ZB profit skyrocket

 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.

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