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Business Reporter
THE disparity between the official and parallel market exchange rates is a cause for concern given its potential destabilising effect upon correction of prices, pan African banking group ABC Holdings says.
The financial services made the remarks in its financial results for the half year period to June 2021, which also indicated an increase in operating expenses, chiefly domiciled in Zimbabwe.
ABC, which has operations in Zimbabwe, Mozambique, Zambia, Tanzania and Botswana, and trades as BancABC, however noted that Zimbabwe had this year showed resilience in the face of the pandemic and other external factors.
“The wide divergence in the official versus open market rate is cause for concern as any subsequent correction could have significant de-stabilising effect on the economy. Besides, the price imbalances are affecting the population at large,” ABC said.
This comes as the rate between the Reserve Bank of Zimbabwe weekly auction system, at $86/US$1 and the parallel market rate, now around $160/US$1 has widened to 50 percent from just about 20 percent early this year.
This is despite the fact, according to the RBZ, that the auction system for both large and small corporates now caters for 90 percent of the registered importers foreign currency requirements.
Authorities have also attributed the relative price stability, after inflation fell from a post dollarisation high of 837,5 percent to 50,2 percent in July, to the introduction of the auction system in June last year.
The auction system, which has disbursed over US$1,7 billion, has ensured relative macro-economic stability, which is expected to provide the firm foundation for projected growth of 7,8 percent this year, a 6 percent recession in 2020.
ABC said operating expenses, excluding loss on net monetary position and IFRS 5 remeasurement loss, increased from US$69,1 million for the half year period to US$72,9 million, chiefly account for by Zimbabwe operations, due to high inflation and local currency depreciation.
ABC said the performance for the interim period to June, 2021 demonstrated an improvement in the economic conditions of the markets in which the pan-African banking group operates in.
“The group reported underlying profit before tax of US$8,1 million for the six months ended 30 June 2021 compared to the prior period profit of US$7,3 million supported by strond underlying business momentum,” ABC said.
Net interest income of US$46,3 million was up from US$37 million in the same comparative the prior year, underpinned by increase in interest earning assets, coupled with improved margins, mainly in Zambia.
Excluding BancABC Mozambique, loss on disposal and recycled foreign currency translation reserves aggregating to US$10,8 million, non-interest income grew by 18,1 percent to US$54,8 million for the half year to June 2021.
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