NEDBANK Zimbabwe posted a profit after tax of ZiG72,54 million for the half year ended June 30, 2024, owing to a growth in transaction income and loans.
During the same period last year, the bank posted a profit after tax of ZWG561, 1 million.
In a statement accompanyingo its financial results for the half year ended June 30, 2024, Nedbank Zimbabwe chairperson Shepherd Shonhiwa said the rise in the bank’s fee income stream was fuelled by a growth in international and local payments.
“The bank posted a profit after tax of ZiG72,54 million, underpinned by a 50% growth in fees and commissions from client transactions and a 27% growth in loans and advances to the private sector and individuals,” he said.
“Transaction-based fee income performance was spurred by growth in international and local payments and increased main banked customer accounts share of wallet.”
For the period under review, non-interest income was recorded at ZiG265,82 million while net interest income was ZiG85,71 million.
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This was from 2023 comparatives of ZiG91,34 million and ZiG1,27 billion in the net interest and non-interest incomes recorded, respectively.
During the period under review, trading and dealing income were subdued due to the reduced foreign currency supply to the interbank market.
The contribution of unrealised foreign exchange gains was curtailed to 15% of total non-funded income with the more stable local currency unit, ZiG.
Shonhiwa said the contribution of US dollar-denominated loans and advances on the net funded income remained high at 97%.
“Net funded income decreased by 6% over a prior period due to the seven-fold reduction in reference interest rates on local currency-denominated Treasury Bills and loans and advances as pronounced by the RBZ in the monetary policy statement of April 5, 2024,” he said.
Shonhiwa said the bank would continue to conjtain cost via streamlining operations through automation and digitalisation initiatives.
“Total operating expenses were ZiG265,13million with employee costs contributing 45% of the total cost, indicating management efforts to prioritise staff welfare. Other significant operating costs were technology-related and were driven by increased client transaction volumes across all technology platforms,” he said.
“Cost to cost-to-income ratio rose to 73% with increased hardening of expenses in US dollars, which is above the bank’s long-term cost-to-income target of 50%.
“The bank continues to improve cost to serve by streamlining operations through automation and digitalisation initiatives.”
The bank’s total assets remained relatively flat at ZiG2,58 billion as of June, while loans and advances grew by 27%, from December 2023, moving the loans to deposit ratio to 72% from 57%.
Loans and advances grew to ZiG1,21 billion as of June 30, 2024.
Shonhiwa said the bank was adequately capitalised, with total shareholders’ funds of ZiG711,37 million and regulatory core capital of US$46,42 million as of June 30, 2024.
The capital adequacy ratio stood at 26% with sufficient headroom to support business growth while the liquidity ratio stood at 49,9% against a minimum regulatory ratio of 30%.
Shonhiwa said the economy is projected to weather the storm, regiatering growth despite the impact of the El Niño phenomenon on the agricultural sector.
“The macroeconomic environment remains challenging and likely to impact value for our clients and stakeholders,” he said.
“This will require us to address client needs while managing the control environment and focusing on value creation.
“The bank appreciates the custom of our valued clients and the support from the board of directors, shareholders, and regulatory authorities in sustaining the business.”
The Nedbank Zimbabwe boss urged the government to practise fiscal discipline to sustain the prevailing economic stability.