admin
Business Reporter
COMPANIES in the microfinance sector combined net profit jumped by 511,11 percent in the year to December 31, 2022, driven by growth in interest income according to the latest sector report released by the Reserve bank of Zimbabwe (RBZ).
The sector’s aggregate net profit for the year ended December 31, 2022 was $12,10 billion, compared to $1,98 billion in the same period last year.
“The 511,11 percent increase in profitability was mainly driven by interest income supported by 48.,8 percent growth in the loan portfolio, as well as cost containment measures such as the adoption of digital financial services,” the RBZ said in its report.
The microfinance sector remained self-sufficient in the period under review as it recorded a ratio above the regulatory minimum 100 percent.
RBZ in the report said, “The sector’s operational self-sufficiency (OSS) ratio declined from 210.18 percent in September 2022 to 167,95 percent as at December 31, 2022 against the minimum acceptable threshold of 100 percent.
“This position reflects the microfinance industry’s positive overall sustainability and viability condition.”
In the period under review, the microfinance industry recorded aggregate equity of $35,91 billion, representing an increase of 60,59 percent from $22,36 billion as of September 30, 2022.
The growth was largely attributed to organic growth and the injection of additional capital by shareholders to comply with minimum capital requirements of local currency equivalent US$25 000.
Compliance with the minimum capital requirements has been an issue for the sector, which saw non-compliant deposit-taking microfinance institutions deadline extended by a further 12 months to December 31, 2023, to allow for completion of the recapitalisation processes currently underway.
“The bank continues to monitor progress towards compliance with both minimum capital requirements and economic capital to facilitate underwriting of more meaningful business,” the central bank said.
During the period under review, forty-nine microfinance institutions were non-compliant with the new minimum capital requirement.
“The bank has issued supervisory directives to all these institutions to adequately capitalise in line with the minimum capital requirements” the report read.
According to the RBZ, the only microfinance sub-sector registered a total equity of $18,51 billion as of 31 December 2022, up from $10,26 billion in the previous quarter reflecting an 80,40 percent increase and the growth in equity was largely attributed to growth in retained earnings.
As per the report, “During the quarter ended December 31, 2022, the deposit-taking microfinance institutions (DTMFIs) sub-sectors aggregate core capital registered a 27,77 percent increase, from $9,94 billion as of September 30, 2022 to $12,70 billion.”
The increase in capitalisation was largely attributed to a combination of revaluation gains on investment property and foreign currency, organic growth and additional capital injections by some DTMFIs.
However, like the other sub-sector, two out of the seven operating DTMFIs were compliant with the new minimum capital requirements of local currency equivalent to US$5 million but other institutions were at various stages in implementing capital raising initiatives.
Online Reporter