Banking sector profitable — RBZ boss

TWELVE banks recorded an increase in profit for the period ended June 2014 compared to the same period last year, statistics from the Reserve Bank of Zimbabwe (RBZ) have shown.

VICTORIA MTOMBA

Central bank governor John Mangudya said the banking sector was profitable during the first half of this year recording a net profit of $13,8million up from $4,9 million recorded in the first half of 2013.

“A total of 12 banks recorded profits for the period ended 30 June 2014,”Mangudya said.

He said as at 30 June 2014, a total of 14 out of 19 operating banking institutions (excluding POSB) were in compliance with the prescribed minimum capital requirements.

The sector made profit despite the fact that there are four banking institutions—Metbank, Allied Bank, AfrAsia and Tetrad—facing liquidity and solvency challenges.

The quartet, however, commands low market share in terms of loans and assets.

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Mangudya said these distressed banks command low market shares in terms of loans (8,8), assets (7,2%) and deposits (6,7%) as at June 30 2014.

Mangudya implored the banks’ shareholders and boards “to finalise implementation of their turnaround plans, failure of which the Reserve Bank will be left with no option but to intervene and institute appropriate supervisory action in terms of the Banking Act”.

He said Metbank was working on fund raising initiatives despite being compliant with the minimum capital requirements of $25 million while Tetrad has agreed with creditors for a scheme of arrangement.

The central bank, he said, was satisfied with efforts being done by AfrAsia shareholder who raised $10 million that improved the bank’s capital to $19,20 million.

Mangudya said Allied Bank was looking at ways of raising additional funding from shareholders to boost its capital and liquidity position.

On aggregate, core capital for the banking sector stood at
$753 million as at June 30, 2014 excluding Interfin which is under curatorship compared to $790million as at December 31, 2013.

“The reduction in the total core capital is largely attributed to loan loss provisions and subdued earnings performance by some banking institutions,” Mangudya said.

He said the losses recorded by the few banking institutions were attributed to high levels of non-performing loans, lack of critical mass in terms of revenue to cover high operating expenses and deliberate strategy by banks to clean up the bad loan books through provisioning.

Deposits increased by 4,86% to $4,96 billion as at June 2014 while loans and advances increased to $3,81 billion from
$3,70 billion during the same period last year.

The loan portfolio during the period under review was dominated by industrial sector 26,07%, household 21,21%, transport 16,95% and agriculture at 15,68% while the remaining sectors contributed less than 10% each.

3 Comments

  1. Banks should be like government..facilitators and oil to the engine of growth which is industry and commerce not the nonsense obtaining presently where banks on their road to profitabilty leave corpses everyhwere in their wake. If the new Reserve Bank governor believes this is good business then we are in big trouble..Banks should reflect what is happening on the economy not shoot all their customers. In any case is this business model sustainable given the fact that banks are fringe players who make money from real economic actors who they have made it their brief to bludgeon to death for petty cash. Banks can grow the econoy by relaxing credit but NOT in Zimbabwe…and the Governor applauds this..

  2. If the majority of the banks are profitable why then should salary disputes prolonged. Ma bank ngavangope vashandi vavo mari dzinokodzera not to wait for a major confrontations Zibawu. It is the ordinary bank worker who toil for the banks to post such profits. Its sad to note an agreement has not been met for 2012 salary increases. Some banks which were profitable then are now facing liquidity challenges now. For banks which can afford please do the right thing and not wait for negotiations muchihwanda ne Allied kuti they cant pay, if allied cant those with muscle should pay up.

  3. The assignment of Dumbugura from mines where he was looting BIG TIME has caused the recapitalisation challenges being faced by Allied Bank.

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