Tawanda Karombo Harare
STANDARD Chartered is to streamline its operations in Zimbabwe after net profit for the year to December declined from $9.6 million (R116.6m) to $6.7m.
The fall was attributed to banks in the country adopting prudent “lending” measures to manage ballooning non-performing loans precipitated by a reclining economy.
Most of the foreign banks in Zimbabwe – which include units of Standard Bank, Nedbank, Barclays and Standard Chartered – enjoy liquidity support from their parent companies.
Their non-performing loans ratios are much better than those notched up by their locally owned competitors.
However, a worsening economic situation had seen profit figures for Standard Chartered Zimbabwe decline.
The country’s struggling economy has resulted in some local finance institutions such as Allied Bank and AfrAsia Zimbabwe folding up, prompting calls for integration of the industry through mergers to help weak banks shore up their capital bases.
Atlas Mara’s BancABC unit in the country suffered a $1.5m loss during the same period.
The loss was attributed to “increased impairments due to a tough operating environment” in the country.
“The group is set to streamline its footprint across the globe and its local franchise, like most markets will be affected by the realignment,” Standard Chartered said.
Despite the tough economic conditions, which economists say will worsen this year, some of the banks are adopting a longer term view of their investments in Zimbabwe.
“The expected economic growth, coupled with the bank’s internal initiatives should position the bank to deliver better performance in 2015,” Standard Chartered said.
Ronald Pfende, the chief executive of the Atlas Mara-owned BancABC group, said that the company was optimistic that the Zimbabwe unit would turn the corner for the better in the near future.
He said his firm would continue to leverage on the regional and international links of Atlas Mara – which now wholly owns the financial services firm – to access financing vehicles for the support of units such as Zimbabwe and Tanzania.
“BancABC received $265m (from Atlas Mara) to help fund growth and lending in the past six months,” said Pfende.
He added that Atlas Mara would continue to leverage on this exposure to secure even more funding for BancABC.
Gwen Muteiwa, the chief financial officer for BancABC Zimbabwe, said that the group’s dealing income had shot up by as much as 27 percent while interest income rose 3 percent.
She said the Zimbabwe unit would focus more on mortgage lending activities and keep costs in check.
Other executives said the Zimbabwe market had challenges around liquidity while units in Botswana and Mozambique were on a sound footing.
“Should we have liquidity challenges, the group will be able to help us. They are sitting on a $100m facility,” said Muteiwa.
Atlas Mara last week said it had incurred a $63.1m loss for the year to December although it said it had posted a $7.2m net profit excluding non-recurring transaction and integration expenses for its operations which now encompass BancABC.