FINHOLD has become the first financial institution not to declare a dividend in its half-ye
ar results in a bid to meet new capital requirements for commercial banks.
Finhold operates commercial banking under its Zimbank brand, asset management under Syfrets Asset Management and financing operations through Scotfin.
The central bank hiked minimum capital adequacy levels for commercial banks to $100 billion from the previous $10 billion.
Under the new regulations, which came into effect in July, deposits for building societies and discount houses were set at $75 billion, 10 times their previous levels.
The capitalisation requirements mean Finhold has to deposit a total of $250 billion with the central bank by September 2006 for its subsidiaries.
Finhold chairman Richard Hove said the group was putting in place measures to ensure the financial counter complies with the new regulations.
“While it is still in the early phase, the group is actively putting in place processes to ensure full compliance with this improved method of assessing capital adequacy,” said Hove.
Hove said the group supported the central bank’s initiative regarding the increase in the capital levels for financial institutions.
“The group welcomes the initiative adopted by the Reserve Bank of Zimbabwe on the new measurements of minimum capital requirements whereby financial institutions will be obliged to set aside capital not only for credit risk but also for other risks such as operation and market risk,” Hove said.
He said the group was continuing the rationalisation of its operations, which has seen its retail banking divisions being merged to cut costs.
Finhold’s operating expenditure for the half year increased by 283,3% to close at $195 billion compared to last year’s figure of $51 billion.
“The inflation induced increase in expenses coupled with reduced net interest margins resulted in the cost efficiency measures as a ratio of cost to income deteriorating from 37% as at September 30 2004 to 66%,” said Hove.
The group’s operating profit recorded an increase of 11,4% to end the half-year at $101 billion compared to $90,7 billion last year.
Finhold’s balance sheet footing increased by 342% to end the half-year at $2,7 trillion compared to the previous year’s figure of $1,4 trillion.
Finhold recently acquired a 80% shareholding in Intermarket Holdings after the group converted its $100 billion debt into equity, effectively assuring the company of the operating assets and banking licences of the group.