THE Agricultural Bank of Zimbabwe Limited (Agribank) has narrowed its losses to $1,2 million in the six months to June 30 from $3,7 million in the same period as the prevailing liquidity conditions forced the bank to cut on lending.
“The loss was mainly a result of the reduced level of lending due to the prevailing liquidity conditions and impairment charges,” board chairman Siyabuliso Biyam said in a statement accompanying the bank’s financial results.
Net loans and advances declined by 4,7% to $86,1 million.
The bank recorded a 36,6% increase in net interest income during the half year to $4 million compared to $2,95 million same period last due to the additional draw down of the Industrial Development Corporation (IDC) of South Africa second tranche facility.
The bank started to draw down funds from IDC in 2011 after it concluded a $30 million facility with the corporation.
“The bank also saved on interest expense as there was a decline in lines of credit and interbank deposits which attract high costs compared to the same period last year,” he said.
Non-interest income declined by 4,9% to $6,63 million compared to the same period last year due to reduced transaction activity.
Biyam said the undercapitalisation of the bank was affecting funding and liquidity.
He said this resulted in reduced trading and lending.
Operating costs for the bank was reduced to $11,24 million during the period under review compared from $11,25 million in 2013.
Biyam said the bank’s core capital stood at $11,4million and was implementing initiatives to access credit lines and has budgeted $4 million allocated for capitalisation in the 2014 fiscal budget.
“The process of securing a strategic partner as part of the overall capitalisation is on-going and government is committed to the recapitalisation of Agribank this is prerequisite for the bank to pay a critical role in agricultural recovery,” Biyam said.