Chronicle Editor
Senior Business Writer
STEWARD BANK says its capitalisation ratio of 22,66 percent is above the mandated regulatory minimum of 12 percent as it focus to remain on continued innovation and leveraging on digital technologies.
In its financial results for the six months ended 31 August, the bank said its capital adequacy ratio as of 30 June 2024 stood at 22,66 percent, above a mandated regulatory minimum of 12 percent.
“Steward Bank is compliant with Tier 1 capital requirement as prescribed by the Reserve Bank of Zimbabwe,” it said.
Capital requirements are intended to keep banks from operating in too risky a manner, thereby preventing their possible collapse in the event of market turmoil.
The overall goal is to ensure the money of depositors is kept safe. According to the banking sector regulations, large commercial and foreign banks (tier 1) are required to have a minimum capital of US$30 million, while tier 2 merchant banks, building societies, development banks, finance and discount houses, should have minimum capital of US$20 million. Tier 3 deposit-taking microfinance banks are required to have US$5 million as minimum capital.
Capitalisation, which is the sum of a bank’s assets minus liabilities, is a key element for safe and sound banks.
During the period, the bank’s profit before tax was ZWG537,3 million, achieving a 14 percent increase from ZWG471,7 million recorded in the same period prior year, driven by the successful execution of cost containment strategies, with operating expenditure recording a positive variance to prior year of 339 percent.
The bank’s balance sheet strengthened by 56 percent, with total assets reaching ZWG1 billion during the period under review.
During the period under review the bank successfully contained operating expenses, with a 33 percent improvement from the same period prior year. This resulted from focused efforts to implement effective cost containment measures.
Net operating income for the period declined by 10 percent from ZWG billion recorded in the same period prior year to ZWG 905,4 million.
The decline in the net operating income is mainly attributed to the reduction in interest income as a result of the recalibration of the local currency loan book to the new ZWG currency and attendant interest rates.
The bank’s net assets closed the period under review at ZWG1 billion, realising 56 percent increase from prior year, which is sitting at ZWG 663 million.
The financial institution said this was mainly facilitated by the 88 percent increase in loans and advances from ZWG288,4 million as at February 29, 2024 to ZWG541 million due to increased lending driven by growth in the deposit base and efforts to restructure the loan book to cater for affordable renewable energy aligned to Sustainable Development Goal 7.
Despite the projected slowdown in economic growth for 2024 due to drought and tight liquidity conditions, the bank remains optimistic about its prospects.
“Our focus will remain on continued innovation, leveraging on digital technologies, prudent cast management, optimisation of our operational efficiency, and sustainable business practices,” it said.
Steward Bank added that the modern day customer has become extremely aware of the technology-driven options at their disposal given the high mobile penetration rate in the country, and has evolved to desire products that cater to their unique needs and attributes while bringing convenience and simplicity.
To that end it continues to pioneer digital bank solutions, which are more convenient, accessible and personalised in nature.
“With this in mind, the bank enhanced its square mobile application, adding key billers to offer its customers an array of services, thereby effectively reducing customer effort.
“The bank also launched the Infinite Visa Credit card, which provides flexibility and convenience, offering various benefits including access to airport lounges and discounts at hotels and car rental services, among others,” it said.
“The advent of these products enables foreign currency to be used through formal channels, as well as ultimately reducing the risk associated with cash transactions.”
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