via EIB heads to Zim – NewsDay October 14, 2015
A TEAM from the European Investment Bank (EIB) is expected into the country in the next few weeks for an update on the assessment of the financial sector.
BY VICTORIA MTOMBA
European Union press and information officer, Dorothe Grebe told NewsDay yesterday that the EIB will also evaluate the possibility of extending credit lines to some domestic banks for on-lending to small-to-medium enterprises.
“If the financial sector assessment update and the due diligence of the domestic banks through which the credit lines would be extended for on-lending to SMEs is positive, the EIB hopes to be able to go to its board by the first quarter of 2016,”she said.
EIB is headquartered in Luxembourg and funds its operations by borrowing on the capital markets rather than drawing on the EU budget. It is owned by the EU’s 28 member states.
EIB has in the past worked with Zimbabwe in 30 different operations that include power and water. Zimbabwe owes EIB $300 million.
It also owes other multilateral financial institutions such as the International Monetary Fund, World Bank and the African Development Bank.
An EIB delegation came to Zimbabwe last year, where it discussed the arrears with the government.
The country at the moment is facing liquidity challenges, with the banking sector having taken a conservative approach to lending to reduce non-performing loans that weighed down the sector.
In his mid-term Monetary Policy statement, Reserve Bank governor John Mangudya said the banking sector remained profitable with an aggregate net profit of $43,01 million [excluding Tetrad Investment Bank – under provisional judicial management] for the half-year-ended June 30, 2015, up from $26,53 million during the corresponding period in 2014.
A total of 14 out of 18 operating banking institutions recorded profits during the period.
Losses were mainly attributed to increased levels of provisions. These provisions have been narrowing over the period under review.
The sector’s aggregate core capital base increased significantly by 19% to $899,10 million from $753,3 million.
Growth in the aggregate core capital position was largely underpinned by increased retained earnings. As at June 30, 2015, all operating banking institutions were in compliance with the prescribed minimum capital requirements.