THE Zimbabwe Allied Banking Group (ZABG) has recorded a profit after tax of $26,7 billion during its first five months of operations, contrary to analysts’ claims that the bank was going to coll
However, in terms of inflation adjusted accounting the group made a loss of $98 billion.
Chairman Cornelius Sanyanga said the group performed satisfactorily despite the challenges it faced.
“I am pleased to note that despite the huge challenges the bank has been facing right from inception,” Sanyanga said, “ZABG has made steady and satisfactory progress.”
The bank published its maiden financial results this week.
“The group has achieved modest growth in terms of deposits, loans and overall market share and profitability.”
Sanyanga said in line with the change in market conditions, the bank is looking at increasing the contribution of non-interest income.
The ZABG was formed amid controversy after Reserve Bank of Zimbabwe governor, Gideon Gono, decided to merge troubled Barbican Bank, Royal Bank Zimbabwe and Trust Bank under the Troubled Bank Resolution Framework.
The bank commenced operations on January 31.
The ZABG was established as a solution to assist depositors and creditors who had their investments trapped in the troubled banking institutions.
The bank assumed the liabilities of Barbican, Royal and Trust against an offer of ZABG shares and the liability was matched with the assets purchased from the three troubled banks.
The group is currently involved in a litigation process that was instituted against it by Trust Holdings Ltd (Trust), Royal and two of its shareholders.
Trust and Royal were seeking an interdict to stop the sale by the curators of the assets of the two troubled banks.
However, the High Court ruled in favour of the ZABG and the curators in both cases and dismissed Trust and Royal’s applications with costs.
The case was taken further to the Supreme Court where they are still awaiting judgement.
The ZABG is also involved in legal proceedings with some former employees of Barbican who are claiming that they became employees of the bank when it purchased assets from the curators.
“The bank’s lawyers are confident that the matter would be successfully defended,” Stephen Gwasira, the chief executive officer of the ZABG said.
The ZABG’s asset base stood at $647,7 billion while its capital adequacy ratio as at June 30 was 57% against a minimum of 10% as required by the central bank.
Gwasira said the group’s cost to income ratio had been adversely influenced by high start-up costs.
He said mandatory salary increases last month are expected to further increase operating costs.
The ZABG has operations in retail and wholesale banking, treasury, leasing, asset management and stock broking.
According to the group’s unaudited interim results, most of its divisions performed well.
Gwasira said significant progress has been made in growing the agricultural book at their wholesale division with the team writing a sizeable book comprising both concessionary facilities and those at commercial rates.
The leasing division is offering premium finance, leases, factoring, invoice discounting, business loans and stocking plans and investments.
“Notwithstanding the economic challenges facing the country, there is evidently demand for lease hire finance as business strives to hedge against inflation,” Gwasira said.