ZB merger deal awaits RBZ approval
LIVINGSTONE MARUFU
The proposed deal to merge ZB Financial Holdings (ZBFH)’s two banking units is awaiting the Reserve Bank of Zimbabwe (RBZ) approval, the lender has said.
ZBFH chairperson Pamela Chiromo is optimistic the process to merge the commercial and building society units will be complete before year-end. If approved, ZB will become one of the imposing banks in the country.In a statement accompanying the lender’s 2021 results, Chiromo said the bank has already consolidated the staff and most operations between the two units.
She said the move would help the lender to contain costs and consolidate its assets.
“The target was to finalise the consolidation of the group’s banking operations, that is, ZB Bank Limited, ZB Building Society and Intermarket Banking Corporation, by December 31 2021. But, the transaction has taken longer than anticipated, and is now scheduled to be completed in 2022,” Chiromo said.
She said as at December 31 2021, all group companies, with the exception of ZB Building Society, were in compliance with prescribed minimum capital requirements.
The central bank reviewed the minimum capital requirements of US$30m for banks and US$20m for banking societies or Zimbabwean dollar equivalent.
The bank believes that complying with both capital requirements will be a burden to the financial institution hence the need for a merger.
The group faces a compliance burden going forward, following the review of the minimum capital requirements for banking entities to the Zimbabwean dollar equivalent of US$30m and US$20m for Tier 1 and Tier 2 banks respectively with effect from December 31, 2020, Chiromo said.
She said the group intends to maintain a Tier 1 banking licence and this will be partially met through finalising the merger of ZB Bank Limited and ZB Building Society in order to lessen the compliance burden.
ZBFH reported a strong performance during 2021 due to the improved activities in the economy during the year under review.
“For the year 2021, the group recorded a 122% increase in total income to ZWL$11.736bn from ZWL$5.288bn in 2020. This performance outturn was on the back of an improved non funded-income.
“Net profit registered a 20% increase, to ZWL$2.058bn in 2021 from ZWL$1.712bn attained in 2020,” ZB group CEO, Shepherd Fungura said.
Income from commissions and fees rose 83% to ZWL$3.366bn in 2021 from ZWL$1.836bn in 2020.
The fair value adjustments increased by 1 526% to ZWL$3.548bn in 2021 from ZWL$0.218bn in 2020 mainly as a result of improved performance of the Zimbabwe Stock Exchange and investment property valuations,” he said.
Net interest income registered a solid performance during the year 2021, rising by 212%, to ZWL$3.304bn in 2021 from ZWL$1.060bn in 2020.
As the loans and advances book rose, loan impairment charges also rose by 37%, to ZWL$0.621bn in 2021 from ZWL$0.453bn in 2020.
Resultantly, net income from lending activities rose to ZWL$2.683bn in 2021 from ZWL$0.607bn in 2020, a 342% increase.
Net insurance related earnings improved to a profit of ZWL$0.830bn in 2021 from a loss of ZWL$0.003bn in 2020, on the back of a 7% rise in gross premiums to ZWL$1.982bn in 2021 from ZWL$1.845bn in 2020.
Operating costs rose by 83% to ZWL$8.124bn in 2021 from ZWL$4.442bn in 2020, largely as a result of the inflationary environment.The group’s total assets increased by 66% in real terms, to ZWL$50.493bn as at December 31 2021 from ZWL$30.504bn as at December 31 2020.
The growth rate however remained below average inflation.
Deposits and other related funding account balances grew by 72%, to ZWL$19.670bn as at December 31 2021 from ZWL$11.425bn as at December 31 2020.
Earning assets increased by 80% to ZWL$28.902bn as at 31 December 2021 from ZWL$16.074bn as at December 31 2020 whilst constituting 57% of total assets (53% at 31 December 2020).
The group maintained a comfortable liquidity margin of safety, with the ratio of liquid assets to customer deposits being above 60% throughout the year against a prescribed ratio of 30%.
