BY FIDELITY MHLANGA
FINANCIAL services outfit, Getbucks Microfinance Bank Limited says it plans to ask shareholders to inject fresh funding to help it meet a US$5 million minimum capital required by the Reserve Bank of Zimbabwe by end of the year.
The financial statement for the five months to May released by the bank last week showed that the firm was yet to meet the threshold, although inflation adjusted profit improved during the period.
The central bank in January last year announced new minimum capital requirements for the banking sector with Tier 1 banks — large indigenous commercial banks and all foreign banks now required have US$30 million minimum capital.
Tier 2 — commercial banks, merchant banks, building societies, development banks, finance and discount houses are now required to have a US$20 million minimum capital, while Tier 3 — deposit-taking microfinance banks, are required to have US$5 million minimum capital.
Apart from the share placement programme, Getbucks said organic profit growth would assist it to meet the required capital requirement.
“In order to meet the regulatory capital requirements of US$5 million by December 31, 2021, the bank will pursue an equity transaction, which will include a share placement programme. This is in addition to anticipated organic growth in profits,” Getbucks chief executive officer, George Nheweyembwa said in a trading update for the five months ended May 31, 2021.
“The trading environment in the five months to May 31, 2021 was slow and challenging, impacted on by the two months of lockdown at the beginning of the year. This, together with a system downtime experienced during the period, saw transactional volumes decrease 5,8% over the comparable year ago period” he said.
Nheweyembwa said the banking sector continued to face limited supply of funding.
“Inflation has decelerated but costs have started to catch up and this has impacted significantly on operations. Interest rates remain high. The growing disparity between the formal and informal sector does not augur well for banking with the informal preferring to keep their funds as US$ cash away from the banking system,” he said.
Total inflation adjusted income grew to $144,56 million from $104,64 million at the same time last year.
Non-interest income declined to $29 million, from $64,97 million last year.
Net interest income firmed to $66,13 million, from $18,7 million during the period last year.
Profit before taxation grew to $10,76 million from $7,36 million, while non-performing loans declined to 1,72% from 3,10% in December 2020.
Total loans increased to $198 million in May 2021 from $93,6 million in January 2021.
“The consumer sector constitutes the bulk of the loan book at 68%. The increase in loan book is attributed to the bank’s focus on increased sales for both consumer and non-consumer loans.
“The loan book quality improved over the period under review as evidenced by a decline in non-performing loans,” Nheweyembwa said.