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Nqobile Bhebhe, Senior Business Reporter
BANKING sector profits jumped to $27 billion in the first quarter this year compared to $6,58 billion for the corresponding period, according to the Reserve Bank of Zimbabwe (RBZ) report.

The growth in income was largely attributable to interest income from loans, advances as well as fees and commissions, which constituted 34,36 percent and 30,32 percent of total income respectively.

Despite the challenging macro-economic environment in the wake of external shocks and the recent exchange rate volatility, the Apex Bank says the finance industry remains safe and viable as institutions adapt to the dynamic operating environment.

In its latest banking sector report for the quarter ended March 31, 2022 shows, the RBZ said amid the combined effects of Covid-19 and the economic impact of the geo-political conflict in Eastern Europe, the banking sector continues to demonstrate resilience to various shocks.

“As at 31 March 2021, the banking sector was adequately capitalised with average capital adequacy and tier 1 ratios of 26,97 percent and 35,16 percent, which were above the regulatory minimum of 12 percent and eight percent respectively,” it said.

“Total banking sector deposits amounted to $582,26 billion as at 31 March 2022, representing an increase of 22,23 percent from ZW$476,35 billion reported as at 31 December 2021.”

Loans and advances grew by 39,75 percent from $229,24 billion as at December 31, 2021 to $320,36 billion in the period under review.

“The increase was partly attributed to the translation of foreign currency denominated loans amounting $142,27 billion and constituting 44,41 percent of total banking sector loans, up from 36,87 percent as at 31 December 2021,” said the Central Bank.

foreign currency

Banking sector loan portfolio quality remained strong, as reflected by non-performing loans (NPLs) to total loans ratio of 1,57 percent against the international benchmark of five percent, it added.

The aggregate core capital increased by 37,07 percent from $100,83 billion as at December 31, 2021 to $138,21 billion as at 31 March, driven by capitalisation of retained earnings.

The RBZ said banking sector assets amounted to $969,24 billion, a position representing 27,04 percent increase from $762,96 billion recorded as at December 31, 2021.

The report adds that assets were largely comprised of loans and advances (30,22 percent), balances with foreign institutions (13,38 percent) and securities and investments at 10,90 percent.

At the end of the review period, there were 19 operating institutions, comprising 13 commercial banks, five building societies, and one savings bank.

Covid-19

In addition, there were 179 credit-only micro-finance institutions, eight licensed deposit-taking micro-finance institutions and four development financial institutions under the purview of the reserve bank.

On the outlook, the banking sector is expected to remain safe and sound with banking institutions adapting to the dynamic operating environment.

“The various measures that the Bank is implementing are expected to maintain financial stability to ensure that banking institutions continue to offer adequate financial support to all sectors of the economy, which is a catalyst for economic growth and development.”