Foreign exchange remains the single most important factor hobbling the performance of the economy. Concessions should therefore be made and consensus on the way forward should be forged if the implosion of the economy is to be averted, NDH Holdings says in its annual report, adding that there is no alternative to making difficult decisions at this juncture.
The financial house says the shortage of foreign currency has pushed up operating costs, thereby squeezing margins. It has also seen inflation soar with the World Bank saying it could rocket to 522.2 percent by the end of this year.
NDH says demand has continued to contract while agricultural output has fallen. There will, therefore, be further pressure on the need for foreign currency as the country will be forced to import food.
It says the 10-point agrarian reform plan announced by the government is not likely to have any significant impact unless it addresses economic issues in all sectors of the economy.
The same applies to tourism which used to be a major foreign currency earner. It is not likely to recover until there is stabilisation of the political and economic climate.
The group did not do too well either. Net interest income was down from $1.1 billion to $823.1 billion.
The same applied to net trading income. It dropped from $1.1 billion to $787.9 million. Fees and commission income, however, more than doubled from $87.2 million to $188.3 million. Net profit dropped from $888.9 million to $487 million.
The group says the drop in profit was expected because the “windfall gains” made in 2001 were not likely to recur.
National Discount House saw its net profit drop from $587.8 million to $561.5 million. This was largely anticipated because of the high level of inflation which saw clients seeking investment alternatives that preserve value such as real estate, motor vehicles and other assets.
NDH Equities had done well consolidating its position among the top six stockbrokers on the Zimbabwe Stock Exchange. NDH Asset Management increased the sum under its management from $0.7 billion to $4.4 billion.