Zimpapers Logo

Oliver Kazunga, Senior Business Reporter
ZB Financial Holdings has reduced its non-performing loan book by over 20 percent to $21.6 million, the group’s financial results for the year ended December 31, 2017 show.

As at December 31, 2016 ZB Financial Holdings non-performing loan book stood at $27.3 million.

In 2014, the Reserve Bank of Zimbabwe established a special purpose vehicle, the Zimbabwe Asset Management Company (Zamco) to address the scourge of Non-Performing Loans (NPLs) by buying out from commercial banks their collaterised loan books.

“The internally discounted value of the security held in respect of non-performing book amounted to $21.3 million as at December 31, 2017 from $27.3 million as at December 31, 2016.

“NPLs with a net carrying value of $9.6 million were transferred to a special purpose vehicle called Credsave on December 31, 2016 in a transaction that is yet to meet conditions of a ‘clean sale’

“Resultantly, these assets are still recognized in the statement of financial position of the group,” it said.

ZB Financial Holdings said it plans to offer the Credsave pool of assets as a “block” to interested investors upon which the assets would meet conditions for de-recognition from the statement of financial position.

During the period under review, the group reported a 36 percent improvement in net income to $15.51 million compared to $11.43 million in the previous year.

Total income improved by 12 percent to $72.69 million from $65.07 million in the previous year driven by non-funded income. Non-funded income was nine percent higher at $37.8 million largely driven by increased volumes in electronic banking products. Interest income, however, was subdued from $27.59 million in December 2016 to $24.8 million as of December 2017 largely due to the Reserve Bank of Zimbabwe’s directive to cap interest rates. Total assets increased to $527.09 million from $439.29 million previously.

“This movement was largely driven by a 26 percent increase in deposits, which closed the year at $347.1 million.

“Conversely, cash balances and treasury bills increased by 30 percent and 31 percent to close $106.8 million and $156 million respectively, thus utilizing most of the funding, which is largely short-term in nature,” said the group.

The gross loan book grew by 12 percent to close the year at $128.3 million compared to $115.1 million in 2016. ZB Financial Holdings has also mobilised $10 million line of credit, which is awaiting disbursement with another facility of $20 million at closing stage.

@okazunga