ZB Financial Holdings yesterday reported a 46 percent increase in Profit After Tax to $5.9 million in the six months to June driven by a strong performance across all its business units and cost cuts.
The financial services group, which has a fully-fledged bank, a building society, a life insurance business and a Reinsurance unit registered a three percent increase in Income from $28.4 million to $29.3 million.
ZB Bank registered profit before tax of $5.3 million compared to $2.43 million last year while deposits at $255 million were down compared to $266 million last year.
ZB Financial Holdings chief executive, Roy Mutangadayi said the bank’s loan book had declined to $94 million from $100 million after the group adopted a “cautious approach to lending.”
“We have been reducing lending because we have not been able to get customers who we thought were good for the funding we have. We are not able to access certain lines of credit which our competing institutions are able to so our cost of funds are a bit higher than our peers, which translates to high interest rates and you don’t want to attract high interest rate borrowers because they have higher chances to default,” he said.
ZB Financial Holdings is listed on the United States of America’s sanctions list managed by that country’s Office of Foreign Assets Control (OFAC) because of its close association with the government which holds 23.5 percent shareholding in the group.
Mutangadayi added that the bank had “deliberately maintained high exposure to sovereign paper” with a balance of treasury bills worth $120 million as of June.
“Treasury paper is immune from impairment. It is a good capital preservation strategy at this point in time. Our experience so far with treasury instruments is that government has honoured its obligations both interest and capital when it has fallen due.”
The bank’s non-performing loans ratio went up to 27 percent from 24 percent last year.
During the half under review, the group offloaded bad loans worth $4.6 million to the Zimbabwe Asset Management Company (ZAMCO) bringing the total of bad loans sold to ZAMCO to $18.4 million.
Mutangadayi said ZB would set up its own special purpose vehicle dedicated to trade bad loans. The SPV would house $14 million of the group’s $27 million NPLs, he added.
Earnings Per Share were up to 4 cents from 3 cents.- The Source
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