METBANK is underwriting foreign currency loans to improve United States dollar income as it seeks to grow the bottom line after recording a 73,08% increase in profit after tax to ZWL$223,58 billion in the year ended December 31, 2023.
In the previous year, after tax profit was ZWL$129,17 billion.
A monetary gain and fair value adjustment were the main drivers of profit after tax.
In a statement accompanying the financial results for the year ended December 31, 2023, released yesterday, Metbank board chairperson Linda Chipunza said underwriting foreign currency loans would ensure profitability after a challenging period.
“The bank’s focus remained on increasing foreign currency revenue streams through underwriting loans denominated in foreign currency to act as a hedge against exchange rate depreciation and inflation that will also produce long-term, sustainable profitability,” she said.
“Further, the bank continued focusing on its digitisation drive in order to enhance customer satisfaction and convenience. Operational and financial resilience is of paramount importance to the bank supported by robust business continuity and succession planning arrangements.”
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Chipunza said the bank recorded comprehensive income of ZWL$230,5 billion in the year under review from ZWL$132,3 billion in 2022.
During the period under review, the bank posted a monetary gain of ZWL$77,23 billion translating to an increase of nearly 1 666% compared to the prior year.
The gain was driven by the exchange rate volatility when the now defunct Zimbabwe dollar (ZWL) depreciated by over 700% in 2023.
This depreciation also saw the bank make a fair value gain on investment property to ZWL$271,51 billion, from ZWL$146,8 billion in the comparative 2022 period.
Thus, total net income was recorded at ZWL$261,84 billion, but kept down by a net interest expense of ZWL$20,3 billion.
Loans and advances to customers dropped by nearly 82% during the period under review to ZWL$3,08 billion, from the prior year as the bank cut back on ZWL loans.
Chipunza said the revaluation gains of the bank’s investment property portfolio was because of strategic actions by Metbank to hedge its balance sheet against exchange rate and inflationary pressures.
This revaluation propelled the bank’s total assets to ZWL$787,01 billion during the period under review, up 67,5% on the 2022 comparative.
“The bank remained compliant with the revised regulatory minimum capital requirements for commercial banks, and the bank is pleased that it has continued to grow its capital base well beyond the minimum thresholds,” Chipunza said.
“Going forward, the bank’s capitalisation will continue to be driven through organic growth with any anticipated shortfalls being covered through shareholder injections.”
However, a threat to the bank’s profitability remains its expenses as operating expenditure more than tripled to ZWL$102,12 billion during the period under review from 2022.
Administrative expenses were the main driver behind the increase.
“The operating environment remains challenging, but we remain optimistic that the bank will maintain an upward growth trajectory, anchored by its strong statement of its financial position,” Chipunza said.
“In the implementation of the bank’s strategy for the delivery of unique customer value propositions, innovation and digitalisation remain our core objectives. Metbank will continue to engage all the relevant funding partners in raising long-term capital to support the country’s economic development aspirations.”
Deposits for the period under review, rose 146% to ZWL$64,36 billion from the 2022 comparative.