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Oliver Kazunga
Senior Business Reporter
THE People’s Own Savings Bank (POSB), a State-owned banking institution, says its balance sheet increased by 130 percent to $18,9 billion in the half-year ended June 30, 2022 despite the headwinds induced by the Russia-Ukraine war.
The two Eastern European countries are the major suppliers of the world’s commodities such as maize, wheat, energy and petroleum.
Due to Russia and Ukraine’s strategic positions in the global economy, supply chains have been disrupted by the conflict between the two countries, triggering inflation across the world.
Speaking during POSB’s 8th Annual General Meeting in Harare on Tuesday, the bank’s chief executive officer, Mr Admore Kandlela, who is set to retire on October 31 this year, said: “In the first quarter of 2022, we were actually beset with the issue of the Russia/Ukraine war.
“We were actually beginning to have an increase in terms of foreign currency payments outward and inward from the Russia and Belarus corridor and I must say in the first quarter of this year, there was actually a decline in the money transfer by close to 80 percent.
“I think as we speak, these have actually reduced by over a 100 percent.”
Mr Kandlela said the pricing of the US dollar during the period under review was lopsided as his bank would, during the procurement process, tender for items that suppliers overpriced.
“And also because of the budgetary constraints in terms of the budgets that were approved, we could not actually proceed to award the tenders so, ultimately we would cancel those tenders.”
The bank is one of the State entities earmarked by the Government for partial privatisation and Cabinet is expected to approve the identified potential investor this second half.
In his presentation, POSB chief finance officer Mr Garainashe Changunda said their balance sheet was in a sound position despite the headwinds the economy has been subjected to.
“As at June 30, 2022, our balance sheet was $18,9 billion, a 130 percent increase from the $8,2 billion that we recorded as at December 31, 2021.
“As at the end of June 2022, we recorded core capital in the sum of $7,75 billion which at that moment in time, if you convert the amount to US$, it was US$21,15 million an indication that the bank is adequately capitalised when bench-marked against Tier 2 capital for commercial banks which the bank has benchmarked itself against,” he said.
In other words, Mr Changunda said this means that the capital of the bank is strong and it provides them with financial resources to support its clients as well as fund POSB’s growth aspirations.
“If you compare the capital adequacy ratio of POSB from 2020 through to 2021 and up to June 222, you will notice that the bank is adequately capitalised and we can support the growth of the bank because of the capital we have.
“When we compare our capital adequacy ratio to the industry average, I can confirm that our capital is well above the industry average.”
For the six months to the end of June 2022, in historical terms, the bank achieved a net profit of $1,6 billion up from the $347 million that was achieved in 2021.
“In other words, we were able to manage our affairs prudently; we were able to generate enough income to cover our operating costs,” he said.
At the AGM, stakeholders passed all the resolutions including the gratuity proposed to be paid to the outgoing POSB chief executive officer.
Among others, the AGM also resolved the adoption of the financial statements and the report of the directors and auditors for the year ended December 31, 2021; approved the payment of a dividend of $3 per share to the shareholder for the year under review as well approve the remuneration of the external auditors for the period ended December 31, 2021 totalling $11,7 million.
Mr Changunda said in 2021 POSB was able to generate income totalling $721 million after adjusting the accounts for inflation.
“But before we adjust accounts for inflation in terms of historical figures, we generated $888 million so, I would say in a way we were able to manage our business in such a way that we generated enough revenue to cover our operating expenses.
“What we are also seeing on the income statement is the net interest income, during the period in question, we were able to grow our net interest income by 195 percent for $360 million in 2020 and we were able to increase that to $932 million by end of December 2021,” he said.
On impairment allowances, Mr Changunda said his institution did well as it was able to manage the provision for bad debts.
“In 2020, we had $132,2 million and the figure came down to $100 million in spite of the impact of Covid and the unstable operating environment on our operations.
“Regarding operating expenses, we were able to contain our costs because of the need to cushion our employees in terms of the increased cost of living. You will see that operating expenses increased by 73 percent to $2,2 billion in 2021,” he said.
As at December 31, 2021, POSB’s asset portfolio increased by 65 percent to $$8,4 billion from $5,1 billion in 2020 and this was attributed to the institution’s ability to mobilise deposits during the period under review.
In the year under review, the bank’s financial assets increased by 69 percent to $2,28 billion from $1,35 billion in 2020.
“Apparently, we achieved 0,85 percent in terms of ratio of non-performing loans to the total loan book,” he said.
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