Staff costs weigh down Agribank

216 percent to US$8,9 million in the period under review.
Agribank chairman Mr Sij Biyam said operating costs increased by 6 percent to US$19,3 million, reflecting moderate cost control.
Mr Biyam said the improved financial performance, compared with the prior period, was attributable to the US$30 million loan secured from the Industrial Development Corporation of South Africa.
During the period, the bank’s loan to deposit ratio stood at 105 percent against the 70 percent recommended by the Reserve Bank.
A total of  US$70,7 million loans were disbursed during the year.
Mr Biyam said the quality of the loan book was good, with only 4 percent of its loan book having been classified as non-performing.
The State-owned bank said the facility also allowed it to support companies in agriculture and manufacturing, which are key to economic recovery.
On the back of the positive impact the loan had on the bank and the beneficiaries Agribank is negotiating for another US$30 million from IDC.
“The bank is currently negotiating with IDC South Africa for a second tranche of US$30 million, which is expected to be disbursed in the second quarter of 2012,” said Mr Biyam.
He said the facility would be disbursed in the same way as the first, focusing on increasing capacity utilisation and job creation.
Mr Biyam said Agribank would target companies in agriculture, manufacturing and tourism under the facility, with a six-year tenor while loans to the beneficiaries would be extended at concessionary rates.
“The second tranche also has green projects component amounting to US$5 million. This component is targeted at companies which contribute towards reduction in the dependence on fossil fuel and energy,” he said.
The bank also expects improved financial intermediation when it secures a partner to inject fresh capital when Government sells 49 percent of its equity.
“The purchase of an equity by a strategic partner implies injection of fresh capital into the bank, allowing the bank to broaden its financial intermediation role and simultaneously pursue its mandate to support agriculture recovery,” said Mr Biyam.
The bank has already received approval from Government to find a strategic partner and floated last month a tender for financial and legal advisors as part of the privatisation of the land bank.
Government would now proceed to float a tender for the strategic partner and this is scheduled for implementation in the second half of this year.
The bank has already met the Reserve Bank of Zimbabwe’s US$12,5 million regulatory capital requirements for commercial banks.