Staff rationalisation excercise bears fruit for Agribank

AGRIBANK

Oliver Kazunga, Senior Business Reporter
ZIMBABWE’S agriculture finance institution, Agribank, is set to generate over $2 million in annual savings as a result of its staff rationalisation exercise and business growth.

In a statement accompanying the bank’s audited financial results for the year ended December 31, 2015, the chairman, Sij Biyam, said the institution has implemented a bank wide reorganisation and staff realignment following recapitalisation by the government last year.

He said this process was on the basis of ideal organisational and staffing levels.

“The exercise resulted in the disengagement of 20 percent of staff (112) and the closure of two marginal branches. The bank will generate annual savings of $2,280 million.

“As a result of both staff rationalisation exercise and business growth, the bank has been recording profits since August 2015. The staff cost to income and staff cost to total cost ratios are now in line with industry trends,” said Biyam.

Agribank was capitalised in May 2015 to the tune of $30 million.

Consequently, the Tier 1 capital as at December 31 last year was $31 million, which Biyam said was way above the minimum regulatory capital of $25 million.

During the period under review, he said, one of the major challenges the bank faced was that of Non-Performing Loans (NPLs) and the attendant impairment charges.

The NPLs mainly related to huge exposures to agriculture and agro-processors, giving rise to significant impairment charges adversely affecting the performance of non-performing loans in the bank.

“The impact of drought over the past two years has contributed significantly to the level of NPLs. It’s pleasing to report that the bank managed to transfer NPL valued at $19 million to the Zimbabwe Asset Management Company…” he said.

This resulted in NPL ratio reducing to 13,97 percent and the financial institution.

In this light the bank is putting in place measures to ensure the NPL ratio is reduced to single digit levels in 2016.

On the outlook, Biyam said the turnaround measures implemented during the year addressed the impediments that had previously choked the bank’s capacity to achieve profitability, setting the stage for sustained profits into 2016.

“Furthermore, in February 2016, Agribank was completely removed from the United State of America sanctions list. The bank is now looking forward to pursuing lines of credit and engagement with development partners for agricultural funding, particularly to the small-scale farmers,” said Biyam.

“Agribank envisages increased government support and private sector partnership in agriculture investment and financing. It’s the expectation that international development partners will focus on agriculture and infrastructure development, as key pillars for sustaining economy wide recovery and growth.”

Biyam said the bank was consolidating its position as a vehicle for agriculture finances and development contributing to Zim-Asset’s food security and nutrition, as well as agro-based value addition.

“The bank aims at supporting the emerging economically active groups, in particular small to medium enterprises, small holder farmers and other active micro business entities critical to the agriculture value chain, supporting recovery and growth,” he said.

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