ZIMBABWE’s largest banks by deposits lost ground to smaller banks for the half-year period ending June 2012 despite a gradual increase in bank deposits, an independent research has shown.
Report by Bernard Mpofu
MMC Capital, a local brokerage and advisory firm, in its banking sector survey for the half-year period, said the country’s top five banks by deposits – CBZ,BancABC, Stanbic, CABS and FBC – reduced their market share although total banking deposits breached the $4 billion mark spurred by growing confidence.
According to the Reserve Bank of Zimbabwe, growth in banking sector deposits was largely driven by annual increases in time deposits of over 30 days (+ 96,18%) and under 30 days (+13,54%).
CBZ continued to dominate the banking sector, maintaining pole position in deposit market share as at 30 June 2012, although its market share slid to 23,85% from 27% in the prior period.
“The top five banks by deposits had a market share of 55,87%, a decrease from 59,53% in 2011,” reads the report in part.
“The top five banks by loans and advances commanded a combined market share of 51,71% a decrease from 54,43% in 2011, reflecting reduced lending concentration by big banks.”
In a bid to generate more interest income and attract depositors, as well as grow market share, Agribank, Capital Bank and Ecobank, according to the survey, were the most aggressive lenders for the half-year period to 30 June 2012.
Commercial banks, the report further stated, maintained their dominance, accounting for a market share of 89,55% during the period under review compared to 90,23% in the first half of 2011.
Loans and advances were dominated by commercial banks with a market share of 88,02% of total loans and building societies with a market share of 9,67% for the half year period to 30 June 2012.
Banking sector loans and advances grew by 18,5% to $3,27 billion as at June 30 2012 from $2,76 billion as at December 31 2011.
On a year on year basis, the total loans grew by 38% from $2,37 billion to $3,27 billion. Despite losing ground to small banks, BancABC according to the survey, was most aggressive bank, overtaking traditional giants like Standard Chartered.
“After closing the year 2011 as the largest gainer in the lending market space, BancABC continued with its aggressive approach to lending, becoming the largest gainer again in lending market share as at June 30 2012 (rising 2,38% from 2011) whilst CBZ lost 2,97% market share,” the report reads.
MMC, however, said although deposits continued to rise, several factors, which include bank closures, high bank charges, non-performing loans which are now trending towards the watch list category of 10-15% would undoubtedly contribute to the loss in depositor confidence.
“With the impending elections, compounded by the increase in the sizes of non-performing loans, we foresee banks adopting a conservative approach to lending in the medium-term. In the outlook we, therefore, expect loans and advances to follow a less aggressive trajectory relative to deposits,” it said.
Aggregate banking Sector Loan to Deposit Ratio in the first six months stood at 73,26% (down from 84% as at December 31 2011), compared to 81% in the same period last year.