THE Bankers Association of Zimbabwe (Baz) says savings deposits remain transitory in nature after confidence in the banking sector took a knock due to changes in the currency regime over the years.
The transitory nature of deposits comes as fiscal and monetary authorities have been urging the public to deposit their money into formal institutions as there is an estimated US$2,5 billion circulating in the informal sector.
“Official statistics point to the fact that most deposits with financial institutions are transitory in nature and, therefore, are not kept for longer periods with banks to earn interest,” Baz chief executive officer Fanwell Mutogo told NewsDay Business.
As of September, time and savings deposits were ZWL$947 billion and ZWL$404 billion, respectively, showing depositors were overwhelmingly putting funds that could easily be withdrawn.
“These two types of accounts which are effectively savings constitute around 10% of total deposits,” Baz president Lawrence Nyazema said.
Research has shown that depositors prefer banking their monies inside their homes which some have coined as the “Mattress Bank of Zimbabwe.”
During last week’s presentation of the 2024 national budget, Finance, Economic Development and Investment Promotion minister Mthuli Ncube revealed that banking institutions have sufficient liquidity to intermediate utilising the foreign currency and local currency deposits, as well as external lines of credit.
“Aggregate banking sector deposits continued on an upward trajectory from ZWL$3,17 trillion as at March 31, 2023, to ZWL$16,08 trillion as at September 30, 2023, dominated by foreign currency-denominated deposits which accounted for 80,49% of total deposits,” he said.
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“Further, banking institutions continued to maintain robust liquidity positions, providing a key source of strength in the face of a dynamic macroeconomic environment. As at September 30,2023, the sector’s average prudential liquidity ratio was 61,74%, reflecting a high stock of liquid assets in the sector.”
