BARCLAYS Bank Zimbabwe has managed to maintain a clean loan book with a rate of non-performing loans (NPLs) of 2%, the best in the industry, but the financial institution is still punching below its weight in terms of lending.
A survey by the Zimbabwe Independent has shown that Barclays comes third only after Metbank and ZB Building Society which have rates of 1% and 0% respectively.
ZB Building Society has nil given the fact that it does not have any NPLs, Metbank only has US$1 million worth of NPLs while Barclays has US$3 million in NPLs.
In terms of deposits, the bank accounts for US$450 million of the industry’s US$8,6 billion, but this is not mirrored in the size of the bank’s loan book which is at US$112 million.
When expressed as a ratio in terms of deposits, Barclays’ loans come in at 25%. This ratio depicts the percentage of deposits that have been issued as loans.
This analysis for ranking purposes has assumed that the higher the ratio the better even though the funds could be committed elsewhere to give a return, hence it does not mean that a low ratio is due to funds not being made productive.
Building societies are expected to rank highly in this regard as their core business is mainly the issuing of mortgage loans.
FBC Building Society came first with a ratio of 82% followed by National Building Society (70%) and Central Africa Building Society at 64% respectively.
Stanbic (27%), StanChart (22%) and Steward (10%) indicate a cautious approach to lending given their significant deposits.
The survey also showed that Barclays has one of the best interest expense-to-interest income ratios at 1,4%.
The ratio shows the extent of the margin between the cost of deposits and funds issued as loans or government security. It could be equated to gross profit in other entities.
The smaller the ratio, the more profitable the bank is expected to be or, rather, the more efficient it is in managing its deposits and loans.
Stanbic tops the rankings with 0,8%, followed by StanChart (0,9%), Barclays (1,4%), and Steward rounds up the top 4 with a ratio of 1,8%.
Barclays is also among the six banks that have a sub-1% cost of funds at 0,07 which can be taken to mean that they do not have challenges attracting deposits as the market confidence in their entities is very high.
The bank has a strong balance sheet and is well-capitalised at US$88 million.
Barclays is considered among the mid-ranking banks with a capital adequacy ratio of 28%.
Last year, First Merchant Bank (FMB) of Malawi acquired 43% shareholding in the Zimbabwe Stock Exchange-listed bank.
FMB holds considerable stakes in several banks in southern Africa. It holds a 70% stake in Capital Bank SA, a licensed commercial bank in Mozambique and 38,6% shareholding in Capital Bank incorporated in Botswana. It also has a 49% stake in First Capital Bank of Zambia.
FMB intends to invest at least US$15 million in Barclays Bank Zimbabwe, with US$6 million of that to upgrade the bank’s information technology systems.
The bank will continue to operate under the Barclays brand with the FMBCH brand being introduced over a subsequent two-year period.
Other major shareholders in Barclays are Old Mutual and SCB Nominees which hold 5,11% and 4,52% respectively. — Staff Writer.