LIVINGSTONE MARUFU
Agribank has posted a 157% growth in profit to ZWL$33m in the year ending December 2019 from ZWL$13m recorded in 2018 due to an increase in non-interest and interest incomes as well as increased transactions.
The development comes at a time when the bank increased transactions from Information and communications technology (ICT) delivery channels, electronic banking and marked growth in the loan book.
Agribank acting chief executive Elfas Chimbera said sustained cost control and containment also helped the bank to achieve profitability given the cost pressures from high inflationary environment.
“The bank recorded a profit after tax of ZWL$33m in 2019 in historical terms, representing a 157% growth compared to ZWL$13m recorded in 2018. “Interest income grew 27% to ZWL$47m from ZWL$37m while non-interest income grew 589% to close at ZWL$113m.
Growth in non interest income was mainly driven by foreign currency revaluation gains and increased customer transactions on ICT delivery channels and electronic banking channels,” Chimbera said in a statement accompanying the financial results.
The loan book growth reflected expansion in support to agriculture and its value chain and a significant part of the agriculture loan book growth came from supporting smart agriculture programmes for the 2019/2020 agriculture season.
Agribank came up with supportive structures to finance seed houses and fertiliser manufacturers in an endeavour to ensure adequate supply of critical inputs to farmers under the smart agriculture programmes.
Total operating expenditure for the year amounted to ZWL$88m, representing an annual growth of 214% over the previous year. Total operating income amounted to ZWL$$145m, representing a growth of 223% over the previous year.
The total income from e-channels and POS machines for the year 2019 at ZWL$27m accounted for 24% of total non-interest income. On year on year basis, commission income from echannels and POS machines went up by 121% from 2018 and this remains an area of growth for the bank.
Chimbera said reflecting sustained cost containment, the full year 2019 cost to income ratio was 61% and the staff costs to income ratio for the year 2019 was 20%, improving from 24% for 2018.
Total assets increased by 397% to ZWL$1.5bn as at December 2019 from ZWL$306m in December 2018. Gross loans and advances were ZWL$287m representing a 95% increase from ZWL$147m in 2018 and this was attributable to increased agriculture lending as the bank expanded agriculture financing interventions during the year. Deposits from customers closed at ZWL$567m, representing an increase of 227% from 2018 showing positive effect of the bank’s deposit mobilization strategies. Total shareholders’ funds closed at ZWL$399m.
On non-performing loans (NPLs), Agribank has made significant progress in strengthening credit assessment process as well as debt recovery, thereby reducing NPLs to 3.70% in 2019 from 9 % in December 2018. As at December 31 2019, the bank had an outstanding foreign debt of US$25.9m due to Industrial Development Corporation of South Africa and the legacy debt which was registered with the Reserve Bank of Zimbabwe is yet to be settled due to lack of foreign currency.
Agribank engaged IDCSA with a view to restructuring the loan and no agreement has been finalised to date.
