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Bank profits increase 12-fold, US$ loans overtake Zim$

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By Alois Vinga


THE banking sector’s profitability defied the odds, increasing 12-fold during the first half of 2022 on the back of rising US$ loan advances, which have since overtaken the Zim$ component, the latest Mid-Term Monetary Policy Statement has revealed.

The blueprint shows that profitability rose significantly, demonstrating the sector’s resilience in the face of rising challenges.

“The banking sector recorded un-audited aggregate profits of ZW$181.25 billion for the half-year ended 30 June 2022, a 12 fold increase from aggregate profits of ZW$15.09 billion reported in the corresponding period in 2021,” the MPS said.

However, growth in banking sector income was largely spurred by non-interest income, which constituted 79,03% of total income comprising mainly revaluation gains from investment properties 25,7%, fees and commissions 21,47%, as well as translation gains on foreign currency denominated assets 20.38%.

During the period, Banking Sector Loans and Advances increased 2,64 times from ZW$229,94 billion as at 31 December 2021 to ZW$603,14 billion as at end of June 2022, largely attributed to the translation of foreign currency denominated loans.

“Foreign currency denominated loans constituted 65,87% of total banking sector loans, an increase from 36,87% reported as at 31 December 2021.

“During the period under review, financial intermediation as measured by loans to deposit ratio improved from 48,27% recorded as at 31 December 2021, to 53,69% as at 30 June 2022. The banking sector continued to support the productive sectors of the economy as evidenced by loans to the productive sectors, constituting 76,29% of total loans as at 30 June 2022,” the MPS said.

On the back of the gains, banking sector asset quality remained satisfactory to the effect that the average non-performing loans (NPLs) to total loans ratio for the banking sector was 1,50%, against the generally acceptable international threshold of 5%.

As at June 30 2022, interest income from loans and advances contributed 18.22% compared to 40.96% of the total income in June 2021.