MBCA Bank, a unit of South Africa’s Nedbank, has positioned itself to take advantage of opportunities that may be presented by the political and economic environment after the harmonised elections.
BY KUDZAI CHIMHANGWA
Bank chairman, Willard Zireva said the bank continues to be actively engaged on the indigenisation process to ensure that “an acceptable solution” is reached despite the uncertainty caused by the indigenisation law.
“The major shareholder remained committed as evidenced by the increased support in the utilisation of the Nedbank on and off balance sheet lines of credit,” said Zireva.
MBCA continued to access lines of credit from international financial institutions including Afreximbank and German-based, Commerzbank.
The bank posted after tax profit of US$2,104 million for the six-month period ended June 30 2013 compared to US$2,077 million over the same period last year.
This was despite the full implementation of the Memorandum of Understanding (MOU) where interest rates, service and maintenance charges for specific customers were reduced and limited activity in the economy.
In February this year, the central bank and financial institutions in the country signed a MOU, where bank charges and interest margins were capped.
“Despite the capping of interest rate margins at 12,5% per annum, interest rates in the economy have remained generally high, given the high cost of funds as financial institutions competed for the limited liquidity circulating in the economy,” he said.
The bank’s annualised net interest margin stood at 11,4%.
Net interest margin measures net interest income as a percentage of interest-earning assets.
The higher the percentage, the better a bank is at managing its assets and interest requirements.
Loans and advances to customers increased by 10,5% to US$97,446 million during the same period.
The bank’s total deposits also grew by 5,4% from US$140 324 million in December 2012 to US$147 million, as at June 30 this year.
MBCA’s cost to income ratio during the period under review stood at 76%. This was in comparison to the ratio of 73,6% recorded as at December 31 2012.
The cost to income ratio is important in determining a bank’s profitability and also gives a clear view of how efficiently the bank is being run.
The lower the cost to income ratio, the more profitable the bank is. In the bank’s case, costs rose at a higher rate than income.
“The increase in operating expenses was mainly as a result of the increase in statutory deposit protection insurance and marketing expenses, as the bank sought to increase its visibility to the targeted market segments and also contribute to the betterment of the communities in which it operates,” said the bank’s managing director Charity Jinya.