BY TATIRA ZWINOIRA
ZB Financial Holdings (ZBFH) posted an increase in profit after tax of 364% to $43,3 million for the half year ended June 30, 2019 buoyed mostly by foreign currency exchange gains.
The profit was recorded from the $9,4 million realised in the comparative period in 2018.
“A significant contribution to other operating income was reported in the form of exchange income, having arisen from the movement in the exchange rate, which increased by 216% from the maiden rate of US$1:ZWL$2,5 in February to US$1:ZWL$7,895 at the end of June 2019. The total unrealised exchange gain as at 30 June 2019 amounted to ZWL$29,4m,” ZBFH CEO Ronald Mutandagayi said in a statement accompanying the group’s financial results on Thursday.
In February, Treasury adopted the real time gross settlement (RTGS) dollar as a local currency and later in June reintroduced the Zimbabwe dollar as the sole legal tender. That meant that ZBFH was able to make gains from the resultant conversion from money they had into the local currency.
“We have the foreign exchange rate which when we translated gave us some foreign exchange gains, so those are the main components. The change in currency would have played a part because you would have to translate your fixed assets base, foreign exchange positions and trading in foreign currency is a normal activity for a financial institution,” Mutandagayi told Standardbusiness.
Despite this, the ZBFH CEO insisted that the group still recorded real growth, having realised interest income from increasing their loan book to ZWL$314,04 million in the period under review from a 2018 comparative of $124,53 million.
“Net interest income from lending and trading activities of ZWL$14,3m up to 30 June 2019 was 40% better than $10,2 million reported for the corresponding period in 2018,” Mutandagayi said.
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However, he said future lending would be extended only to customers with a positive rating.
ZBFH’s total assets grew by about 90% to ZWL$1,1 billion for the period under review from a comparative of $579,82 million in 2018. Earning assets grew by 60% to close at ZWL$709,1 million in the period under review from a 2018 comparative of $444,54 million.
“Over and above the general inflation pull factor on monetary balances, total asset growth was also induced by the restatement of foreign-denominated balances, which were previously maintained at par with the Zimbabwean dollar,” Mutandagayi said. In terms of liquidity, ZBFH was able to maintain an aggregate liquidity ratio above 80% throughout the period.
Concerning basic earnings per share, there was an increase to 26.09 cents in the period from 0.058 cents in the comparative 2018 period.
“Operating expenses increased by 75% to ZWL$48,8 million for the half year to 30 June 2019, from a level of $27,9 million recorded in the corresponding period in 2018. The increase has largely trailed the inflation index and indicates the build-up of pent-up cost expansion pressure going forward,” Mutandagayi said.
Total deposits grew by about 36% from to ZWL$533,8m as at June 30, 2019 from a 2018 comparative of $391,5 million.
