Source: Banks record $100m profit – DailyNews Live
John Kachembere 3 August 2017
HARARE – Zimbabwean banks have made $100,59 million profit in the half
year to June 30, 2017, representing an increase of 47,99 percent from
$67,97 million reported in corresponding period last year, the central
bank has said.
Presenting his mid-term monetary policy statement yesterday, Reserve Bank
of Zimbabwe (RBZ) governor John Mangudya said despite the current harsh
economic environment, all but one out of 19 operating banking institutions
recorded profits in the period under review.
“To ensure sustainable profitability, banking institutions should
implement adaptable business models which are sufficiently solid and
resilient over time, by further interrogating their value chains, with a
particular focus on efficiency enhancement initiatives,” he said.
In the period under review, the performance of the country’s banking
sector was satisfactory as total assets increased to $9,65 billion, while
capitalisation and profitability indicators reflect improved performance.
Notwithstanding the current liquidity crisis, total deposits increased by
6,71 percent, from $6,55 billion as at March 31, 2017 to $6,99 billion as
at June 30.
Mangudya said the financial institutions’ aggregate core capital increased
by 1,81 percent from $1,22 billion by the end of March this year to $1,24
billion as at June 30, 2017, on the back of improved earnings performance.
The capital adequacy and tier 1 ratios of 26,89 percent and 24,02 percent
as at June 30, 2017, respectively, were above the required minima, he
added.
“The average prudential liquidity ratio for the banking sector of 66,87
percent as at June 30, 2017, was above the regulatory requirement of 30
percent,” he said.
“The high average prudential liquidity ratio is largely reflective of the
cautious lending approach adopted by banking institutions especially under
the context of foreign exchange shortages. Lending exacerbates the demand
for forex,” Mangudya said.
The central bank chief noted that notwithstanding the high average
prudential liquidity ratios recorded across the sector, the banking
industry continued to experience underlying shortages of physical United
States dollar cash.
“The cash constrains are a manifestation of the structural challenges
facing the economy including the high fiscal recurrent expenditures,
particularly employment related costs, which result in increased demand
for cash,” he said.
In the six-month period under review, banking institutions reduced their
lending interest rates and bank charges to promote provision of affordable
banking services and access to credit.
By the end of June, the average maximum effective lending rate was 11,94
percent compared to 15,7 percent as at the end of December 2016, according
to central bank figures.
“The Reserve Bank shall continue collaborative engagements with banking
institutions to boost credit to the productive sectors of the economy. In
addition, banking institutions are required to adequately disclose and
communicate their respective effective lending rates to their borrowers,”
Mangudya added.
COMMENTS