POSB jumps in profits. . . Declares $2.4m dividend to major shareholder

05 Jun, 2017 - 00:06 0 Views
POSB jumps in profits. . . Declares $2.4m dividend to major shareholder A POSB branch in Bulawayo

The Chronicle

A POSB branch in Bulawayo

A POSB branch in Bulawayo

THE People’s Own Savings Bank (POSB) has presented $2,4 million in dividends to its major shareholder — Government — after the financial services firm reported a 22 percent jump in profit for the year ended December 31, 2016.

Accountant General in the Ministry of Finance and Economic Development received the dividend cheque on behalf of Government and commended management for the sterling efforts in keeping the business profitable.

POSB reported last week that its after tax profit increased 22 percent to $9, 68 million in the full year to December 2016 on increased revenue and cost containment measures.

Chief executive officer Mr Admore Kandlela acknowledged the tough operating environment but remained upbeat of growth opportunities in the financial services sector.

“The sector has been affected by cash reliability challenges, arbitraging on the foreign currency market and low credit uptake.

“But there are opportunities in the growing informal sector, merchants adoption of point of sale technology and mobile technology,” he said.

Cost to income ratios improved from 76 percent in 2015 to 73 percent in 2016 on growth in income, which outweighed the increase in operating expenses. Total assets grew by 22 percent to 164 million from $134 million in 2015 as a result of business growth.

Addressing its third annual general meeting in Harare on Friday, Mr Kandlela said stiff competition in the industry had negatively affected the banking group’s market share, which is mostly the low end market. In line with this, its customer base which used to be around three million in 2015 declined to over half a million.

Prepaid electricity sales from its partnership with ZESA also declined in the quarter due to competition from other service providers such as Econet’s mobile money platform, Ecocash.

But in the first quarter to March 30, 2017, its customers increased to 692 000 from 679 000 as at the end of December 2016.

Net profit for the quarter was $2, 3 million while assets stood at $170 million. Liquidity ratio for the quarter was at 57 percent while capital adequacy ratio was at 31 percent.

Mr Kandlela said the economy has been shifting and skewed towards the informal sector which presented an opportunity for the bank to tap into that market.

“As the economy shifts towards the SMEs, we also see opportunities to create SMEs responsive products and roll out of merchant point of sale and POS agents,” he said.

He added the bank had also made a shift in its foreign payment categories, formerly dominated by individuals to corporate. This, he said, was in line with Government’s initiatives to support the productive sectors of the economy, as a way of enhancing local industry, promote exports and ultimately – economic growth.

In this regard, individual transactions which accounted for 87 percent of foreign payments in the first quarter of 2015 reduced to 27 percent in the quarter under review.

Corporates subsequently increased to 56 percent in the quarter under review from 8, 3 percent in the same quarter last year. — BH24.

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