HomeNewsPOSB posts loss, cites RBZ directive

POSB posts loss, cites RBZ directive

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THE People’s Own Savings Bank (POSB) posted a loss of $209 000 during the financial year ended December 31 2013 as it took the toll from a decree by the central bank to cap bank charges and interest.

By Tarisai Mandizha
Business Reporter

The Reserve Bank of Zimbabwe (RBZ) and banks signed a memorandum of understanding (MoU) in January last year providing a framework for determining bank charges and interest rates margins following complaints by the transacting public. The MoU was scrapped in December.

POSB chief executive officer Admore Kandlela in a statement accompanying the bank’s audited financial results, said the bank witnessed a decline in profitability recording a loss compared to a profit of $2,47 million in the prior year.

“This was mainly as a result of the introduction of the MoU between RBZ and banks which saw the banks waiving charges on all pensioners above the age of 60 years. This had a great impact as the bank serves the largest community of pensioners countrywide,” Kandlela said.

Kandlela said total income declined by 15% to $19,21 million in 2013 from $22,73 million in the previous year mainly as a result of the effects of the MoU.

He said despite the loss recorded for the year, the bank was able to realign its cost structure thereby recording a decline in operating costs of 4%.

“On a positive note, total costs declined by 4% as the bank put in place effective cost-cutting measures in an effort to reduce the decline in performance caused by subdued income,” Kandlela said.

In the period under review, total assets grew by 12% to $89, 97 million from $80,57 million in 2012 while the loan-to-deposit ratio declined to 54% from 59% in 2012. Kandlela said bank deposits increased by 13% though the composition of the deposits remained unfavourable for long- term lending and investments.

He, however, said the bank lending business grew by a marginal 3% from last year due to tight liquidity conditions as well as the cautious approach adopted by most banks on lending.

The local banking sector is reeling under a surge of non-performing loans as individuals and companies default due to the prevailing harsh economic environment. Non-performing loans surged to 15,92% in December last year from 4% in 2009.

“Despite the foregoing, the bank continued to be aggressive in deposit mobilisation and business development, focusing more on the mass market and small to medium enterprises,” Kandlela said.

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