ZB Financial Holdings finally out of the woods

have returned to profitability.
ZB Financial Holdings, one of the big banking institutions with a strong asset base in the country, seems to have come out of the woods judging from its financial results for the half-year ended June 2011.
In spite of the volatility in the financial sector, ZB came out to post a profit of US$5,2 million compared to a loss of US$2,6 million they suffered during the same period last year.
Profits have been attributed to increased volume of business underwritten by the group.
The group says an overall profitability path is projected to the end of the financial year notwithstanding the erratic operating environment.
However, its performance on the bourse has remained on the south side with a market capitalisation of US$15 million. During the period under review, short-term borrowings were at US$3,8 million – indicating that the group is not under intense pressure to retire its debts.
Total income for the group was US$36,1 million resulting in the profit before tax of US$7 million for the period under review.
Banks’ profitability has since improved into 2011 as more companies seek funding for recapitalisation. Financial institutions are only unveiling short-term facilities in a bid to reduce risk.
However, companies have managed to pay back the loans evidenced by the prevailing rate of non-performing loans standing at 5 percent.
Liquidity constraints have continued to saddle the financial sector on the back of an uneven pace of recovery in the productive sector with overall capacity utilisation remaining between 40 percent and 60 percent.
ZB group chairman Bothwell Nyajeka said during the period under review the group was operating with sufficient capital to provide a substantial buffer above all minimum regulatory capital requirements in all sectors it operates.
ZB Holdings operates a commercial bank, asset management, building society and life assurance.
Just like most other banks, ZB indicated that they are still seeking a technical and financial partner.
“The possibility of a technical partner still remains a strategic option that the group continues to evaluate,” said Nyajeka. Most banks have failed to attract meaningful lines of credit coupled with lack of aggressive credit growth thereby exposing most banks to heightened liquidity and credit challenges.
The search for a partner started after the group was considering a private placement to raise an undisclosed amount of money to recapitalise its business.
This route would result in major shareholders being diluted.
The National Social Security Authority is the majority shareholder in the diversified finance house controlling 37 percent followed by the Government with a significant 24,5 percent.
Old Mutual Life has 5,8 percent, and Finhold Employee Workers’ Scheme 3,01 percent.
ZB is being haunted by a judgment that is still pending at the Supreme Court in the matter in which Transnational Holdings Limited is challenging the acquisition of a controlling stake in Intermarket Holdings by the ZB Group.
Besides the disputed acquisition of Intermarket, the Office of Foreign Assets and Control of the United States of America’s Treasury Department has listed the group as a Specially Designated National.
ZB Holdings has failed to optimally utilise its position of having the best branch network in Zimbabwe.