ZB Financial Holdings has returned to profitability after recording a $7 million tax profit following strong performances by its commercial banking and life assurance arms for the year ended December 2011.
In 2010 the group posted a loss of $2,6m.
Operating profit before loan loss provision and transfers to the life fund grew from $7m the previous year to $15,1m.
The strong performance was despite a provision for extra-ordinary expenses amounting to $2,6m representing the negotiated final settlement of warranties and indemnities issued during the recapitalisation of former subsidiary company, Intermarket Banking Corporation (Zambia).
The bank realised a 6% improvement on its cost to income ratio closing the year at 82%.
Group assets increased from $198,6m to $272,6m last year on the back of a 46% increase in deposits to $169,2m.
In a statement accompanying the group’s audited financial results, ZB chairman Bothwell Nyajeka said despite the group having sufficient capital to meet all regulatory requirements, additional injection of capital would boost its product offering.
“On the back of a highly volatile operating environment, the group was able to achieve a profitable outturn, with a net profit having improved by 370% from a loss position in 2010 to a profit of $7m in 2011,” Nyajeka said.
As a result of the non existence of the lender-of-last-resort function at the Reserve Bank of Zimbabwe and a lethargic inter-bank market, the group was forced to carry substantial non-earning cash or low yielding balances in order to cater for customer demands.
ZB Bank posted a profit after tax of $7m reflecting a 394% increase from the previous year while profit for ZB Building Society was up 105% to $2,2m.
The society’s assets grew 43% to $35,8m and the mortgage book closed at $4,5m
The group realised an increase in loan charges to the income statement of $3,1m up from $1m in 2010.
ZB Life’s gross premium increased by 23% to $6,1m compared to $4,9m the previous year. The unit recorded an after tax profit of $2,2m from a loss position of $5,1m in 2010.
Depressed activity on the Zimbabwe Stock Exchange affected the group’s fund management and stockbroking operations.
Group chief executive officer, Elisha Mushayakarara said in the short term operating imperatives for ZB Asset Management and ZB Securities would be to preserve capital.
ZB Asset Management and ZB Securities posted losses of after tax of $53 000 and $194 000 respectively.
Mushayakarara said the group will implement a suit of risk management systems after successfully carrying out a technology-enhancement project and treasury management and trade finance systems.
“The current operating environment is fraught with risk of fraudulent loss.
“The group will continue to review its processes in order to minimise loss events,” he said.
Gross premiums for ZB Reinsurance were up 16% to $12,5m resulting in an after tax profit of $588 000.