Concentration risk arises where there is a heavy exposure to a particular counterpart. This may be an individual, company or sector. The bank says its deposits have grown by 6% over the same period.
Barclays Zimbabwe MD, George Guvamatanga, told shareholders at an annual general meeting held in Harare on Wednesday that the policy was working well for the bank.
Barclays is viewed as a relatively safe bank in the market and attracts a sizeable chunk of the deposits, but maintains a prudent lending policy. The bank said it would continue to follow a “safe bank model”.
Guvamatanga told shareholders that the bank had converted statutory reserves into government bonds yielding between 2,5% and 3,5% interest following the offer by the Reserve Bank to convert these balances.
This development, Guvamatanga said, was adequately covered as a post balance sheet event in the annual report.
The regulatory prudential liquidity ratio was raised to 27,5% from 25% by March 31 this year and 30% by end of May.
“Barclays is already compliant with this requirement,” said Guvamatanga.
He said at 76,8%, the bank’s liquidity ratio was well ahead of regulatory benchmarks and reflects the bank’s thrust to ensure it meets customer payments timely regardless of the size of amounts they wish to settle.
“Capital is well above regulatory threshold and responding to business performance,” he said.
The bank said it would continue to grow a quality loan book, which Guvamatanga said was key to sustaining quality earnings while continuing to grow the quantity of those earnings.
Guvamatanga said overall, market liquidity had improved with a reduction in settlement times.
In the year to December 2011, the bank made a modest profit of US$1,4 million compared to a loss of US$1,2 million in 2010. Net interest income grew by 140% to US$6,7 million, but still constituted only 17% of total income.
Non-funded income, which is made up of such things as cash withdrawal fees and commission income, was 65% of total income. Total loans increased by 36% to US$59,5 million while the loans-to-deposit ratio improved slightly from 24% to 27%. Most of the loans were wholesale and corporate loans while personal loans made up only 7% of the loan book.
The bank’s management said it would only consider increasing personal loans if the environment allowed it. Home loans, for example, were only viable with a longer tenure and a lower interest rate, management said. — Staff Writer.