AGRIBANK reported a profit after tax of US$2,1 million for the half year to June 2016 from a US$3,7 million loss over the comparable period in 2015.
By Fidelity Mhlanga
The bank’s CE Sam Malaba said profit was driven by the bank’s business growth strategies, the conclusion of staff rationalisation, injection of capital by the shareholder in 2015, acces to the African Export and Import Bank Trade Debt Backed Securities (Aftrades) facility and transfer of some non-performing loans to the Zimbabwe Asset Management Corporation (Private) Limited( Zamco).
Zamco was established by the Reserve Bank of Zimbabwe in July 2014 to deal with rising non-performing loans (NPLs) in the banking sector.
African Export and Import Bank Trade Debt Backed Securities is a facility supported by Afrexim Bank was launched in March last year with an initial pool of US$100 million to help ease liquidity problems in the banking sector.
Malaba said further capitalisation would also underpin agriculture financing and development interventions for enhanced national food security.
In this regard, he said the bank is engaging the shareholder, pursuant to the objective of further capitalisation.
“Beyond the near term the bank will seek further capitalisation level to tier 1 bank level of US$100 million as a minimum regulatory requirement for the bank to offer a full range of banking and financial services and attract suitable lines of credit, now that the bank is no longer under the Office of Foreign Assets Control (OFAC) sanctions,” Malaba said.
Going forward, the bank anticipates the clearance of external payment of arrears will unlock international support and enhanced private sector partnerships in agriculture financing.
“Agribank envisages increased international support and enhanced private sector partnerships in agriculture financing following the clearance of external arrears payment,” Malaba said.
Net interest income at US$6,49 million for the first half was 89,2% higher than US3,43 million recorded in 2015 driven by diversified lending.
Non-interest income marginally increased by 2% from US$7,05 million in 2015 to US$7,18 million in 2016.
Cost containment measures resulted in operating costs, declining by 16% to US$10,88 million in the first half of 2016 compared to US$13 million over a similar period in 2015.
The bank’s liquidity ratio at 54% surpasses the minimum regulatory requirement of 30%.
The cost-to-income ratio for the period was 77% ,staff costs-to- income ratio at 39% and staff costs to total costs was pegged at 48%.
Following government injection of US$30 million capital in May last year, the bank’s was capitalised at US$33,8 million as of end of June this year.
Having supported 1668 farmers under 36 different projects,the bank is raising US$20 million agro bills in conjunction with FBC bank is for the 2016/2017 agricultural season.