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ZB Financial Holdings’ profit plunge

ZB Financial Holdings’ after tax profit tumbled 81% to US$1 million in the half year to  June 30 2012 owing to limited investment opportunities, a market-wide liquidity crisis and high operating expenses.

Report by Gamma Mudarikiri
“A narrow band of investment opportunities against a sharp market-wide liquidity crisis restricted growth in interest margins as significant amounts were kept in non-productive cash or near cash instruments in order to meet customer demands,” Group CEO Elisha Mushayakarara said in a statement attached to the group’s financial results.

Profit after tax in the period dropped to US$1 million from US$5,1 million in the same period last year.

The decline in profit was also attributed to operating expenses which in the period surged 44% to US$27,3 million, driven by movement in staff-related expenses.

A market-wide credit squeeze worsened the group’s loan loss provision to US$2,3 million, from US$1,7 million in the comparative period. Earnings per share also plunged from 0,02 US cents compared to 0,01 US  cents the previous year.

Total income in the period, however, surged 11% to US$40 million, up from US$36,1 million recorded in the prior year.

The loan-to-deposit ratio remained conservative at 61% while deposits were generally transitory, Mushayakarara said. He said the group would continue to increase its points of presence, adding new branches were opened in Karoi, Kariba and Redcliff in the first half.

In the period under review, the bank also rolled out 10 new ATM machines and 300 Point of Sale machines. The group’s technology enhancement project was expected to commence by the third quarter of the current financial year.

Going forward, ZB’s focus would be on risk management, following  the successful implementation of a new suite of banking and treasury management systems. The group was confident it would meet the new minimum capital requirements announced by the Reserve Bank of Zimbabwe (RBZ), within the given timelines. ZB Bank is currently capitalised at US$18 million.

Last month ZB Holdings announced plans to merge its bank and building society, a move to meet the new US$100 million minimum capital requirements by 2014.

ZBH had sold some of its Springvale land where 395 residential stands were developed.The financial holdings group was working on raising US$150 million, adding it was in discussions with an international financial institution as a strategic partner to raise capital.

The banking unit, ZB Bank was  anticipating increasing its deposit market share to at least 10% with the on-going countrywide branch roll out project. The bank’s market share of deposits is currently at 6,3%.

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