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Nqobile Bhebhe, [email protected]

THE banking sector has witnessed general stability and continues to be safe and sound, with all banking institutions registering profits with a reported aggregate of $5,77 trillion for the year ended December 31 2023, figures from Reserve Bank of Zimbabwe show.

In 2022, the sector posted $503,13 billion.

In his inaugural Monetary Policy Statement last week, Dr John Mashayavanhu noted that the sector has demonstrated resilience to shocks emanating from the dynamic operating environment and remains a key catalyst for inclusive and sustainable economic growth.

Stability in the sector, he said, is attributed to a raft of stabilisation measures by fiscal and monetary authorities.

He noted that banking sector performance remained robust with adequate capital and liquidity buffers, satisfactory asset quality and sustained profitability.

“As at 31 December 2023, the banking sector was adequately capitalised and all banking institutions complied with the prescribed tier 1 and capital adequacy ratios of eight percent and 12 percent, respectively,” he said.

“The banking sector remains profitable. All banking institutions registered profits, with reported aggregate profits of $5,77 trillion for the year ended 31 December 2023, compared to $503,13 billion reported in 2022.

“The growth in the banking sector income largely emanated from non-interest income, which accounted for 84,27 percent of total income ($10,45 trillion) as at 31 December 2023.”

Aggregate core capital increased from $5,05 trillion as at 30 June 2023 to $6,31 trillion as at 31 December 2023, due to organic growth.

Retained earnings from some banking institutions were largely driven by revaluation gains from investment properties and translation gains from foreign currency denominated assets.

 The Governor said in the period under review, banking institutions pursued various measures to bolster their capital levels as part of ongoing efforts to ensure that they have adequate economic capital commensurate with their risk profiles and to ensure ongoing compliance with minimum capital requirements.

He added that external audits of banking institutions for the period under review are underway.

“The Bank will leverage on the audit reports to conduct capital verification examinations, to confirm the banks’ declared capital positions as at 31 December 2023,” he said.

The banking sector asset quality remains satisfactory, the aggregate non-performing loans to total loans ratio (NPL) of 2,09 percent was within the internationally acceptable threshold of five percent.

The ratio improved from 3,62 percent as at 30 June 2023 reflecting continued sound credit risk management practices and strong internal controls within the banking sector.

Total banking sector deposits continued on an upward trajectory from $14,66 trillion reported as at 30 June 2023 to $19.47 trillion as at 31 December 2023, mainly driven by translation of foreign currency-denominated deposits due to exchange rate movements.

Foreign currency deposits accounted for 77,09 percent of total deposits.

As at 31 December 2023, aggregate banking sector loans and advances amounted to $11,26 trillion, representing a 10,50 percent increase from $10,19 trillion reported as at 30 June 2023.

The increase was largely attributed to an increase in foreign currency-denominated loans, which accounted for 84,67 percent of the sector’s loan book.

The sector continued to support the funding requirements of the productive sectors of the economy as it provided loans, which constituted 72,68 percent of total loans as at 31 December 2023.