Banks poised for profits

Business Reporter
INTERFIN Securities has projected that most listed banks are likely to deliver full-year profits for the period up to December last year.
The research firm used the changes of assets and liabilities from the results released in June last year to estimate the earnings.
With the use of monthly statements of assets and liabilities, Interfin said it is possible to calculate the banks’ monthly profits by adding or subtracting changes in capital and reserves.
CBZ, which had the highest loan-to-deposit ratio, is projected to post US$19,4 million net income for last year.
In the first six months to June last year, CBZ, the nation’s biggest bank in terms of deposits and advances, showed a strong growth in earnings and Interfin expects the second half to be ahead by 28 percent. Its commercial bank is likely to be a major contributor to profitability.
Datvest, its asset management wing, is expected to record a loss of US$103 000, an improvement from the first half-year loss of US$420 000, due to increased business volume on the Zimbabwe Stock Exchange.
The property and insurance divisions are anticipated to contribute US$597 793 and US$250 674 to full-year profits respectively.
Barclays is projected to make a net loss of US$6,12 million on the back of a slow-down in lending.
Its decision to curtail lending is likely to hurt the bank going forward as the possible listing of an international player could test its brand equity.
Whereas the curtailment on lending can be an act of prudence, given the uncertain future in Zimbabwe, if it is prolonged, it will have negative repercussions in future, said Interfin.
Even at the expense of very profitable entities like CBZ, Barclays Bank is alone in its risk aversion mode because other foreign-owned banks, such as Stanbic Bank and Standard Chartered Bank, are lending more and are profitable.
FBC is likely to show significant improvements on net profit with the second half forecast to contribute US$2,63 million to the estimated full-year net income of U$3,58 million.
The reinsurance division is likely to double its first half income of US$560 250. However, the stockbroking arm would be on the loss-making track by year-end.
The manufacturing division is expected to contribute more to the bottom line, second only to the bank.
BancABC foreign business is expected to generate US$2,96 million while the net profit for the local earnings is estimated at US$3,6 million.
The anticipated earnings of US$6,6 million provide earnings per share of US2c.
NMB, which successfully raised US$10 million through a rights offer last year, is projected to make US$2,2 million in net income.
NMB is strategically positioned to benefit from the huge demand of financial products in the market, given the alliance with African Century.
ZB Bank is likely to make a profit of US$3,3 million with a contribution of US$1,9 million from the first half and US$1,4 million in the second half.
The asset management subsidiary could possibly achieve a reduced loss position in the second half given a better performance from the stock market.
The reinsurance and life business is expected to make a loss of US$1,9 million.
The director of the Centre for Economic and Social Policy Analysis, Mr Blessing Sakupwanya, agreed that banks, especially those lending, were likely to post profits.
“Any bank that is meaningfully lending is bound to make profits because the demand for money is high,” he said.
“However, it may also be difficult to look on profitability in isolation without looking at loss loan ratio. There are so many defaults as people and corporates are struggling to repay.
“So, while banks can report profits, they might also be vulnerable to defaults. That is why banks such as Barclays have remained tight on lending.”