Mixed bag in ZB first half performance

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By Alois Vinga

INCREASED local market risks associated with the country’s economy have prompted ZB Bank’s foreign premiums to reduce to minus 27% against a background of increased non-interest income in the first half of 2019.

The diversified financial institution’s analysts’ presentation released Monday observes that ZB Bank failed to sustain revenue growth from its foreign reinsurance market.

“Foreign premium contribution reduced from $66 million earned in the first half of 2018 to $48 million in 2019 owing to the increase in exchange risk on the local market. Total reinsurance expenses increased by 53% on the back of a 171% increase in net claims,” the report shows.

During the period under review, a 116 % increase in commissions’ related revenue was realised.

However, retro-cession premiums reduced by 58% while the technical expenses ratio remained at an acceptable level at 83%.

Locally generated premiums recorded income of $15 million, up from $9 million in the half year of 2018.

Net life assurance income improved by 37%, driven by a 15% increase in gross premiums which was partially offset by a 7% increase in policy benefits and reassurance premium commission expenses as expense ratio also improved from 51 % recorded in the first half of 2018 to 41 % in 2019.

The financial institution’s profit increased by 364 % from $9 million earned in the comparative period last year to $43 million in the corresponding period this year.

Notably, banking fees and commissions improved by 39%, benefiting from higher transaction volumes and a review of charges effected in the second quarter of 2019. Fair value gains tracked general share price performance on the Zimbabwe Stock Exchange.

“Other income is largely made up of foreign exchange gains amounting to $30 million (while) fair value and foreign exchange gains are largely a result of on-going value discovery mechanics in the underlying markets,” added the report.

The financial institution also gained from coupons on primary market acquisitions that ranged between 7% and 10% whilst discounts on secondary market trades ranged between 5% and 18%.

There was also notable reduction in the loan book where Non-Performing Loans (NPL) reduced by 44% from $7 million at 31 December 2018 to $3 million at 30 June 2019, the movement having been a result of concerted recovery efforts.

The NPL ratio improved from 4.6% at 31 December2018 to 1.2% at 30 June 2019 as impairment loss provisions increased by 50% from $14 million at 31 December 2018 to $21 million as at 30 June 2019.