THE local unit of pan-African banking group, Ecobank Transnational Incorporated, has reported a $1,2 million profit before tax for the first six months of this year, up 2 370% from the same comparative period driven by growth in net interest income.
Report by Business Reporter
The company’s chairman David Whatman said in spite of the macro-economic uncertainties that weighed on the operating environment, Ecobank Zimbabwe managed to register an improvement in profit before tax.
The bank’s net interest income was up 116% to $4,6 million after the parent company extended more lines of credit to the local unit. The growth, according to managing director Daniel Sackey, was also driven by lower cost funds aided by an increased contribution from low interest bearing deposits.
“The Bank continues to pursue a growth strategy buttressed by increased investment in human capital and distribution channels. The pursuit of this strategy has resulted in the bank’s operating costs rising by 36% year-on-year,” he said.
“In addition to boosting fee income, this strategy has resulted in a significant improvement in the proportion of non-interest bearing deposits to total deposits from 41% to 61%. This translated into a reduction of the bank’s average cost of funds and improved net interest income.”
Operating costs, according to Sackey, were up 36% year-on-year driven by investments in the distribution network, human capital and enhanced technology infrastructure.
The company had 11 branches in the six months under review and three more branches are expected to be on board by year end.
Whatman said deposits remained largely transitory thus constraining asset creation, in particular the funding of the productive sectors of the economy.
Whatman said funding challenges, low product demand and obsolete machinery and technology continued to have a negative impact on productive sector capacity utilisation levels.