Online Reporter
Michael Tome
People’s Own Savings Bank (POSB) says a 35 percent growth in mortgage uptake by buyers contributed significantly to its interest income, supporting sustainable value creation for the financial institution.
This surge in mortgage demand has boosted the bank’s financial performance and supported its goal of creating sustainable value for its stakeholders. The expansion of the POSB mortgage portfolio has allowed the bank to generate more interest income, which now contributes to its long-term sustainability and ability to deliver value to its customers and investors.
This comes as the bank extended a $3 million facility to Communications Allied Industries Pension Fund (CAIPF) to support the development of 601 low-cost industrial and residential stands. The loan was fully repaid along with over $250 000 in interest and fees under the Tynwald Project.
CAIPF also partnered with POSB, granting it exclusive rights to sell 100 stands, which resulted in a significant commission of $134 859. POSB’s partnership with CAIPF on stand sales demonstrates its commitment to generating revenue through strategic partnerships.
These developments come as the bank reached final compliance stages for the Barrington development during the 2024 financial year. Located in the southern parts of Harare, Barrington is intended for the construction of low-cost houses financed by POSB.
Addressing stakeholders at the recently held 2024 annual general meeting, POSB chief executive Mr Garainashe Changunda said the bank implemented strategies to protect shareholder value, including investing in housing developments as a key initiative. He noted that the bank bolstered its hedging strategy through a long USD position and sustained real estate investments, seeking to preserve value and minimise risk.
“Mortgage uptake by 35 percent of buyers further contributed to interest income, supporting sustainable value creation. We did extend a facility of $3 million to our partner, CAIPF, to support the development of 601 low-cost industrial adjustments. We also embarked on strategies to preserve shareholder value, one such example is the Barrington development, which has reached the final compliance stage,” said Mr Changunda.
POSB is diversifying its investments into real estate as a hedge against Zimbabwe’s volatile economy and inflation. This strategic move aims to preserve value and reduce risk amid uncertainty, particularly with inflation concerns. Through investment in real estate, POSB is taking proactive steps to protect its assets and ensure financial stability.
The growing demand for housing has seen demand for mortgages rising significantly over the past few years, despite fairly high interest rates being charged by lenders. Zimbabwe has a huge housing backlog and a housing shortage. Available housing finance schemes have little incremental effect on the national housing stock as these are either exclusively packaged for a few targeted groups or are priced beyond the reach of the poor.
However, the Government intends to reduce the housing backlog through the provision of serviced land, strengthen public-private partnerships and the adoption of new building technology.
While giving remarks at the 2025 mid-term budget and economic review, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said real estate activities contributed to Zimbabwe’s GDP with a growth rate of three per cent in 2024, driven by factors like improved economic performance and increased participation from financial institutions in property development. He lauded the banking sector’s agility in responding to national development needs and for tailoring financing solutions that are accessible and sustainable for project developers.
Economic analyst Mr Tinevimbo Shava said it is encouraging to see banks partnering with the Government to tackle the housing backlog.
“Financial institutions’ and private entities’ drive to support the government’s initiatives by investing in infrastructure and housing development is noteworthy, as it substantially alleviates the country’s housing shortage,” said Mr Shava.
The drive is meant to complement government efforts and help the country deliver 220 000 housing units by 2025 in line with the National Development Strategy 1 (NDS1).
