Harare - Standard Bank together with a number of other banks are collectively raking in the profits in Zimbabwe.
However, for Bob Diamond’s BancABC unit, respite may only come from the longer-term outlook as the country battles to steady its economy amid growing turbulence.
Standard Bank’s Stanbic Bank unit in Zimbabwe, NMB and ZB Bank showed healthy profit margins and firm revenue bases in this difficult economy, even as the shadow of bank failures in the past three years still haunts some struggling finance institutions.
Stricter lending
Diversification, cost cutting, rationalisation of operations and stricter lending criteria has been key for Standard Bank’s unit in Zimbabwe and for the other two banks that raised half-year profits this week.
Stanbic raised its profits for the half-year period to the end of June by 10 percent to $10.5 million (R139.5m) and chairman Stanford Moyo attributed the rise to marked growth in interest income.
He added that the bank – which is among the stable banks in the country – had also rationalised its cost structure, an exercise several other companies in Zimbabwe have also embarked on.
“The bank’s fee and commission income grew by 13 percent to $17.7m due to an increase in transaction volumes being processed through our service channels. The bank is on course to meet the regulatory minimum core capital of $100m by 2020,” Moyo said.
Another Zimbabwean bank, NMB, posted an impressive profit rise of as much as 128 percent to $3.17m during the week, shocking economists, although analysts said shrewd lending and cost reduction had helped grow the half-year profits for the bank. However, other banks such as Standard Chartered Zimbabwe and Atlas Mara’s Banc-ABC have not been so lucky, with John Vitalo, the chief executive of Atlas Mara saying “Zimbabwe’s economic challenges have intensified over the past two years” while the “slowdown in economic activity is expected to continue throughout 2014”.
The International Monetary Fund said Zimbabwe’s economy would struggle for growth this year, and warned that over reliance on mining posed growth risks for the economy.
Finance Minister Patrick Chinamasa recently said Zimbabwe’s banking sector was now sound, although instability in the other sectors of the economy forced him to revise growth prospects for this year from 3.2 percent to about 1.5 percent.
BUSINESS REPORT