Banking sector improves


The Reserve Bank of Zimbabwe (RBZ) yesterday said 20 out of 25 financial operating institutions were in compliance with the prescribed minimum requirements while total industry capitalisation had increased to $509,71 million as at December 2011.

Addressing a Press conference organised by the Confederation of Zimbabwe Industries (CZI), RBZ governor Gideon Gono said the banking sector had registered improvement in growth and performance since the introduction of the multi-currency system.
The total industry capitalisation increased from $382,21 million in December 2009.

The Reserve Bank continues to engage and closely monitor all undercapitalised banking institutions in the interest of financial stability and banking sector confidence, he said.

He said the total banking sector loans grew to $2,75 billion from $0,692 billion in December 2009 while deposits were at $3,02 billion from $1,36 billion in 2009.

Adversely classified loans have generally stabilised around 7% in relation to total loans. The sectors ratio of provisions to adversely classified loans was 82% at the end of December 2011, which is reflective of the high level of prudence exercised by banking institutions, Gono said.

While the industry net income stood at $85,48 million as at December 2011, average liquid asset ratio for the sector was 45,64%, which is above the prudential minimum of 25% while the loans to deposit ration stabilised at 89%.

In spite of challenges faced by banks, such as tight liquidity conditions, the sector continues to provide support to the economy through credit facilities, while exercising significant caution in asset and liability management.

He added that there was a lot of liquidity in the system despite the absence of trading paper. Gono said the introduction of the multi-currency system had helped the country, but the stabilisation was affected by loss of monetary policy autonomy resulting in the central bank failing to influence economic variables and persistent liquidity challenges.

University of Zimbabwe lecturer professor Tony Hawkins said the economy would lose its momentum this year after experiencing three strong rebound years.

Hawkins said the tight global financial conditions mean credit lines will be harder to access and more expensive.