…Secures ZWL$50m for recapitalisation
An unnamed shareholder has injected ZWL$50m line of credit into GetBucks Microfinance Bank (GetBucks) to cater for recapitalisation of the business and boosting its lending capacity, Business Times can reveal.
An insider confirmed the development saying the facility will go a long way in boosting the microfinance’s operations after it recorded a dip in income for the quarter ended September 30.
He, however, declined to reveal the identity of the shareholder who injected the fresh cash.
“The bank secured a line of credit to the tune of ZWL$50m and this is out of the business’ quest to grow further,” an insider told Business Times.
He added: “There is expected demand for funding post Covid-19 from our clients and this funding will go a long way in strengthening our lending position and operations.”
Executives at GetBucks said they would not comment since the company is in a closed period.
The fintech concern’s financial results for the half year ended June 30 have been delayed due its auditors requiring additional time to finalise their review of the prior year effective interest rate computations.
The revised effective interest rate will affect the half year financial results, the company said in a notice early this month.
In its financial results for the quarter to September 30, 2020, GetBucks’ loss widened 5911% to ZWL$102.2m from ZWL$1.7m recorded in prior comparative period due to monetary assets which lost power during the Covid-19 pandemic lockdown.
Total income for the lender shrunk 39% during the reviewed period to ZWL$57.4m from ZWL$93.7m in the same period last year to revaluation adjustments in investment property and foreign currency balances held by the bank.
“The increase was due to the loss in purchasing power of the bank’s total assets which were mainly driven by monetary assets,” GetBucks chief finance officer, Patrick Mashinga said.
The financial institution’s inflation adjusted loss after tax for the nine months period was ZWL$54.0m while shareholders’ funds closed the quarter at ZWL$177.6m.
The Reserve Bank of Zimbabwe announced a US$5m minimum capital level with effect from December 31, 2021 and the financial institution is pursuing measures to ensure it meets the minimum capital threshold prior to the deadline.
GetBucks was licensed as an authorised dealer on August 12, 2020 which makes it able to offer banking services to exporting clients and offshore payment services to importers as well as participate on the auction system on behalf of clients.
The bank will participate in the foreign currency market and earn revenue, Mashinga said.
The foreign exchange auction system was introduced by the central bank in June to replace the fixed exchange rate.
Mashinga said during this period, the RBZ maintained a strong grip on reserve money growth resulting in a slow increase in money supply growth, thereby stabilising exchange rates.
The tight monetary position made it harder for the bank to access wholesale lines of credit.
GetBucks said the environment has been tough for micro-lending owing to inability to keep up with inflation and the attendant rate of increase in expenditure.
In the outlook, the bank’s strategies will be anchored on increasing transactional income from retail business.
The financial institution said access to new funding lines and cost containment will be key to the bank’s growth during the next quarter.
GetBucks has instituted measures to manage costs during the year in order to mitigate hyperinflation and to right size the company in line with reduced levels of activity.