NEDBANK Zimbabwe Limited (NZL) posted an increase of 311% in its inflation-adjusted profit after tax to $12,77 billion for the year ending December 31 2022, owing to increases of 46% and 204% in funded and non-funded income, respectively.
The profit after tax recorded was from a 2021 comparative of $3,1 billion.
During the period under review, the Zimbabwe dollar depreciated significantly against the United States dollar to $684,33, from $108,66 at the start of the year, which drove the inflation-adjusted results.
In a statement accompanying to its financial results for the period under review, NZL managing director Sibongile Moyo said driving the net interest income was private sector lending, investment in government securities and foreign placements.
“The audited inflation-adjusted numbers are the primary set of accounts for the bank although both the inflation-adjusted and unaudited supplementary historical accounts are presented. There was a 311% growth in 2022 profit after tax (PAT) to $12,77 billion from $3,10 billion in the comparative period,” she said.
“This was attributed to an increase in funded income by 46% and non-funded income by 204%. The contribution of net interest income increased to 32% of total income from core banking activities due to increased lending to the private sector and investment in government securities and foreign placements.
“The non-funded income increase was spurred by increased volume of transactions as well as increase in active customer numbers on our mobile banking and internet banking platform.”
Net interest income and non-interest income were recorded at $6,78 billion and $41,98 billion respectively, from 2021 comparatives of $4,65 billion and $13,79 billion.
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Gross loans and advances rose 101,36% during the period to about $17 billion from a 2021 comparative of $8,44 billion.
The performance was driven by term loans, which rose to $11,78 billion, a 218% increase from a 2021 comparative of $3,7 billion. Term loans provide borrowers with a lump sum of cash upfront in exchange for specific borrowing terms.
The bank recorded a 109,18% increase in foreign and local bank balances to $60,86 billion from a 2021 comparative of $29,09 billion.
Total deposits for the period under review was $95,28 billion, up from 2021’s comparative of $66,83 billion. In an analysis of these deposits, business banking clients took nearly 39% while corporate and Institutional banking customers took 27,08%.
The increments in deposits and loans drove overall total assets to rise to $128,74 billion from a 2021 comparative of $84,23 billion.
“The balance sheet grew by 53% to $128,749 billion supported by the increase in deposits from customers, retained earnings and shareholder funds arising from the rights issue concluded in February 2022,” Moyo said.
“Lending to the private sector increased by 101% mainly due to increased lending in foreign currency in line with client needs. The bank’s credit loss ratio and non-performing loans were well maintained at 3.86% and 0.52% respectively.”
She said the capital adequacy ratio increased to 40% from 29% in the prior year, well above the prudential guidelines of 12%.
“The bank reported a liquidity ratio of 103% against a prudential minimum of 30%. Return on equity (ROE) at 67% outpaced prior year ROE of 33% and was well ahead of cost of equity,” Moyo said.
However, the depreciation of the local currency caused the bank’s net monetary loss to widen to $16,68 million last year from a 2021 comparative of $3,1 billion.
Resultantly, overall operating expenses more than doubled to $35,52 billion during the period under review from 2021.
Moyo said the bank and its stakeholders’ business models had been challenged by the fast-changing environment and both local and global shocks resulting in the bank taking a cautious approach for the future.
“We are cautiously optimistic about the prospects of the economy given the current trajectory and policy interventions. The support of our existing and new clients will be critical to our future growth as the bank strives towards being a purpose led growth institution,” she said.
“We will continue to leverage our people, culture, control environment and strong capital base to enhance value for our clients and stakeholders and deliver leading client experiences with the support of the group on multi-technology enablement.”
