Kingdom looks to the future

Sibusisiwe Bango said the fresh capital would be used to recapitalise the group’s subsidiaries.
“The group’s (AfrAsia Kingdom Zimbabwe) shareholders have approved plans to raise US$200 million to further capitalise its operations, in line with regulatory expectations,” said Ms Bango.
She disclosed this in a statement accompanying Afr- Asia Kingdom Bank’s interim results for the period to June 30, 2012. The RBZ last week raised minimum capital requirements for financial institutions by up to 900 percent as the monetary authorities seek to ensure a stable financial system.
This follows challenges faced by a number of local banks as well as developments across the globe to strengthen banking institutions to avoid the recurrence of problems that have shaken major economies.
Minimum capital for commercial and merchant banks was raised to US$100 million from US$12,5 million and US$10 million, respectively.
AfrAsia will inject fresh capital into local operations, having provided equity funding for Kingdom Bank to meet previous minimum capital levels for commercial banks of US$12,5 million.
This has also resulted in improved profitability.
Ms Bango said that the financial services group had made significant progress in terms of enhancing liquidity and funding position during the first six months of this year.
“The group is targeting further improvement across the board which should place its subsidiaries in a top quartile industry positioning from a funding and liquidity position,” she said
The group’s unaudited net profit for the six months to June 30, 2012 was US$1,3 million and compares favourably with the US$782 031 achieved in the full year to December 31, 2011.
The statement said AKFL’s financial position improved by 18 percent to close the period at US$186 million since December 2011, reflecting a modest increase in demand deposits in line with the group’s strategy of lowering the cost of funding the loan book. 
Ms Bango said after recapitalisation, confidence levels in the bank unit — the financial group’s flagship operation — increased as evidenced by a rise in both retail and corporate deposits.
The bank managed its liquidity risk exposures proactively within prudent risk parameters and posted a modest US$572 136 profit, anchored by strong fee and commission income.
Ms Bango said subsequent to the capitalisation of Kingdom Bank, liquidity pressures eased markedly and effectively put an end to delayed Real Time Gross Settlements. Kingdom Asset Management’s performance continued to improve with the unit posting a profit after tax of US$32 751 while funds under management grew by 20 percent to US$41 million.
The group said it continues to take steps to enhance the market positions of its micro-finance and stockbroking operations, which are strategic to the AKZL’s product offering.
Commenting on the group’s future outlook, Ms Bango said the focus of AKZL would be on improving the mix of cost-effective core deposits and optimising cost efficiencies.