LIVINGSTONE MARUFU
ZB Financial Holdings has posted a profit increase of 806% to ZWL$125.3m during the first nine months of 2019, from $13.8m during the comparative period due to the inflationary environment and depreciation of the local currency against the US dollar.
In a third quarter trading update, ZB company secretary Hardlife Nharingo said the group’s operating expenses increased by 109% to ZW$86.9m for the nine months ended 30 September 2019, from ZW$41.7m last year.
He said this cost outturn was below inflation, principally because increases in salaries and wages had lagged behind year-on-year inflation last reported in June as 175.66% .
“The group attained a profit after provisional taxation of ZW$125.3m for the 9 months ended 30 September 2019,” Nharingo disclosed. “This represents an 806% increase from ZW$13.8m posted in the comparative period in 2018. The group’s total asset base grew by 128% to ZW$1.514bn as at 30 September 2019, that was 128% from the closing balance for the previous year (ZW$663.2m as at 31 December 2018). Total earning assets were at ZW$829.5m, having increased by 83% over the same period,” Nharingo said.
For the nine months ended 30 September, total revenue grew by 294% to ZW$234.1m, from ZW$59.4m achieved in the comparative period in 2018.
Non-funded income contributed 86% of total revenue, while net interest income contributed 14%.
All business units complied with minimum capital provisions applicable to their industries except for ZB Building Society whose capital of ZW$19.3m was lower than the regulatory minimum requirement of ZW$20m.
The trading environment in the third quarter, as in the preceding quarters, remained challenging due to, among other factors, which include the continued shortages of foreign currency and local bank notes, a rapidly depreciating local currency against major currencies, in particular the US dollar, shortages of fuel and energy.
He said declining household disposable income levels and an upward inflation profile was making the cost of doing business to increase and this has caused the value of the group’s capital to be eroded.
The group has realigned its strategic focus from growth to the preservation of its capital base through the acquisition of real assets. Interim dividend has been proposed for the quarter.
The group’s good financial performance was spurred by a significant contribution from fair value credits and exchange gains from the revaluation of its foreign exchange position. Therefore, the group achieved an upsurge in total revenue.
ZB said the authorities had implemented a number of monetary and fiscal policy measures aimed at stabilising the economy, and whilst these measures take full effect, the operating environment is expected to remain difficult.