THE demerger has resulted in two distinct companies listed on the Zimbabwe Stock Exchange namely Lifestyle Holdings Ltd and TN Bank Ltd. TN Bank Ltd prospects The inception of multi-currency system and the formation of the Government of National Unity in 2009 have significantly changed the economic landscape of Zimbabwe. In March 2009, macro-economic conditions improved, hyperinflation was halted and new policies and budget reforms were implemented. This saw the banking industry’s net income growing from US$9,8 million in December 2009 to US$85,5 million as at December 31 2011, according to the RBZ.
Total banking sector loans grew from US$692 million to US$2,7 billion during the same period, while deposits grew from US$1,3 billion to US$3,02 billion. The sectors’ ratio of provisions to adversely classified loans was 82% at the end of last year, reflective of the high level of prudence exercised by banking institutions.
Combined industry capitalisation has grown from US$382,2 million in December 2009 to US$509,7 million as at December 31 2011 while 20 out of 25 operating banking institutions were in compliance with the prescribed minimum capital requirements as at December 31 2011. The banking sector asset base also grew 30% to US$4,7 billion as at December 31 2011 from US$3,6 billion in 2010. Increased liquidity is expected to improve the deposits and assets held by the banks particularly as a result of savings and private sector credit that TN Bank is already well positioned to exploit.
As the wealth holdings by institutions and individual investors improve, the demand for banking services will improve. TN Bank has a client base and infrastructure suitable for taking advantage of the anticipated opportunities.
The envisaged recapitalisation and listing of TN Bank will give it a strong base and capacity to gain market share and grow. TN Bank will increase the number of branches in major cities of Zimbabwe, focusing on customer services and profitability. In line with the banks vision of offering financial convenience to Zimbabweans, wherever, and whenever, the bank will roll out 16 more branches in the short to medium term to add to the current 27 branches.
TN Bank realised that mobile money is a way to serve a vast swathe of customers who are otherwise out of reach. Generally speaking, the low-income segment cannot be profitably served using the traditional banking model, in which bricks-and-mortar branches are the primary point of contact between customers and the financial institution. It is not economical to build and operate bricks-and-mortar branches in areas where the poor live because of the high fixed costs of maintaining such branches. Even if such a branch were busy all the time, the fees the bank would have to charge their clients, relative to the size of those clients’ transactions and/or deposits would exceed the customers’ willingness to pay.
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This problem is exacerbated in rural areas that have low population density. In contrast, mobile money services allow users to cash in and cash out using a network of independent agents, leveraging existing infrastructure to serve customers more cheaply. TN Bank is privileged to have Econet as both a shareholder and partner. TN Bank intends to use the existing subscriber base of Econet currently at 6.6 million as an arsenal to offer banking products to every nook and cranny of Zimbabwe. The first step towards this goal is the recently launched Eco-Cash product where TN Bank is the partnering bank.
Further opportunities in airtime financing, phone handsets financing and leasing, the financing of computers and software, micro- lending, consumer lending, savings accounts, and many others shall be pursued by TN Bank Limited from the platform presented by this strategic relationship.
