HomeLocalHighveld chalks up $774m profit

Highveld chalks up $774m profit

Staff Writer

ONE of the country’s newest players in the financial services industry, Highveld Financial Services Ltd (Highveld), has posted an after-tax profit of $774 million in historical terms in its maid

en year in operation.


Highveld was registered as a discount house last year and is chaired by businessman Edmore Ndudzo.


The chairman said the $774 million was for the first nine months ending December 31 and had been achieved despite the turbulent operating environment as the economy continued to grapple with numerous challenges.


“Hyperinflation, acute foreign currency shortages, fuel shortages, cash shortages and low business confidence, among other problems, adversely affected overall economic activity resulting in real gross domestic product (GDP) declining by an estimated 13,2% in 2003,” Ndudzo said. “Under this difficult environment the company managed to post an after tax profit of $774 million.”


Shareholder funds at Highveld stood at $1,2 billion in historical terms, while total assets were $12,9 billion.


Basic earnings per share were 258 cents in historical terms and headline earnings stood at 242 cents.


“Market acceptance and confidence in Highveld Financial Services, a registered discount house, have been remarkable during the first nine months of operations,” Ndudzo said.


He said the new monetary policy regime announced in December had introduced far-reaching changes in the conduct of monetary policy.


The overall objective of the policy was to reduce inflation to below 200% by December this year, stabilise the foreign exchange rate and maintain a stable financial system in the country.


“Under the new monetary policy the Reserve Bank discontinued automatic liquidity support for banks and set up a Troubled Banks Fund to assist banks facing liquidity problems,” Ndudzo said. “To strengthen supervision and surveillance, the central bank took over the responsibility of issuing and withdrawing licences for banks, asset management companies and microfinance institutions.”


Furthermore, minimum capital requirements were raised to $10 billion for commercial banks, $7,5 billion for merchant banks and 45 billion for discount houses.


“However, for the various monetary policy measures to achieve the desired results, the existence of a complementary fiscal policy will be very critical,” Ndudzo said.


Fiscal developments during 2003 were out of line with the original budget estimates, which does not augur well for a supportive fiscal policy during 2004.


In August last year Parliament passed a supplementary budget authorising additional expenditure amounting to $619 billion.


The budget was presented by former Finance Minister Herbert Murerwa.

As a result, total expenditure for 2003 amounted $1,442 trillion compared to the original estimated of $782,4 billion.


However, revenue collections, at $1,141 trillion, were well above the original estimate of $540,5 billion, reflecting high inflation and higher collections on individual income tax and customs duty.


Government’s budget deficit for 2003 amounted to $301 billion compared to the original estimate of $242,9 billion.


“In the absence of external financial support, the domestic sector financed the entire budget deficit, thus partly contributing to the high money supply growth experienced in 2003,” Ndudzo said.

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