ZBFH returns to profitability

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ZB Financial Holdings says it will increase lending once the economy improves, but will focus on a transactional banking strategy in the meantime as private sector loan defaults remain high.

In addition to transfer of bad loans to the Zimbabwe Asset Management Corporation (ZAMCO), ZBFH said it would continue to deliberately thin down its loan book.

“We’re moving to a more transactional form of banking, rather than lending, and this is to run away from non-performing loans,” group chief executive Ron Mutandagayi told analysts yesterday.

“It’s easy to resume lending when the economic situation turns around,” he said. Consequently, ZBFH’s total advances for the year ended December 31, 2016 was 32 percent lower at $100 million from $146 million in 2014. And the financial services firm’s credit assets reflect a reducing pace since 2011 as general credit absorption capacity in the private sector weakened.

A sectoral analysis of ZBFH’s loans and advances shows that last year the mining and manufacturing sectors were particularly culpable for loan defaults.

“Bad debt recoveries in the mining and manufacturing sectors, write-off in most sectors and renewal of loan facilities at relatively lower levels resulted in a lower loans and advances book,” said Mutandagayi.

For FY2015, the decline in the loan book was largely attributable to declines in short-term loans and Bankers Acceptances. Short-term loans last year amounted to $73,3 million, down from $95 million in 2014, while Bankers Acceptances declined to $6,7 million from $31,2 million in the prior year. Mortgage loans also declined – albeit marginally from $12,7 million in 2014 to $12,3 million last year.

However, aided by Zamco and recoveries of bad debts, ZBFH’s NPL ratio declined from 29 percent in 2014 to 20 percent last year. The chief executive said Zamco provided credit relief to the group with treasury bills worth $13,6 million. The rescued assets were largely in the mining sector at 88 percent ($12 million), with the manufacturing sector accounting for 12 percent ($1,6 million).

Meanwhile, for the year just ended, ZBFH yielded total income amounting to $56,7 million, while profit before tax amounted to $9,4 million on the back of cost rationalisation measures that the group has been implementing over the last couple of years.

The group said all its strategic business units operated profitably during the period, except the Assurance business.

“The loss in the Life Assurance segment is a result of a revaluation of underlying assets which is not expected to recur in FY2016 going forward,” said Mutandagayi. The group declared a dividend of 0,54 cents per share for the full-year.—BH24.

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