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RBZ Governor John Mangudya

Bianca Mlilo, Business Reporter
BANKING sector loans and advances to clients in the third quarter this year dropped by an average 2,15 percent to $3.65 million compared to $3,75 million in the previous quarter, the Reserve Bank of Zimbabwe reported.

In its quarterly banking sector report, the central bank attributed the decline to a cautious lending approach that banks had adopted.

In the second quarter the RBZ had reported a similar drop of 2.14 percent in total loans and advances from $3,81 billion to $3,73 billion.

“Banking sector loans and advances marginally declined by 2,15 percent, from $3,73 billion as at June 30, 2016 to $3,65 billion as at September 30, 2016,” said RBZ.

“The decrease was largely attributable to the adoption of a cautious approach to lending by most banking institutions in light of the adverse operating environment as well as acquisition of non-performing loans (NPLs) by Zamco (Zimbabwe Assets Management Corporation).

“The downward trend in loans and advances continues to reflect intensified collections as well as disposal of non-performing loans to Zamco.”

The central bank said the operations of Zamco helped to clean up the balance sheets of most banks.

The RBZ said as at September 30, 2016, banking institutions had disposed non-performing loans amounting to $537,34 million to Zamco, up from $528,40 million as at June 30, 2016.

“To date, a number of companies are benefiting from the relief brought about by the restructuring of the loans through the reduction in interest rates and elongated repayment periods,” the central bank said.

Zamco is a special purpose vehicle created by RBZ in 2014 to buy NPLs from banks as a way of cleaning their balance sheets and allowing them to lend again to various sectors of the economy.

This was necessitated by a high loan default rate which hit an all-time high of 20,45 percent in June 2014 triggering fears that banks would cut back on lending.

@BiancaMlilo