Senior Business Reporter
THE Agricultural Bank of Zimbabwe Limited (Agribank) posted a $4.8 million profit in the year ended December 31, 2016, spurred by a successful staff rationalisation exercise among other turnaround strategies that yielded cost savings of $1,7 million.
Chairman, Mr Sij Biyam, said in a financial statement for the period under review that the positive performance marked an indication of the solid turnaround for the institution.
He said growth was anchored on the implementation of a range of turnaround initiatives following the capitalisation of the bank in 2015.
“The bank recorded a profit of $4,8 million for the year ended December 31, 2016, which was a massive improvement on a loss of $6,3 million recorded in 2015. The solid performance marked an indication of the solid turnaround for the bank premised on the implementation of a range of turnaround initiatives,” said Mr Biyam.
“The bank’s performance in 2016 has been driven and supported by continued staff rationalisation that was completed in 2015 where the bank reduced its staff compliment by 20 percent (112). This restructuring led to cost savings of $1,7 million for the year under review.”
The bank continued to benefit from the staff rationalisation exercise completed in 2015 with a staff to income ratio closing the year at 30,8 percent compared to 57,7 in 2015.
Between May 2015 and last year, the Government recapitalised Agribank to the tune of $40 million and for the first time since 2009, the bank has posted profits.
Sustained pursuit of growth strategies buttressed by the bank managing to access adequate liquidity through the Aftrades window availed by the Reserve Bank of Zimbabwe and agro bills, saw the banking institution closing the year under review with a liquidity ratio of 49 percent compared to a 30 percent regulatory requirement.
The bank’s performance has been driven and supported by recoupments from the transfer of some none-performing loans to the Zimbabwe Asset Management Company, said Mr Biyam.
During the period under review, the bank recorded an increase of 45,2 percent in net interest income with $25,9 million compared to $17,8 million for the prior year.
“Growth was largely driven by realisation of previously suspended interest on loans and continued lending owing to adequate liquidity. The bank’s non-interest income was driven by the implementation of e-banking channels, in the second half of the year,” said the Agribank chairman.
He said during the period under review, measured cost containment strategies resulted in the banking institution recording a 14,5 percent decline in operating costs to $22,3 million compared to $26 million in the prior year.
As at the end of last year, the bank’s total assets grew by 18,8 percent to $204 million compared to $171,7 million in 2015.
As at December 31, 2016 was capitalised to the tune of $51,1 million following shareholder capital injection of $10 million and thus the institution’s capital adequacy ratio closed the year at 36 percent compared with the regulatory minimum of 12 percent.
It is envisaged that Agribank will continue deepening the pursuit of the mandate for agriculture financing and development.
“Beyond the near term, Agribank envisages more investment in agriculture by both the Government and the private sector. In this regard, the bank will position itself for enhanced participation in agriculture financing and development in Zimbabwe,” said Mr Biyam.