Banks’ core capital base up 19%

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ZIMBABWE’s banking sector aggregate core capital base went up 19,3% between June 2014 and June 2015 largely owing to retained earnings and fresh capital injections at some banking institutions.

Fidelity Mhlanga

Presenting his mid-term fiscal policy, Finance minister Patrick Chinamasa said core capital for banks went up from US$753,3 in June 2014 to US$899,1 million as at June 2015 buoyed by government’s injection of fresh capital in Agribank and ZB Bank Ltd to the tune of US$30 million and US$20 million, respectively.

According to Chinamasa, most banking institutions indicated a preference for the Tier 1 segment and are already instituting various measures to ensure compliance with the minimum capital requirement of US$100 million.

The Reserve Bank of Zimbabwe (RBZ) has established a dedicated credit reference registry unit within its banking supervision division to spearhead the operationalisation of the credit reference system.

The unit will coordinate the collection and data base maintenance of credit information from all banking and micro finance institutions for the credit registry.

“High credit risk in the banking sector is attributed to a combination of exogenous factors impacting on the performance of borrowers, as well as endogenous factors relating to credit risk management practices at some banking institutions,” Chinamasa said.

The RBZ has established a dedicated credit reference registry unit within its banking supervision division with a mandate to spearhead the operationalisation of the credit reference system.

The unit will coordinate the collection and data base maintenance of credit information from all banking and micro finance institutions for the credit registry.

The credit registry is mandated to promote efficient, timely and accurate credit information sharing, thereby enhancing credit risk management, governance systems and fostering credit discipline in the market.

Credit risk has remained a key component of the profile of banking institutions, with the ratio of non-performing loans to total loans ratio high at 14,52% as at end of June 2015.

The creation of the credit registry will go a long way in addressing information asymmetry in the credit market, thereby reducing over indebtedness in multi-banked clients.

RBZ has also established the Zimbabwe Asset Management Corporation to acquire non-performing loans to strengthen banks’ balance sheets and provide them with the liquidity to fund valuable projects, and making them attractive to access cheaper sources of funding.

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