Banks maintain cautious optimism

Bankers Association of Zimbabwe chief executive officer Fanwell Mutogo

THE banking sector is maintaining cautious optimism for 2024, despite numerous challenges affecting the economy, including exchange rate volatility, climate change risks, and global commodity trends.

In spite of these problems, the industry is witnessing potential areas that will improve banking operations and allow for the preservation of shareholder value.

As the industry transitions to paperless operations, the banks are also making use of existing resources to expedite digitisation, while simultaneously searching for new credit lines for funding from the private sector.

The banks have indicated that the financial year 2023 was quite challenging, although they managed to report profits and sound capital positions.

Most of the banks were well capitalised above regulatory minimum capital requirements.  A look at the financial results for the period ending December 31, 2023, shows that,  despite the challenging terrain, banks were maximising on deploying strategies that work in the current economic environment in line with their asset mix and business synergies.

NMB Zimbabwe said it will focus on disciplined execution of its strategy, which is anchored on broadening the group structure and diversifying  sources of income.

The bank will leverage on technology to deliver robust digital platforms, effectively delivering convenient financial solutions to its customers.

“Raising of credit lines remains a key focus area as we continue to fund export-oriented productive sectors of the economy as part of our drive to support growth  of the Zimbabwean economy.

The group is considering the acquisition of a complimentary business and processes are underway,” the bank said.

As foreign currency shortages and the relationship between income and expenses under inflationary conditions continue to pose challenges, CABS sees value in continuing to rely on the implementation of prudent fiscal and monetary policies.

The society said it will continue to play a part in providing full banking services to its customers, as well as ensuring that shareholder value is preserved.

On the other hand, pan-African financial institution, Ecobank, said it was poised to continue providing appropriate interventions to the economy through customised product offering and strategic thrust.

The bank, which has commenced construction of its head office, said its sound performance was set to be maintained during the year,  with a good asset mix and managed appetite on risk weighted assets.

To mitigate the threats posed by exchange rate volatility and high inflation,  the Infrastructural Development Bank of Zimbabwe (IDBZ) indicated that it had adopted strategic measures, including investing in projects with returns.

The development bank will restructure its balance sheet by disposing of under-performing investment properties and assets.

“The proceeds from these transactions have been reinvested to enhance the bank's performance,” it said.

Despite the local and global economic uncertainties, AFC Holdings said the outlook remained positive.

Nedbank Zimbabwe looked into the year with optimism, but remained cautious of the impending headwinds locally and globally.

“Our business models continue to be challenged by the dynamic environment and changing customer patterns. Our clients and stakeholders remain critical to our mutual success,” Nedbank said.

“We will continue to leverage our people, risk culture and strong capital base to enhance value for our clients and stakeholders and deliver leading client experiences”.

This is coming as authorities in the sector recently called for  policy consistency, saying it was a panacea to restoring the lost confidence and influence market sentiment.

The financial services sector  has been battling confidence issues due to decades of hyperinflation and policy inconsistencies, which have left account holders nursing wounds after losing their hard earned cash.

The prevailing exchange rate volatility  has not made things any better for the sector.

Bankers Association of Zimbabwe chief executive officer Fanwell Mutogo recently said frequent changes in fiscal and monetary policies created uncertainty for banks, making it challenging for them to develop long-term strategies.

“The effectiveness and credibility of fiscal and monetary policies can influence investor confidence and market sentiment,” he said.

“Transparent and well-executed policies are likely to enhance trust and stability in the financial sector, attracting investment and promoting growth.

“Conversely, inconsistent or poorly communicated policies may lead to uncertainty and volatility in financial markets,” Mutogo added.

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