daniel chigunwe
Michael Tome
STEWARD Bank says it recorded significant financial losses amounting to ZiG173 million during transition from the Zimbabwe Dollar (ZWL) to the newly introduced Zimbabwe Gold (ZiG).
On April 5, 2024, the Reserve Bank of Zimbabwe (RBZ) unveiled its 2024 Monetary Policy Statement, which announced several significant reforms including the launch of a new currency, the ZiG.
This was a strategic move designed to enhance confidence in the financial system and address inflation challenges that had gone out of hand.
As a consequence, this currency change initiated by the central bank posed substantial challenges for the financial institution as it navigated the implications of shifting currency protocols.
The bank’s management has highlighted the complexities involved in adapting to this new monetary system, which impacted its operations and overall financial stability in the half-year period to August 2024.
“To comply with International Financial Reporting Standards, specifically IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ and IAS 21 ‘The Effects of Changes in Foreign Exchange Rates, the bank had to restate prior year comparatives to April 5, 2024, using the inflation index, as detailed in the accounting policies section.
“Consequently, the bank recognised monetary losses amounting to ZiG 172,9 million as a result of this process. These losses arose from the restatement of opening ZWL balances according to IAS 29 guidelines before subsequent conversion to ZiG,” said Steward board chairman Bernard Chidzero in the financial statements for the half year to August 2024.
Generally, the new currency and policies affected individuals, businesses and other various sectors as they were prompted to adapt to the new monetary unit in their financial dealings.
In terms of financial performance in the period under review, Steward posted a profit before tax of ZiG537, 3 million, translating to a 14 percent growth from ZiG 471,7 million recorded in the same period last year attributable to the successful execution of cost containment strategies.
This was, however, weighed down by the aforementioned monetary loss.
Operating expenditure recorded a positive variance of 33 percent to the prior year
In the period, Steward’s balance sheet improved by 56 percent, with total assets reaching ZIG 1 billion.
The bank’s capital adequacy ratio stood at 22,66 percent as of June 30, 2024, which is above the mandated regulatory minimum of 12 percent making Steward Bank compliant with Tier 1 capital requirements as prescribed by the RBZ.
This comes as the group has embarked on the reimagining process that focuses on three strategic pillars encompassing people, processes and technology as part of evolvement to match emerging customer needs.
According to Steward, this exercise has led to rapid automation of processes, product optimisation, workforce rationalisation, and the adoption of new technologies to enhance service delivery.
“Part of this evolution involves aligning with the emerging needs of customers and pivoting on new technologies that drive improved customer experience and service delivery,” said Chidzero.
He said the outcome of this vital implementation is expected to positively influence the performance ratios going forward.
During the half-year period to August, Steward recorded key accomplishments in the digital bank space, ranging from process automation to enhancements of its digitally oriented products.
Steward also implemented Visa-Card reloads and card-based cash deposits on its smart ATMs which helped in reducing the customer effort needed to trigger cash deposits and time spent accessing services.
From the back office process automation perspective, the bank rolled out a digital archiving solution that is designed to improve the storage and retrieval of its Know Your Customer documents (KYC), fortifying its compliance regime in line with global standards in the process.
In this regard, the bank indicated that it will continue to focus on more automations driven by the need to improve its service delivery which will ultimately positively impact customer experience.
Bongani Ndlovu