POSB has posted an operating profit of $1,25 million in the year 2014 compared to an operating loss of $209 000 in 2013 due to the improvement in the performance of the bank during the period under review.
by BUSINESS REPORTER
In a statement accompanying the group’s financial results, the company’s acting board chairman Israel Ndlovu said the financial sector continued to be characterised by high cost of funding, limited credit creation, liquidity constraints and rising non-performing loans.
“The bank recorded an operating profit of $1,25 million. This outturn was achieved in spite of high provisions for impairment losses amounting to $3 million. Despite the challenges faced by the banking sector as a whole, the bank managed to position itself in a way as to take advantage of limited opportunities in the market by growing the loan book without jeopardising its quality as well as increasing its deposit base,” Ndlovu said.
The bank’s loan to deposit ratio improved to 67% from 54% in 2013 due to increased lending activities. POSB loan book grew by 46% to $56,30 million in 2014 from $38,66 million in 2013.
Total income for the bank increased by 25% to $24 million due to better margins on lending as well as the new products. Total assets increased to $105 million from $90 million in 2013 due to the increase in the loan book.
Total deposits grew by 17% to $84,30 million from $72 million in 2013 due to an increase in deposit mobilisation and business development.
Ndlovu said the banking sector was stable in 2014 despite the economic challenges faced by the economy as a whole. Banking sector deposits grew by $5,1 billion in 2014 while loan and advances stood at $4 billion, translating to a loan to deposit ratio of 78,9%.
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“Credit risk remained the most significant challenge in the banking sector and liquidity constraints continued to have negative impact on operations of some banks,” he said.
Ndlovu said broad money supply grew to $4,4 billion as at December 31 2014 from $3,9 billion in 2013 due to increases in deposit classes except short-term deposits.
“However, most of the deposits remained largely transient and as such, were not available for long-term lending,” he said.
