BUSINESS REPORTER
GetBucks Microfinance Bank is feeling the heat of high interest rates, which has seen income dropping by more than half.
It comes after the Reserve Bank of Zimbabwe recently hiked interest rates to 200% from 80% as part of efforts to curb speculative borrowing, deal with high inflation and exchange rate volatility.
As a result, GetBucks reported a 68% decline in total income in the quarter to September 30, 2022 to ZWL$200,359,210 from ZWL$ 635,296,606 in the prior comparative period.
“The increase in lending rates negatively affected the institution’s interest margin as the microfinance bank relies heavily on wholesale credit lines from commercial banks which hiked their lending rates to above 200% in compliance with the directive by the apex bank. As the majority of our clients are civil servants, we were not able to pass the increase in lending rates to them due to limits in their affordability,” GetBucks’ CFO, Wimbayi Chigumbu, said in a trading update for the quarter to September 30, 2022
Consequently, GetBucks swung into a ZWL$194m loss from a ZWL$64m profit position in the same period last year.
“The loss is largely attributable to the increase in interest expense due to the policy changes. The microfinance bank reorganised its balance sheet and managed to dispose of certain assets and pay off loans from the commercial banks that gave rise to these losses,” Chigumbu said.
Despite this, the bank remained optimistic for the future citing the resurgence of the US$ in the economy which resulted in higher demands for USS$ loans.
GetBucks was also able to secure US$ funding lines allowing it to actively participate in the US$ lending space.
“The increased use of the US$ in the economy and the payment of US$ allowance to civil servants opened up an avenue for the microfinance bank to lend in US$ The reorganisation of the balance sheet stopped the bleed and this has enabled the microfinance bank to take advantage of changing landscape with regards to the increased use of the US$ in the economy,” Chigumbu said.
