ZIMBABWE'S banking sector is still profitable, recording an aggregate profit of $503,13 billion last year, a 748,59% increase from prior year, driven by non-interest income, fees and commissions, a Reserve Bank of Zimbabwe (RBZ) report has revealed.
According to a banking sector report for the quarter ended December 31, 2022, all banking institutions were profitable during the period under review.
“The growth in the banking sector income largely emanated from non-interest income, which constituted 67,82% of total income as at 31 December 2022, up from 54,35% reported in the corresponding period in 2021,” the report compiled by the central bank shows.
The report shows that the total non-interest income mainly consists of revaluation gains from investment properties, fees and commissions and translation gains on foreign currency-denominated assets.
“The banking sector continues to play an important role in the development of the economy. The banking sector remains generally safe and sound. The economic outlook is expected to remain positive on account of the current macroeconomic stability.
“Aggregate capital and liquidity positions of the banking sector remained strong, providing strong buffers for banking institutions to withstand shocks,” RBZ said.
Total deposits increased 198,95% from $1,91 trillion as at September 30, 2022 to $2,29 trillion as at December 31, 2022, mainly driven by growth in foreign currency deposits.
The average prudential liquidity ratio for the banking sector was 59,50% as at December 31, 2022, and all banking institutions, with the exception of one, were compliant with the minimum prudential liquidity ratio of 30%.
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During the period under review, the return on assets and return on equity ratios were 17,43% and 54,33%, respectively.
The cost to income ratio for the sector slightly improved from 71,38% in 2021 to 57,21% in 2022, mainly due to the improved operating income.
Total banking sector deposits amounted to $2,29 trillion in four months from September to December.
“The increase in the deposit base was mainly attributable to revaluation of foreign currency-denominated deposits,” further read the report.
The average prudential liquidity ratio was high at 59,50%, largely reflecting high stock of liquid assets in the sector.
In the outlook period, the central bank said the macro economy was expected to remain stable in view of the projected lower inflation complemented by sound monetary and fiscal policies.
“The banking sector will continue to support the economy through lending to the productive sectors and funding the requirements of the economy. The bank will continue to closely monitor the overall financial condition and risks in the banking sector as part of its supervisory toolkit in order to maintain financial stability,” the RBZ added.
