ZB Bank reported a hefty US$7 million profit for the period after generating total income of US$41,8 million. As has become the norm with most banking institutions, fee and commission income contributed more to income at US$22,5 million.
The absence of a lender of last resort and the need to hold substantial amounts of non-interest earning balances to cover customer payments impacted on the bank’s ability to generate more interest income, thus the group reported a net interest income of US$17,3 million.
“The group was forced to carry substantial non-earning cash in order to accommodate customer demands,” the group said in a statement accompanying its financial results.
The balance sheet of the financial group grew significantly by 39%, with a capitalisation of US$34,2 million, a figure well above the regulatory minimum requirement of US$12,5 million for a commercial bank. Total advances grew to US$105,3 million from total deposits of US$146,1 million, indicating a loan-to-deposit ratio of 72%.
The bank has a non-performing loan book of US$9 million, representing an increase of 100% from US$4,5 million in 2010. Provisions for impairment totalled only US$2,8 million.
The other divisions of the financial group include ZB Building Society, which achieved a 105% growth in profitability after posting a US$2,7 million profit after tax. The building society’s assets now stand at US$35,8 million, with mortgage advances of US$4,5 million, largely on the back of employer-assisted building schemes.
ZB Life Assurance also posted a modest set of results after realising a profit after tax of US$2,2 million despite the high levels of surrenders and withdrawals during the period. The performance of the division was also buoyed by strong performance in their investments which yielded a fair value adjustment of US$6,8 million.
The fund management and stockbroking operations were negatively impacted on by the underperformance of the stock market, which shed 4,6% off market capitalisation in 2010. ZB Asset Management’s funds grew by 454% to US$45,4 million but the unit posted a loss for the period of US$53 000, an improved outturn against a loss of US$163 000 the prior year.
With activity still depressed on the stock market, ZB Securities posted a loss of US$194 000 on the back of reduced brokerage commission.
The strong performance of the flagship divisions resulted in the group posting a return on equity of 3,2%. The group said it would continue with the on-going channel expansion project were the bank is setting up infrastructure which includes opening new branches, redecorating branches and commissioning of new point of sale terminals.