Stanbic Bank posts inflation-adjusted $9,7 million loss

STANBIC Bank has posted an inflation-adjusted loss after tax of $9,7 million amid currency volatility in the economy.

By Kudzai Kuwaza

In its audited financial results for the year ended December 31, 2019, the bank said it had posted the loss amid major policy changes, which include the banning of the multi-currency regime and making the Zimbabwe dollar the sole legal tender through Statutory Instrument 142 of 2019 in June last year.

“The bank ended the year with an inflation-adjusted loss after tax of $9,7 million (historical cost profit-after-tax of $477 million) as the country went through a period with significant policy changes, which included the introduction of a local currency (the Zimbabwe dollar), the abandonment of the multi-currency system which had been in existence since February 2009, and the fulfilment of conditions required to be termed a hyperinflationary environment,” Stanbic revealed in its statement.

The 2019 inflation-adjusted net interest income was $451 million, which is an increase from $432,6 million in the prior period, which it said was largely buttressed by the growing demand for local funding as working capital requirements continued to increase in a spiralling hyperinflationary environment.

This, the bank added, was compounded by the acquisition of short-term investments in the period to strengthen the balance sheet efficiencies of the financial institution.

The bank’s inflation-adjusted net fee and commission income closed the period at $381,8 million, increasing from $240,2 million in the comparative period, caused mainly by the continued depreciation of the local unit against the United States dollar on its foreign denominated fee and commission lines.

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“The increasing turbulence in the operating environment, which was characterised by inflation and increased currency volatility, impacted negatively on the bank’s inflation-adjusted operating expenses, which ended the period at $957 million growing from $451 million in the previous year,” the bank noted.

“The extensive depreciation of the local currency against the US dollar led to an exponential increase in the bank’s foreign denominated expenses when expressed in local currency terms. These expenses included hardware and software licence fees, data line requirements , travelling expenses, bank charges and insurance.”

The bank’s customer deposits during the period ended at $5,6 billion, which is an increase from $1,5 billion in the comparative period.

This was attributed to the weakening of the local currency against the greenback on its foreign denominated customer funding, which, in turn, had increased significantly in local currency terms.

Meanwhile, Stanbic Bank has temporarily closed its Victoria Falls and Hwange branches as part of its preventive measures against the spread of the COVID-19 global pandemic, which has claimed more than 22 000 lives.

Last week, the bank also advised of the temporary closure of its Incubator Hub as a measure to support the effective practice of social distancing, which comes as a recommended preventative measure by the World Health Organisation.

“One of the biggest lessons we have learnt form the outbreak is that people need to be proactive rather than reactive. Some countries have been hit hardest because they took time to act so we saw it fit to support our country in the preventive strategies being taken following the President’s national disaster declaration,” Stabic head of marketing and corporate affairs Palmer Mugavha said.

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