’s Covid-19 vaccination programme is expected to reduce the negative impact of the pandemic and the implementation of prudent fiscal and monetary policies was anticipated to strengthen the economic stability as witnessed in the first half of the year.

“The society will continue to play its part in the country’s economic recovery by providing full banking services to clients,” the society noted.

Nedbank noted that the near term economic recovery hinged on a persistent stable macroeconomic environment underpinned by policy consistency, a bumper agricultural output, increased energy production as well as manufacturing and construction output.

The bank said the medium to long-term recovery depends on post-pandemic normalisation, the degree of Zimbabwe’s international reintegration and the sustainable efficacy of domestic macroeconomic balancing measures.

“We look forward to a rebound in GDP growth in 2021 as the nation rolls out an effective vaccination programme against the novel coronavirus that will have a positive impact on our clients and their businesses. The Bank will continue to adapt to the changing environment as we strive to deliver leading client experiences to the market and to support our clients,” the bank said.

Agribank on its part said macro-economic stability is expected to prevail throughout the rest of the year, provided there are no major shocks.

It said that inflation is projected to be around 20 percent by December 31, 2021, and this indeed is a good signal for economic stability with improved business growth.

African Century Limited said that the country’s economic prospects continue to improve with key fundamentals pointing towards sustained recovery.

As a result, the bank noted that it will remain optimistic that stability in the local currency market will continue to prevail thus creating a stable environment for the banking sector.

The bank said it was continuing to engage foreign funders in readiness for the much needed financial resources to retool local industry.

According to the Reserve Bank of Zimbabwe (RBZ) 2021 mid-term monetary policy review, the banking sector has remained stable, safe and sound, despite the disruptive impact of the Covid-19 pandemic.

The RBZ noted that the banking sector remained adequately capitalised, with aggregate core capital of $57,54 billion as at June 30, 2021, an increase of 8,09 percent, from $53,18 billion as at  December 31, 2020.

The banking sector average capital adequacy and tier one ratios of 35,32 percent and 25,05 percent respectively, were above the regulatory minima of 12 percent and 8 percent, respectively.