ZB Financial Holdings Limited (ZBFHL) is seeking to develop strategic business partnerships and enhance sustainable revenue streams to preserve its capital position against possible loss of value due to currency depreciation.
This is contained in the group’s financial results for the half year ended June 30, 2023.
“The group will continue to develop strategic business partnerships with real sectors of the economy, enhance sustainable revenue streams, especially foreign currency revenues, and take advantage of investment opportunities in order to preserve its capital position against possible loss of value from currency depreciation,” ZBFHL acting chairperson, Luxon Zembe said.
The financial institution lost ZWL$91,32 billion in the period under review on its externally-denominated net monetary assets owing to the Zimdollar depreciating, raising its foreign currency risk exposure.
At the end of June, ZBFHL reported that it had foreign currency-denominated net monetary assets in Botswana pula, British pounds, euros, South African rand and United States dollars totalling ZWL$43 billion.
This was down nearly 68% from ZWL$134,32 billion recorded at the end of 2022.
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The drop coincided with the Zimdollar’s over 90% loss of value in June this year.
“The group’s main exposure to foreign currency risk arises from the commitments for licence and support fees for information technology platforms that were sourced from foreign suppliers,” ZBFHL said.
At the end of June, the group’s foreign currency-denominated total monetary assets in Botswana pula, British pounds, euros, South African rand and United States dollars totalled ZWL$345,81 billion.
This was down from ZWL$1,08 trillion, at the end of 2022.
However, ZBFHL’s foreign currency-denominated monetary liabilities in Botswana pula, British pounds, euros, South African rand, and United States dollars improved to ZWL$302,81 billion at the end of June. The improvement was from ZWL$945,91 billion recorded at the end of 2022.
At the end of June, ZBFHL had recorded a 796% rise in total income to ZWL$917,28 billion.
Group CEO Shepherd Fungura said the income performance in the review period was mainly on the back of a 3 022% rise in fair value adjustments, from ZWL$14,773 billion to ZWL$461,2 billion.
He said there was a 522% improvement in other operating income, from ZWL$54,68 billion in 2022 to ZWL$340,255 billion, as well as a 257% increase in commissions and fees from ZWL19,05 billion in 2022 to ZWL$68,1 billion.
Net interest income rose by 115% to ZWL$43,406 billion. Loan impairment charges fell by 1% to ZWL$11,132 billion. Resultantly, net income from lending activities improved by 262% to ZWL$32,274 billion.
The fair value adjustments and other operating income led to a profit after tax of ZWL$678,45 billion.
Both the fair value adjustment and other operating income were influenced by the local currency falling to ZWL$5 739,79 against the greenback at the end of June.
Total assets more than doubled to ZWL$2,53 trillion.
An increase of nearly 299% in mortgages and other advances to ZWL$807,57 billion at the end of June drove total assets.
“The group maintained a comfortable liquidity margin of safety, with the ratio of liquid assets to customer deposits being above 55% throughout the year against a prescribed ratio of 30%,” Fungura said.
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