ZB creates SPV for bad debts

ZB Holdings has created an internal special purpose vehicle to house $14 million of the group’s bad debt that failed to qualify for an uptake by the Zimbabwe Asset Management Company (Zamco).


Speaking at the company’s analysts briefing yesterday, ZB official, Fanuel Kapanje said $14 million of the
$27 million in non-performing loans (NPLs) would go to the internal special purpose vehicle.

“It will be autonomous outside the bank and will have an independent board, administration structure and a lot of support will be rendered by the group so that no costs will be incurred. We will, perhaps, invite investors to participate and create another investment opportunity,” he said.

Kapanje said as of December 2014, the group’s NPL’s stood at $49 million and in June 2015 they received $13 million from Zamco, and they had written off $11 million and the balance was $24 million. For the first six months of this year, the group received $4,6 million from Zamco.

As at June 30, NPLs stood at $27 million due to a downgrade and some interest. Zamco takes over secured NPLs at a discount.

Zamco is a special purpose vehicle created by the central bank in 2014 to free the balance sheet of banks of NPLs and enable them to lend again to sectors of the economy. To date, it has taken secured NPLs worth over $450 million.

The banking sector experienced its highest NPLs ratio in 2014, when it reached 20,45%, leading to the creation of Zamco to clean the balance sheets of banks.

The central bank is targeting a 5% NPL ratio by year end.

ZB Holdings chief executive officer, Ron Mutandagayi said the group’s NPL ratio stood at 24%, which was very high.

He said the group was working on reducing the ratio, although the challenge was in recovering the loans.

Banks have been facing high default rates, as individuals and companies fail to repay loans due to the harsh economic environment. This has seen banks cutting back on lending, which is critical to rebooting the economy.

Mutandagayi said the group recorded a 46% increase in profit after tax to $5,94 million for the half year ended June 30, 2016 due to the reduction in operating expenses and recoveries of bad debts.

Total income stood at $29,39 million from $28,5 million in the same period last year. He said there was pressure on incomes due to the liquidity challenges in the economy, as well as the reduction in interest caps.

Mutandagayi said the group tightened the loan book to reduce the NPL ratio.

Operational expenditure for the group was down by 7% to $21,8 million from $23,4 million in the prior period last year.

The group’s assets went down to $394 million from $424 million in the same period last year, while loans advances decreased to $94 million from $100 million.

Mutandagayi said the group had taken a cautious approach to lending and would work towards spreading risk.

Commenting on the returning of Nicholas Vingirai to the group, Mutandagayi said: “What we see as management is a positive move, as it has resolved a major issue that has been unresolved for a long time. We hope that it will move faster beyond that I have no comment.”

Vingirai’s Transnational Holdings Limited will get 26% in the group, as compensation for the loss of Intermarket Holdings nearly a decade ago.

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