Ecobank Zimbabwe Limited has surpassed the US$30m minimum capital threshold set by the central bank after hitting US$76.04m, Business Times can report.
The Reserve Bank of Zimbabwe directed commercial banks to have a minimum capital buffer of US$30m or ZWL$2.6bn, using the prevailing exchange rate this week, by December 31, 2021, to absorb shocks and militate against the risk of insolvency.
“The bank during the period surpassed the minimum capital requirements of US$30m or its equivalent by December 31, 2021. Total core capital for the bank during the period under review stood at ZWL$6.5bn (US$76.04m),” board chairman, Emmanuel Gwatidzo said.
In its financial results for the six months to June 30, 2021, published last week, Ecobank reported a 23% decline in operating revenue to ZWL$3.3bn.
Net interest income and fees commission grew 88% and 37% to ZWL$1.8bn from ZWL$935m and ZWL$762m from ZWL$556mfrom respectively.
Loans declined by 10% to ZWL$8.35bn. Profit before tax declined 7% to ZWL$1.85bn in the reviewed period from ZWL$1.96bn in the same period in 2020.
“As expected the first half performance was consistent with the business slowdown experienced during the period,” Ecobank Zimbabwe managing director, Moses Kurenjekwa, said.
Operating costs increased by 13% to ZWL$871.56m from ZWL$769m with Kurenjekwa saying the area would continue to receive focus in the second half of the year.
Total assets of the bank stood at ZWL$52.54bn during the period under review.
Despite the sluggish performance, deposits grew 4% to ZWL$41.8bn.
Kurenjekwa, however, is optimistic the bank would do better in the second half of the year.
“The outlook for the second half of the year is positive on the back of declining inflation and growth expectations from authorities. He noted that the bank is well positioned to exploit the opportunities as they unveil,” Kurenjekwa said.
Ecobank has undertaken to guarantee State-owned power utility ZESA Holdings on the importation of electricity from regional power utilities.
A guarantee ties the guarantor, which is Ecobank in this case, to service debt in the event that ZESA fails to pay the obligation to regional power suppliers. The guarantee binds Ecobank as surety.
Zimbabwe currently battles power supply deficit which has been exacerbated by ZESA’s critically constrained electricity generation capacity.
The power utility is generating about 1 200 megawatts (MW) daily from its five power stations at Kariba, Hwange, Bulawayo, Harare, and Munyati, which is not adequate to a national demand of about 1 800MW.
To cover for the shortfall, ZESA imports electricity from Eskom of South Africa and Hydro Cahora Bassa of Mozambique.
Three years ago, ZESA signed a non-firm contract with Eskom for the Zimbabwe power utility to access up to 300MW of electricity. This doesn’t mean Zimbabwe is getting 300MW because the non-binding agreement stipulates that Eskom can only supply Zimbabwe when it has a surplus.
However, ZESA signed a firm contract with Hydro Cahora Basa to supply 50MW to Zimbabwe. A firm contract means the electricity supply to Zimbabwe is guaranteed.
ZESA access the balance from the Southern Africa Power Pool, a regional collaboration linking up national grids.