ECOBANK Zimbabwe Limited recorded a near 35,5% drop in profit after tax to $2,42 billion during the half-year period ended June 30, 2022 after net monetary losses widened due to continued local currency volatilities.
The group made a profit of $3,75 billion during the comparable period in 2021.
In a statement attached to its financial report for the period under review, the Togo-headquartered bank said a net monetary loss of $7,33 billion was recorded, compared to $1,37 billion at the same time in 2021.
“A net monetary loss of $7,34 billion was recorded for the period, reflective of the composition of the bank balance sheet that was dominated by monetary assets and liabilities. Cost to income (CIR) remained in check at 30%,” chairperson Emmanuel Gwatidzo said.
“Liquidity, currency depreciation, rapid policy change implications and year-on-year inflation of above 191,6% from mid-term fiscal review indicate the business challenges, while firming commodity prices create opportunities,” he added.
Profit after tax was driven by non-interest income and foreign exchange earnings.
Keep Reading
- Dual economy Zim’s Achilles heel
- Village Rhapsody: How Zimbabwe can improve governance
- Dual economy Zim’s Achilles heel
- Scrap IMTT to save industry, govt urged
“During the period under review, non-interest income grew 96% from $4,84 billon to $9,47 billion while net foreign exchange income grew 116% from $2,83 billion to $6,11 billion to anchor the revenue performance,” managing director Moses Kurenjekwa said.
Non-interest income was driven by enhanced digital channels and platforms.
The contribution of interest income to the overall revenue was marginal as it increased by 31% to $7,04 billion as of the end of June from $5,39 billion recorded over the comparative 2021 period.
This was owing to depressed lending conditions and a prudent reclassification of assets.
Loans and advances grew about 146% to $75,13 billion at the end of June 30, 2022 from a 2021 comparative of $30,54 billion, mostly driven by an increase in lending to the trade and services sector which was up 44,7%.
Total assets were up 43,5% to $266,25 billion at the end of June, from $185,53 billion for the period ending June 2021.
Deposits increased to $224,5 billion during the period under review, from a 2021 comparative of $150,6 billion.
However, demand deposits were nearly 88% of the total showing clients wanted to be more liquid owing to the inflationary environment. The remainder was term deposits.
“During the review period total operating costs increased by 81% from $2,54 billion to $4,59 billion.
The increase, which is below the June 2022 inflation figure of 191,6%, reflected that the bank’s various costs and optimisation measures paid off.
The Ecobank MD said global supply chain disruptions, the 200% bank interest rate, volatile local currency and the expected decline of the economy to 3,5% from 6,3%, based on International Monetary Fund projections, will weigh heavily on the business.
“We are hardened by our previous exploits in tougher environments that prevailed before, and we believe we are on solid ground to continue the positive trajectory we have set for ourselves. We, therefore, stand ready to exploit the opportunities the environment may provide to deliver value to our stakeholders,” Kurenjekwa added.
- Follow us on Twitter @NewsDayZimbabwe