ZB Bank has second highest NPLs

ZB Bank has the second highest ratio of non-performing loans (NPLs) at 12%; a survey of the 18 banks operating in the country by the Zimbabwe Independent has shown.

The ratio simply indicates the percentage of loans that are in default or close to being in default. A smaller percentage is ideal and shows a possible good credit vetting of borrowers by the financial entity. It basically reflects the quality of a bank’s loan book. Agribank has the biggest ratio of NPLs to loans at 14%. Other banks with high ratios are BancABC (11%), CBZ, Steward, and ZB who all have 12% each. The rest have single-digit ratios and ZB Building Society has nil, given that it does not have any NPLs.

ZB bank accounts for just 2,83% of the total US$3,4 billion loans in issue as at December 2017. The bank has US$12 million worth of NPLs. The bank’s US$355 million deposits account for a meagre 4% of the industry’s US$8,6 billion.
The survey showed the 18 institutions cumulatively held US$10,5 billion in assets, with the biggest banks by asset base being CBZ (US$1,9 billion), Stanbic (US$1,4 billion), CABS (US$1,2 billion) and Standard Chartered (US$816 million), accounting for 52% of all bank assets.

Mid-tier banks by asset base are FBC (US$558 million), Barclays (US$556 million), Ecobank (US$547 million), BancABC (US$530 million), Steward (US$461 million), ZB Bank (US$442 million), and NMB (US$423 million). The smallest bank by asset base is ZB Building Society with a modest US$42 million.

ZB bank channelled 27,5% of deposits to loans. FBC Building Society came first with a loans-to-deposits ratio of 82% followed by NBS (70%) and CABS at 64% respectively. Banks such as Stanbic (27%), Barclays (now First Capital) (25%), StanChart (22%) and Steward (10%) indicate a huge cautious approach to lending given their significant deposits.

ZB Bank has committed 44% of its deposits to government securities. Government’s security-to-deposit ratio indicates the percentage of deposits that has been committed to government securities. It could also reflect the level of risk that an entity is avoiding from the other borrowers on the market who might be less secure than the state. Steward tops the rankings with 72%, followed by FBC BS at 57% and CBZ at 52%, BancABC is fourth with 49%. Those with lower ratios include Stanbic and NBS at 20%, CABS (18%), FBC (15%), Metbank (8%) and, lastly, ZB Building Society at nil.

The bank has the eighth highest holdings of government paper at US$156 million. These are instruments that banks take up when lending to the state, and they can be in the form of Treasury Bills or bonds. They constitute a form of loan that is just classified separately on the financial statements.

Their yields are not usually that high owing to the stability or the secureness of the borrower or guarantor. CBZ is the biggest lender to government, with almost a billion dollar worth of government securities, while StanChart comes in second with US$271 million.

The bulk of the banks that balances ranging from US$69 million to US$250 million. ZB Building Society does not have any government securities on its books.