Private sector development has taken centre-stage in the country’s industrial policy with issues of funding and the involvement of the local financial services sector continuing to make headway at various fora. One of the country’s biggest financial institutions, ZB Financial Holdings, has been active in supporting local industry. Zimbabwe Independent reporter Nyasha Chingono (NC) caught up with chief executive Ronald Mutandagayi (RM, pictured) to discuss the bank’s private sector engagement programmes in light of the economic thrust of economic revival and double-digit growth prospects. Below are excerpts of the interview:
NC: What is ZB Bank’s policy on private sector funding and how does the financial institution fit into the country’s quest for industrial revival?
RM: We are very excited, we are an institution that should be serving the local market so we are quite excited about the private sector and the new dispensation, that it is beginning to generate business opportunities. There is growth that’s being experienced all round and we are looking at those opportunities, we are engaging the companies that are seeing growth so that we can participate in the growth of the Zimbabwean economy.
We want to see the expansion of our loan book but, as you know, the expansion of the loan book comes with risk, so our risk management will obviously be more cautious because of the economy. But I have no doubt that the economic environment is improving.
NC: How much has ZB Bank spent on the private sector and how are you planning to improve the deposit-to-loan ratio notwithstanding economic risk?
RM: It’s difficult to be able to put a number to it; I think it’s a function of the absorption capacity of the economy. You may have funding, but you may not have takers. We are currently targeting a deposit-to-loan ratio of 80%, we are currently sitting on 20% which is very low, meaning, we are taking deposits but we are not able to on-lend the money. So, 80% ratio would be a reasonable figure for an institution.
NC: What is the size of your loan book as compared to last year and how are you managing the risk factor?
RM: Our loan book has roughly remained flat. As we reported in the December 31 financials, we were sitting around US$120 million, we are hovering around that number, there hasn’t been any significant growth, the basic reason is obviously the performance of the economy has not allowed us the opportunity to grow the loan book. But we are aggressively looking at opportunities to increase exposure to the local industry.
NC: Have you managed to secure new lines of credit in 2018?
RM: As I reported during our analyst briefing, we had almost concluded a US$20 million export facility with a regional bank, it’s still being finalised and it will be ready for draw-down in a few weeks. We have concluded a US$10 million facility with a power utility, again it’s just about to be drawn down, we are finalising on the documentation now.
NC: What are your total borrowings against the capacity to service them?
RM: Our deposits have been hovering over US$350 million, as you know that the market is flush with funds, arising from the maturity in Treasury Bills, we have been able to deploy part of that money in the loan, but we have also been able to deploy the money on our TB portfolio.
NC: How do you see your revenue spread out in the outlook?
RM: We think that the outlook period is going to improve. The open for business mantra has found resonance with the local and international partners so we think that things can only improve. We are looking forward to a better 2019 and even a more glorious 2020.