LIVINGSTONE MARUFU
Listed financial concern, ZB Financial Holdings (ZBFH), has US$40m in credit lines to finance power generation projects in Zimbabwe as well as lending exporters to increase their foreign currency generating projects.
The economy is battling foreign currency shortages and subdued production across all sectors resulting in imports increasing.
ZB chief executive Ron Mutandagayi told Business Times that the country needs more foreign currency and it was up to banks to make credit lines readily available for exporters who want money for their various projects.
“We have credit lines from the regional financial institutions worth US$40m and we are mainly using them for power generation projects in the country,” Mutandagayi said.
“The other chunk goes to exporters who are looking for capital and revenue expenditure.
We tend to lend to exporters only because they are the ones who have capacity to generate foreign currency and be able to repay credit lines in foreign currency.”
The group has maintained partnerships with Afreximbank, Trade and Development Bank, the African Development Bank, FNB, IFC, Bank of China, DZ Bank and ODO- BHF Bank.
He said the group will also continue to forge strategic alliances to enhance corresponding banking relationships for the mobilisation of offshore credit lines.
ZB has posted a 375% profit increase to ZWL$1.13bn during the half year ending June 30 2020 from ZWL$237.8m due to rampant inflation in the market.
The bank’s earnings per share increased by 239% to ZWL$6.07 during the HY 2020 from ZWL$1.79 during the corresponding period last year.
During the 2020 half year presentation Mutandagayi said the portfolio benefited from the positive performance of the Zimbabwe Stock Exchange and volatility is expected in tandem with macro-economic trends.
“The group’s profit improved by 375% to ZWL$1.13bn during the 2020 half year from ZWL$237.8m during the same period last year, while ROE improved to 49% during H1 2020 from 21% during the half year of 2020,” Mutandagayi said.
Investment returns improved by 5195% to profit of ZWL$761.2m in HY 2020 from a loss of ZWL$13.1m driven by movements in the ZSE stock prices.
He said gross interest income regressed by 21% in real terms against a moderate repricing on reduced portfolio of assets.
Interest expenses reduced with paying rates having remained flat whilst the funding mix shifted to less expensive classes.
A net impairment charge of ZWL$79.37m was posted for HY 2020 against a charge of ZWL$28.95m for HY 2019, driven by expansion in the loan book.
Mutandagayi said policy surrenders increased by 223% as household income levels deteriorated due to an increasing inflationary trend and lockdown.
The ratio of assurance expenses to premium remained acceptable at 42.9% in HY2020, having moved from 40.6% in HY 2019.
Foreign sourced premiums increased to 6.8% from 3.3% as the reinsurance company maintained strong relations with regional patterns on the back of strong reputation and credit rating.
The insurance claims ratio softened to 24% during HY2020 compared to 49% during HY 2019 with the improvement being partially explained by the general slowdown of business and social activity as a result of the Covid-19 lockdown.
The technical expenses ratio remained at an acceptable level despite an increase to 86.6% from 78.8%.
The non-performing loans ratio improved to 0.19% during 2020 HY from 0.45% during December 31 2019.
Total loan impairments retreated in real terms to ZWL$126.5m from ZWL$175.4m on the back of improved asset quality.
Deposits reduced in real terms by 20% to ZWL$2.8bn as at June 30 2020 from ZWL$3.5bn as at December 31 2019.
In the wake of worsening inflation outturn, the group will continue to focus capital preservation in the foreseeable future, Mutandagayi said.
The group will in the outlook focus on land bank acquisition to harden the asset base.
