BUSINESS REPORTER
Listed financial services group, ZB Financial Holdings (ZBFH) is optimistic the proposed merger of its two banking units will be completed this year as it seeks to comply with minimum capital threshold set by the central bank.
The financial services concern has in the past missed several Reserve Bank of Zimbabwe minimum capital requirements deadlines for its building society.
While the ZB Bank is compliant with the US$30m or Zimbabwe dollar equivalent minimum capital requirement, ZB Building Society has been struggling to meet a capital requirement of US$20m or the Zimbabwe dollar equivalent by December 2021.
That did not happen. The RBZ then extended the deadline to December 31, 2022.
When it was evident that it would not happen by December 2022, ZBFH said it was seriously considering merging the commercial bank and the building society by surrendering the licence of the latter to the central bank, according to ZBFH CEO, Shepherd Fungura.
Fungura told Business Times in January this year: “We are certainly going to surrender the licence for the building society where operations, assets and liabilities will be rolled over to the bank without prejudicing the customers of the building society.
“So far we have notified the RBZ of our intention and what we are doing is that we are processing the surrendering of the licence. When you surrender a licence certain steps need to be taken and we will do so as per the regulator’s advice.”
However, the RBZ extended the deadline to December 31, 2023.
ZBFH company secretary, Tinashe Masiiwa, is confident the merger will happen before year-end.
“The group is confident that the non-compliance of the building society will be resolved by consolidating banking operations before December 31, 2023,” Masiiwa said.
Shareholders of ZBFH approved the plan to combine the two units in 2013.
But, the process has taken longer than expected after it was stalled at some stage because of the fierce battle for control of ZBFH between one of the major shareholders, the Transnational Holdings Limited led by Nicholas Vingirai, and the National Social Security Authority (NSSA).
NSSA has since sold its 37.79% shareholding in ZB.
In anticipation of the merger, ZBFH has already consolidated the staff and most operations of the two units.
ZBFH believed the move is a strategic one that will see the two units being able to harness economies of scale that include managing the cost of doing business.
This would mean better returns to shareholders and improved service to customers.
Once consolidated, the bank is expected to be one of the biggest in the country.
The group’s total income for the first quarter to March 31, 2023, increased by 655% to ZWL$34.414bn from ZWL$4.558bn in the prior comparative period.
The revenue growth was underpinned by growth in net income from lending activities and non-funded income.
During the quarter under review, the business witnessed growth in both local and foreign currency transactions driven by enhanced digital channels, physical services centers, and the International Virtual Service Centre.
Total assets increased in historical terms by 20% to ZWL$381.537bn as at March 31 2023 from the total of ZWL$317.271bn as at December 31, 2022.
Income-earning assets constituted 64% of total assets as at March 31 2023 against 60% as at December 31, 2022.
The group maintained an aggregated liquidity rate above 60%, which is enough to accommodate short-term fluctuations in customer demands.
Asset quality remained strong with the non-performing loans ratio having been contained within the target rate of 5% throughout Q1 2023.
Deposits and other accounts increased to ZWL$153.70bn as at March 31 2023 from ZWL$109.21bn as at December 31, 2023.
The group’s total equity increased by 10% in Q1 2023closing at ZWL$160.747bn as at March 31, 2023.
During the period under review, the group launched additional service centres consistent with the financial services concern’s strategy to convert all branches to service centres.
This is part of the group’s ongoing transformation programme.
In the outlook, the group will pursue strategic business partnerships, improve revenues, implement foreign currency revenue generation strategies, and continue exploiting investment opportunities to protect its capital position from adverse economic projections.
