The bank’s chairman Wilson Manase sees it sustaining the performance going forward. The bank’s profitability was buoyed by the significant contribution of net interest income of US$8,3 million against US$2,5 million in the prior year, indicating an improvement in the bank’s lending activities. Commission and fee income stood at US$7,2 million.
“The improved bottom line was a result of aggressive deposit mobilisation and diversification of the bank’s income streams,” said Manase. Deposits grew from US$43,8 million as of 31 December 2010 to US$78,5 million in spite of the liquidity crunch slowing down the pace of economic recovery. Metropolitan’s cost to income ratio has however remained high at 77%, with operating expenditure totalling US$11,8 million.
“While cost-containment remains the buzz word sector-wide, the introduction of mobile banking and the upgrading of Met Bank’s core banking system was always going to present headaches to management,” said the chairman.
The return on shareholders’ equity stood at 13% and subsequently, the shareholder’s equity has increased by the same percentage to US$21,3 million, which is well above the regulatory capital requirement of US$12,5 million set by the Reserve Bank of Zimbabwe for commercial banks. Its liquid asset ratio, very high at 35%, is a result of a conservative liquidity management strategy, especially at a time the market ran into liquidity challenges during and after the festive period.
The bank’s balance sheet increased by 61% to US$105 million and this growth was largely funded by the massive growth in customer deposits that grew by 81% to end the year at US$73 million. The banking sector, which many believe is over-banked, has become a very competitive environment as the 26 banks are scrambling for the US$3,3 billion deposits that are estimated to be in the market.
Metropolitan acknowledged the existing tight liquidity conditions in the market due to the high magnitude of transitory deposits and short term loans bearing high interest rates.
“The country remains beset by liquidity challenges due to high proportions of transitory deposits and short term loans at interest rates way above world market comparatives despite increased bank deposits,” the bank said in a statement accompanying its financial results. Interest rates have generally remained very high in Zimbabwe, with average borrowing rates in excess of 20% per annum.
Metropolitan Bank however contends that its low impairment charges, at only 0.4% of its loan book, are a product of tight management of risk and sizeable recoveries of problem accounts during the course of 2011.
“Tight management of risk coupled with pro-active management of accounts has resulted in low levels of bad debt provisions,” said the bank.
The bank only provided for US$293 152 on loan impairments, saying the bank’s loans were highly collaterised. Looking into the future, Manase said MetBank’s traditional operations in the retail banking sector would continue to grow along with increased focus on small to medium size enterprises, treasury and corporate banking. “We believe retail banking is at the heart of the bank’s activities.
Over the coming months, we will continually strive to provide our customers with innovative products ranging from special savings accounts, mortgages, remittances and customer financing including cars, personal loans and credit cards,” said Manase.
He said the bank would also continue to develop more effective ways to service its customers by, among other things, establishing borrowing facilities to enable them to fully resuscitate their operations. “We are confident that with the high calibre of our staff and growing business portfolios we will be able to deliver satisfactory financial results,” Manase said.