Banks profits up 1101%
RYAN CHIGOCHE
Zimbabwe’s banking industry’s profit soared 1 101% to ZWL$181bn in the first six months of this year from ZWL$15bn reported in the corresponding period in 2021, the Reserve Bank of Zimbabwe (RBZ) report shows.
The increase was on the back of sharp increase in fees and commissions, which constituted 79% of the total income.
Interest income constituted 18% in the period under review from 40% in the prior comparable period, as the central bank introduced stringent measures to discourage lending.
The improving profitability among banks comes as most lenders adopted technology, a move that resulted in most financial institutions closing some of their physical branches.
The report also showed that the lenders operated above expected capitalisation thresholds with aggregate core capital amounting increasing by 179% to ZWL$284bn in the period under review from ZWL$100bn as of December 31,2021.
The increase was largely attributed to growth in retained earnings.
The sector’s average capital adequacy and tier one ratios were 33.87% and 18.84% respectively, which was above the regulatory minimum of 12% and 8%, respectively.
“Banking institutions continue to implement various capitalisation initiatives to bolster their capital positions including mergers, organic growth of capital and capital injection by shareholders. The bank is monitoring progress periodically to ensure on-going compliance with minimum capital requirements,” part of the report reads.
Total assets for the sector stood at ZWL$1.94 trillion, which was a 154% increase from ZWL$762.9bn reported in December 2021.
The total banking sector loans increased by 162% from ZWL$229.9bn as of December 2021 to ZWL$603.1bn as of June 30 2022 largely attributed to the translation of foreign currency denominated loans which constituted 65.87% of total banking sector loans, an increase from 36.87% reported as at 31 December 2021.
The average non-performing loans to total loan ratio for the banking industry was 1.50%. The worldwide benchmark is 5%.
