HomeBusinessAgribank targets single digit NPL ratio by year-end

Agribank targets single digit NPL ratio by year-end


AGRIBANK is targeting to reduce the non-performing loan (NPL) ratio to single digit by year-end, on the back of measures that include debt recovery and small debt management strategies.


Agribank chief executive officer, Sam Malaba (right)
Agribank chief executive officer, Sam Malaba (right)

As at June 30, the bank’s NPL ratio was at 14,89% down from 17% in June 2016.

Agribank chief executive officer, Sam Malaba said loans and advances declined by 19% to $80,28 million during the period under review as a result of transfer of loans to the Zimbabwe Asset Management Company (Zamco) that outweighed growth in new loans.

Zamco is a special purpose vehicle created to buy NPLs from banks to free their balance sheet and be able to lend again. This came after the default rate had reached 20,45% in 2015.

“The NPLs ratio was reduced to $14,89% as at June 30 2017 compared to 17% in June 2016. The bank targets single digit NPL ratio by December 2017 against regulatory target of 5%. The target of 5% set by the regulator is also in line with international best practice,” Malaba said.

He said as part of concerted efforts to achieve the target NPLs ratio by December 2017, the bank introduced a cocktail of measures that include strengthening credit granting, debt recovery and small debt management strategies.

A total of $17 million was transferred to Zamco during the period under review.

Malaba said the bank holds capitalisation treasury bills issued by the Reserve Bank of Zimbabwe in addition, treasury bills were received as settlement of NPLs.

In the period under review the bank held $76,6 million in treasury bills making up 36% of the total assets and of this $40 million relates to capitalisation of the bank.

“The bank is progressing towards a sustainable profitable performance through a number of business expansion initiatives, notwithstanding the current business environment.

“The bank is poised for growth driven by Information and Communications Technology (ICT)-based products, mobile and agency banking business as well as sustained deployment in agriculture in support of agriculture recovery, food self-sufficiency and growth,” he said.

Malaba said the continuous investment in a robust ICT system and availing of resources to support growth in business would be imperative in the outlook.

In the period under review, Agribank recorded a marginal increase in after tax profit of $2,18 million for the half year ended June 30, 2017 from $ 2,16 million in 2016 due to continued benefits from capitalisation of the bank by the shareholder and growth in business driven by ICT delivery channels.

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