NMBZ surpasses RBZ capital level threshold

…As shareholders approve delisting from LSE

TINASHE MAKICHI

Dual listed financial services provider, NMBZ Holdings Limited, has adequate capital buffer to absorb shocks and militate against the risk of insolvency after surpassing the Reserve Bank of Zimbabwe (RBZ)’s minimum capital threshold of US$30m or ZWL$2.5bn for commercial banks, making it well capitalised with six months before the capitalisation deadline.

According to a trading update for the quarter to March 31, 2021, the capital position of NMBZ, which has a primary listing on the Zimbabwe Stock Exchange (ZSE) but also trades a portion of its shares on the London Stock Exchange, stood at ZWL$4.1bn or about US$48m using this week’s auction rate of ZWL$84.6:US$1, which is above the required US$30m or ZWL$2.5bn  for Tier 1 banks by the end of December.

Company secretary, Shumirai Pashapa said: “This translated to a capital adequacy ratio of 31.59% as at 31 March 2021 and this was significantly above the prescribed regulatory minimum ratio of 12%.”

Pashapa is confident that the bank would remain above the set minimum regulatory capital level for Tier 1 banks of US$30m equivalent by the set deadline of December 31, 2021.

Initially, the deadline for banks to meet the required threshold was December 31, 2020.

But, taking cognisance of the economic challenges as well as the negative impact of Covid-19, the RBZ extended the deadline for banks’ compliance with the requirement for meeting the minimum capital requirement levels by one year to December 31, 2021.

The capital thresholds are deemed necessary given that Zimbabwe’s banking sector is fragile. The demand for banks to increase their capital levels came after several banks closed due to low capital levels, a situation which saw most depositors losing their hard-earned cash.

Since then, depositors’ confidence in the banking sector is low resulting in the most banking public keeping their money at home.

Central bank governor, John Mangudya, is of the view that a US$30m or equivalent capital base would ensure long-term stability of the banking sector.

Total income for NMBZ increased by 42% in the three months to March compared to the corresponding period in 2020.

The group’s banking subsidiary continued with its digitalisation drive which resulted in the rolling out of more customer centric products.

The bank launched five disruptive digital products including a virtual branch that allows customers to conduct cash transactions on their phone and walk into the branch to either drop or pick cash among other innovative products.

The bank is at an advanced stage in rolling out the zero-rated mobile banking facility which will enable customers to access the bank’s mobile banking platforms without using their own mobile data.

This, together with other initiatives being pursued by the bank, will further enhance the bank’s customer experience as well as continue to reduce the cost of transacting for customers, Pashapa said.

Meanwhile, NMBZ Holdings Limited last week approved the de-listing of the company’s shares from the London Stock Exchange.

The delisting from the exchange was precipitated by low trading volumes which do not   match the ongoing regulatory compliance and administrative costs that are associated with listing on that bourse.

The shareholders said this has given the bank unnecessary costs and threatened its viability as participation on  the bourse was not benefiting the group.

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