ECOBANK Zimbabwe was last night crowned the best bank in the country during the 22nd edition of the Banks and Banking Survey.
The survey is published by the Zimbabwe Independent, the country’s largest circulating business weekly, with support from the Zimbabwe Stock Exchange-listed First Capital Bank.
Ecobank, which extended its footprint into the Zimbabwean market about a decade ago, has firmly established itself as one of the country’s most influential financial services providers.
The BBS’ high level adjudication panel said the pan-African bank outshined its peers because of its lean cost structure, competitive advantage in trade finance, international payments and funding, which have spurred it to the top echelon of banking in Zimbabwe.
“The bank has been pivotal in cushioning the economy, particularly in facilitation of international payments at a time the country faced scarcity of forex ensuring that critical supplies for the country are maintained,” lead adjudicator, Equity Axis managing director Respect Gwenzi said.
“In the period under review, the bank stood out for its ability to streamline and maintain a lean cost structure resulting in an unmatched profitability compared to other banks.”
Stanbic Bank was voted the first runner-up, while CBZ Bank came in as the second runner-up.
Admore Kandlela, chief executive officer at the mass-market focussed People’s Own Savings Bank (POSB), was capped Bank CEO of the Year.
Gwenzi said for the banking sector, the years 2020 and 2021, were challenging, with the global financial system battling to shake off serious threats posed by the Covid-19 pandemic, while the domestic landscape was unsettled by currency volatilities.
Commenting on Stanbic, the lead adjudicator said they were impressed by the bank’s ability to capitalise on disruptions to stimulate growth.
Gwenzi said Stanbic spurred its digitisation efforts during the period under review, tapping from its parent bank and retaining an urge on the market.
He said Stanbic leveraged its strong asset base and United States dollar deposit base to spur interest earnings.
Commenting on CBZ Holdings, Gwenzi said for over two decades, Zimbabwe’s biggest financial service outfit had remained pivotal in championing growth through funding of critical sectors.
“In most recent years, CBZ experienced a successful transformation which ushered in not only new management, but a new direction for the company,” the lead adjudicator said.
“The new management has stayed true to its promise and has since cleaned the bank’s historically contentious loan book and introduced new areas of focus. Its support for the agricultural sector is already yielding fruits, as evidenced by the good harvest in the 2020/21 season. In the period under review, the bank’s earnings swelled driven by a strong resurgence in funded income.”
The survey comes in the midst of complexities presented by the emergency of Covid–19, which was declared a pandemic in early 2020 fuelling macro realities to Zimbabwe’s economy, which had already contracted by about 10% in 2019. For banks, these disruptions led to the spontaneous increase in innovation, a revolution which had already begun a few years back having been primarily induced by cash shortages for local banks.
The survey noted that all banks invested in latest core banking systems, innovated and changed processes such as account opening applications and loan applications, increasing their presence on social media, and positioning themselves closer to communities for swifter responses.
Most banks streamlined their workforce, a restructuring exercise, which entailed rationalisation and upskilling digital skills for retained workforce.
“The level of physical cash to total money supply in the economy trended below the global accepted threshold, by a wide margin. The cash shortages sped up innovations such as mobile and internet banking and the use of point of sale machines,” Gwenzi noted.
“Huge investments in core banking systems saw an upgrade and expansion in platforms which increased online service offerings and reduced reliance on brick and mortar or in-person banking in general.
“The results of these manoeuvres are clearly seen through the survey’s review of income composition from the latest financials.”
Gwenzi said the banking sector fee and commission income maintained a lead ahead of funded income in terms of income contribution.
At 50% contribution as at half-year 2021, which is up from about 47% in the same period in 2020, fee and commission income asserted its position as the anchor income line, the lead adjudicator said.
Traditionally, funded income has been the cornerstone of banking and is one of the key reasons why banks exist, he noted.
During the period under review, banks stepped up their efforts to sweat balance sheets through increasing loan book exposures, resulting in a relatively higher loan to deposit ratio.
“The ratio however remains below 50% against a benchmark of 75%. Banks have been jittery to expand loan books due a number of factors primarily the weak environment characterised by inflationary pressure. Inflation cancels out yield, given a constrained interest rate regime,” the Equity Axis boss said.
“Moreso, the weak environment increases the risk of default on loans. On the customer side, the allure of Zimbabwe dollar-denominated loans in an environment that is dollarised, has been significantly low, particularly for sectors such as mortgage.
“Interestingly, data also shows that banks have been accruing US dollar deposits on nostros, but without extension as credit facilities to customers. The conservative approach is risk-driven and in line with prevailing macro realities.”
FBC Bank Limited scooped the Digital Innovation Award, while Nedbank Zimbabwe and POSB Bank were the first and second runners-up, respectively.
CABS was crowned Building Society of the Year, while Steward Bank won the Sustainability Award.
NMBZ Bank Limited won the Overall Corporate Governance Award and Standard Chartered Bank Zimbabwe scooped the Social Cluster Award.