BY TATIRA ZWINOIRA
NEDBANK Zimbabwe’s profit after tax rose 225,35% to $14,2 million in the first half of the year ended June 30, 2019 due to exchange gains following the reintroduction of a local currency.
The increase was from $4,36 million in the comparative 2018 period.
“The bank posted a profit after tax of $14,203 million for the six months to June 30 2019. It is important to note that the previous comparative period was reported in United States dollars at a rate of 1:1 to the RTGS$. The previous corresponding period recorded a profit after tax of $4,366 million,” Nedbank Zimbabwe managing director Charity Jinya said in a statement accompanying the bank’s financial results for the period under review.
In February, the RTGS dollar was adopted among the several foreign currencies in use before the Zimbabwe dollar was reintroduced as the sole legal tender in June.
As such, there were gains made from converting money held by Nedbank into the local currency.
Nedbank becomes the second financial institution after ZB Financial Holdings to realise better profits based on exchange gains made during the half year.
However, Jinya said the bank did get some growth from non-interest income.
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“As the economy experienced high and unsustainable inflation, lending rates rose in sympathy, thus leading to subdued lending activity. Consequently, the bank focused on non-interest income. The total revenue for the six months period was $45,530 million (excluding $2,033 million in foreign exchange gains). Of the total revenue, 68% was from non-interest income, while 32% related to net interest income,” she said.
Non-interest income rose to $33,15 million during the period under review with fees and commissions contributing 74,2%; net trading and dealing income (19,66%); and foreign exchange (gain)/loss (6,13%).
In the comparative 2018 period, non-interest income was $11,48 million.
Net interest income also rose to $14,4 million in the period under review from a 2018 comparative of $9,69 million.
Loans and advances to customers rose to $278,08 million due to increases in overdrafts and term loans. In the 2018 comparative, loans and advances were $116,98 million.
“Inflation pressures increased cost of doing business as most suppliers of goods and services maintained the US dollar indexed base pricing with conversion at interbank rate at the date of settlement. This led to an exponential growth in operating costs,” Jinya said.
Total operating expenses nearly doubled to $29,13 million from a 2018 comparative of $15,29 million.
“Total assets as at June 30, 2019 amounting to $1,098 billion (2018: $432,64 million) were mainly due to the movement in the exchange rate between the US$ and ZWL$. Of the total assets, 51% ($555,86 million) comprised of cash and cash equivalents while 24% related to loans and advances,” Jinya said.
Of the cash and cash equivalents, Nedbank had foreign bank balances worth $353,06 million up from 2018’s comparative of $15,2 million. Cash on hand also grew to $91,07 million from 2018’s comparative of $8,04 million.
Deposits were at $915,73 million in the period under review again due to exchange gain movements from a 2018 comparative of $343,79 million.
In an outlook, Jinya said: “In line with one of Nedbank’s key focus areas of being client obsessed, the bank continued to position its digital strategy to satisfy changing client needs and demands.”
