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Listed financial services provider ZB Holdings says it has to date received Treasury Bills amounting to $18 million from the Zimbabwe Asset Management Company (Zamco).
Zamco was established by the Reserve Bank of Zimbabwe (RBZ) in 2014 to manage the growing portion of bad loans in the banking sector, threatening the disbursement of fresh loans.
ZB Holdings CEO Mr Ron Mutandagayi told the company’s shareholders this morning that the majority of those TBs were accrued during the first six months of this year.
“During the half-year to June 31, 2016, we received TBs worth $12,6 million bringing the cumulative TBs we have received from Zamco to $18,4 million in respect of our non-performing loans,” he said.
The CEO said it is unlikely that ZB will move from its cautious approach on lending. The group’s NPLs ration as at June 30, 2016, stood at 24 percent.
“The reason this is so is that we are reducing the denominator as a result of the debt work-outs that we engaged in. We have not experienced any more bad debts that are significant during this half-year compared to what we experienced in the past year or year and a half. So the ration looks uncomfortable and management is dealing with that very aggressively.
Market TBs still dominate though.
“Of the total of $120 million for 2016, $18 million are debt substitution TBs — these are TBs we get from Zamco as a result of the debt work-outs that we are engaged in. The $20 million is TBs for re-capitalisation that we got from the Government of Zimbabwe sometime last year.
We have also been a major market marker in the area of buying and selling TBs, and those market TBs stand at $70 million compared to $68 million last year. The aggregate discount earned from acquisition of TBs was 20 percent,” said Mr Mutandagayi.
ZB’s SPV to absorb $14m NPLs.
The group has established a Special Purpose Vehicle (SPV) to cater for residual NPLs that Zamco will not take and group financial director Mr Fanuel Kapanje said the new SPV will take $14 million worth of the NPLs rejected by Zamco.
“The amount that we expecting to ship out to the SPV is about $14 million and that’s out of the total $27 million NPLs,” said Mr Kapanje.
“The SPV will operate as an autonomous entity outside the bank, it will have its own independent board and administrative structures. But as far as the administrative activities, a lot of support in the formative stages will be rendered by the group so that we don’t incur significant costs upfront.
“The expectation is that we will package these assets within this SPV. There are some assets that having failed to perform as far as the mandates that were contracted with the bank are concerned there are still some strong fundamentals that can actually be invested on going forward. So we are going to package these assets, perhaps invite investors that may be able to participate in this SPV and as we do that create perhaps another investment opportunity for some of our investors.”
Meanwhile, for the half-year under review, ZB’s profit after-tax increased by 46 percent over the corresponding period in 2015 to $5,9 million, largely on the back of significant bad debt recoveries. – BH24
Online Reporter