adminIdeally, the main income stream for banks should be net interest, which should be able to cover the bank’s operational costs.
In the first six months of the year, 12 banks out of the 16 that have released their results have recorded an increase in profit after tax, with the remaining four recording losses.
In terms of profitability, loan advances and deposits CBZ has continued to lead the pack recording US$13,7 million in profits in the interim period.
Loan advances and deposits increased to US$632 million and US$814,7 million respectively.
Standard Chartered Bank, registering a solid US$12,6 million in profits and total deposits, ended the six months at US$288,4 million.
BancABC, ZB and FBC posted profits of US$5,7 million, US$5,2 million and US$4,9 million respectively. BancABC’s loan and advances were impressive at US$589,1 million.
Barclays Bank surprised the market with a paltry US$700 000 profit. Other banks to post profits were Stanbic, TN, MBCA, Metropolitan, NMBZ and Kingdom.
Agribank, Royal Bank, Ecobank and Interfin were in the red, posting losses during the period under review.
Ecobank had a loss of US$1,4 million and their loan book was firm at US$35,3 million on the back of US$42 million in deposits.
Interfin was also in the same range with Ecobank suffering a US$1,6 million loss.
With a few months in operation, Royal limited losses to US$1,5 million as deposits were thin at US$680 000.
Agribank’s losses were minimal at US$359 450 against deposits of US$56,8 million.
Total bank deposits for the period amounted to US$2,9 billion but remain skewed in favour of the top five players with CBZ still leading the pack, con
trolling 26 percent of total deposits.
Advances to private sector ended the first six months at US$2,3 billion with a non-performance loan rate of about five percent.
Analysts say banks should release more long-term funding to industry to improve production and mobilise an additional US$2,5 billion expected to be circulating outside the formal banking system.
Banks are also holding a significant amount of cash and cash equivalent assets, which represent liquid assets. Ideally, the bulk of the cash on hand should be invested in money market instruments such as Treasury bills and bonds.
Zimbabwe has got a total of 26 banking institutions comprising 17 commercial banks, four merchant banks, four building societies and one savings bank.
About 16 banks have so far published their results for the six months with the other four expected to publish soon, one is under curatorship while the other one is yet to resume operations after being
licensed by the Reserve Bank of Zimbabwe.
Going forward, the financial sector is expected to improve on the back of a projected 9,3 percent economic growth and improving production capacity.
The increase in banking sector deposits is associated with the general recovery of the economy, increase in incomes and improvements in depositor confidence.
Banks are struggling to gain public confidence due to undercapitalisation and microeconomic pressures.
Since the inception of the multiple- currency system in 2009, the country’s banking sector has experienced a crisis of depositor confidence and capital inadequacies.
Prevailing liquidity risk has exposed many banks that are still dealing with liabilities incurred during the 10 years of economic recession.
Liquidity risk is the risk a financial institution encounters in meeting the obligations of its financial liabilities and often arises from the fact that assets and liabilities have differing maturity periods.
Online Reporter