STANBIC Bank posted a growth of 11% in net interest income of $23,1 million for the first half of 2016 compared to the same period last year due to the acquisition of interest earning assets.
BY TATIRA ZWINOIRA
Despite the growth in net interest income, the bank’s profit remained static at $10,5 million.
Net interest income is the difference between interest income and interest expense. Interest income is interest received on loans to customers, while interest expense is interest paid by banks to depositors or other providers of funds.
In a statement accompanying the bank’s financial results, Stanbic Bank chairman Stenford Moyo said the stagnant growth for the period was due to a decline in volumes of transactions passing through their channels due to market-wide foreign currency shortages.
“Foreign currency shortages had a significant negative impact on our business, coupled with the regulatory directives on charges. Going forward, the acute foreign exchange shortages are expected to significantly constrain productivity levels as most companies import critical raw materials, machinery, spare parts and other production inputs,” Moyo said.
“There is need for concerted efforts towards implementation of policies which promote local industrial growth and generation of increased foreign currency.”
The bank’s loan-to-asset ratio dropped by 57% in December 2015 to 44% due to their customer deposit base growing to $625 million from $474 million that could not be matched with asset creation due to the fragile economic state.
Stanbic Bank managed to grow its cash and cash equivalents by about 58, 95% to $374,91 million from $235, 86 million at the end of December 2015.
As a result of the regulatory directives, Stanbic Bank experienced a 12% decline to $15, 6 million in its fee and commission. In the first half of 2015, the bank recorded $17, 8 million in its fee and commission income.
Stanbic Bank CEO Joshua Tapambgwa said decline in fees and commission was a reflection of the downside impact of the current market wide cash and nostro shortages.
“The recent monetary policy measures which included, among others, the introduction of surrender requirements on mineral and tobacco exports, compounded by the directive for banks to cut bank charges, also had a negative impact on our fee and commission income,” Tapambgwa said.
“Given the deterioration in our fee and commission income, our focus remains directed at further reducing our cost base through reengineering of our existing processes. This is expected to result in a shift of resources from areas of inefficiencies to areas where they are required.”
Operating expenses grew by 1% to $25,5 million in the period under review from $25, 1 million recorded in 2015 as the bank invested in various initiatives.