AfrAsiaKingdom Zimbabwe Limited (AKZL) has reduced its lending to the manufacturing sector to concentrate on the increasing demand for consumer loans caused by low disposable incomes.
In its unaudited financial statement for the half-year ended June 30, the financial services group revealed that most loans and advances channelled to the undercapitalised manufacturing sector had gone down to 27% during the period under review compared to 45% recorded during the same period last year.
Consumer loans on the other hand more than trebled to 29% during the period under review, while loans advanced to the retail sector dropped to 4% of the group’s total loans compared to 6% the previous year.
The banking group increased its lending to the transport and communication sector to 20% from 13% recorded during the same comparative period.
The figures also indicated that the group was conservative in its lending as seen by the $137,2 million loans advanced as at June this year, compared to $141,2 million loaned out during the same period last year.
This could have been attributed to the transitory nature of deposits and the high level of non-performing loans that was recorded by most banks last year.
AKZL audited net profit for the six months rose to $1,3 million from $782 031 recorded during the same comparative period following the acquisition of a 35% stake by AfrAsia Bank Limited of Mauritius.
Reserve Bank of Zimbabwe (RBZ) recently said the appetite for personal loans continues to grow in Zimbabwe amid revelations that borrowings from banks had trebled since the beginning of the year, while the manufacturing sector continued to be underfinanced.
At its peak, the manufacturing sector, which is facing capital constraints and competition from regional peers, used to contribute almost 25% of the country’s gross domestic product as well as 30% of the export revenues.
RBZ Governor Gideon Gono said personal loans advanced were expected to rise to 25% of the total loans channelled by the entire banking sector by year end from the current 18%.
Official figures have shown that the loan-to-deposit ratio last year rose to 71,7% from 49,3% when the multiple currency system was introduced on the back of growing deposits standing at $4 billion.