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Prosper Ndlovu Business Editor
DESPITE registering an increase in deposits during the first half of the year, the People’s Own Savings Bank (POSB) extended a 60 percent loss of $340,288 by end of June from $130,956 in the same period last year, the bank’s financial results indicate.The institution’s deposits grew 11 percent to $80,4 million from $72,1 million in December 2013 as total assets value clocked 13 percent high to $101,5 million from $89,9 million in the same period.

However, revenue reserves nosedived by five percent to $5,9 million from $6,2 million with cost of income ratio also deteriorating by two percent to 103 percent from 101 percent in June last year.

The bank’s interest income rose 15 percent to $5,1 million from $4,4 million in June last year. Non-interest income also spiked 22 percent to $9,3 million from $7,6 million within the same period.

In a statement accompanying its unaudited half year financial results to June 30, 2014, yesterday, POSB acting board chair Israel Ndlovu attributed the loss to a harsh economic climate and the bank’s “extraordinary” expenditure.

He said: “Net profit for the period declined 160 percent from June 2013 to a loss of $340k mainly as a result of extraordinary expenditure incurred in payment of taxes and penalties following an audit by the tax authorities.”

Ndlovu said POSB would continue to introduce products in line with the new technological developments in its bid to increase customer satisfaction and competitiveness.

He, however, said the bank has resources to continue in business for the foreseeable future and that it was working on launching internet banking envisaged to bring convenience to clients.

“Re-alignment of costs, consolidation of market share and provision of more convenient as well as value added services to all stakeholders are all sustainable efforts, which the bank will continue to employ,” Ndlovu added.

Given the bank’s continued woes there have been efforts to commercialise its services as a long term revival strategy.

POSB is a statutory body wholly owned by the government.

It was established through an Act of Parliament, the POSB Act, Chapter 24:22 of 1999.

The bank was established in 2000 after the unbundling of the Post and Telecommunications Corporation (PTC) in 1999, which resulted in the creation of four entities, namely Zimpost, NetOne, TelOne and POSB.

If privatised the government would be left with 51 percent shares with 49 percent going to strategic partners.

At the moment, POSB, while supervised by the Reserve Bank of Zimbabwe (RBZ), is not required to comply with the minimum capital requirements prescribed by the central bank and is also exempted from corporate tax payments.

To attract suitable partners for POSB, several sections of the current Act would need to be amended.

Banks’ lending remains subdued across the country due to the prevailing liquidity constraints as well as risk aversion in the wake of increasing non-performing loans.

While national total bank deposits grew by 10 percent from $3,8 billion in January this year to $4,3 billion by end of May, the economic environment remained unfavourable for long term lending and investments due to their short term nature.