ZIMBABWE’S troubled banking sector has assets worth over $4 trillion that are at risk due to the current crisis rocking the once high-flying section of a rapidly shrinking e
The 17 commercial banks, six merchants banks, five finance houses, now eight discount houses after the closure of Century Discount House, and four building societies following the collapse of First National Building Society, had about $4,1 trillion in the form of assets during the third quarter ending September 30.
A Reserve Bank of Zimbabwe report on the banking sector indicates that the sector of the economy had been growing in leaps and bounds before the current crackdown of speculative dealings in the stock, money and property markets was launched after Gideon Gono took over as central bank governor last month.
“The number of commercial banks operating in the sector rose to 17 following the commencement of operations by Barbican Bank during the quarter,” the report says.
“The sector recorded a 70,6% increase in total assets from $1,7 trillion to $2,9 trillion. This represents an increased market share of 70,6%, up from 66,7%.”
Merchant banks, the report notes, recorded an increase in their asset base although their market declined during the period under review.
“The number of institutions operating in the sector remained at six,” it says. “Total assets increased by 25,2% from $429,7 billion in June 2003 to $538 billion. This however represented a reduced market share for the sector of 12,9%, down from 16,4% as at 30 June 2003.”
The report says Zimbabwe’s five finance houses’ total assets increased by 44,6% from $63,5 billion to $91,8 billion, representing a reduced market share of 2,2% from 2,4% during the previous quarter.
“The prevailing unstable operating environment has negatively affected the business operations of most players in the sector, as measured by an increase in the adversely classified loans to total loans ratio of 7,2%, from 3,4% recorded in June 2003,” it says.