ECOCASH Holdings Zimbabwe Limited (EcoCash) will invest in technologies to grow its banking unit, Steward Bank, after losing its fintech firms to sister firm, Econet Wireless Zimbabwe.
At an extraordinary general meeting held on April 17, EcoCash shareholders approved a proposed scheme of reconstruction which transferred the six fintech firms to Econet leaving the group with Steward Bank.
Prior to the reconstruction, EcoCash had a market capitalisation of ZWG1,42 billion on the Zimbabwe Stock Exchange which has since dropped to ZWG718,07 million post reconstruction.
“Post the scheme of reconstruction, the bank, which will be the remaining unit under EcoCash Holdings, is poised to drive a digital banking expansion as it invests in technologies to enhance operational efficiencies and increase the product offering to customers,” EcoCash chairperson Sherree Shereni said in a financial statement for the firm for the financial year ended February 29, 2024.
“These technological innovations will necessitate a parallel scaling up of the bank’s underlying systems and processes and grow shareholder value.”
She said the businesses transferred to Econet Wireless Zimbabwe would leverage the mobile network operator customer base and technologies to scale up and increase operating efficiencies through leveraging synergies.
The non-banking units transferred to Econet Wireless Zimbabwe are EcoCash (Private) Limited, VAYA Technologies Zimbabwe (Private) Limited, Econet Insurance (Private) Limited, Econet Life (Private) Limited, MARS Zimbabwe (Private) Limited, and Maisha Health Fund (Private) Limited.
“During the period under review, EHZL (EcoCash) settled its debentures, therefore the adverse impact of exchange losses on the business’ profitability is expected to dissipate in the outlook. Going forward, Steward Bank is focusing on a diversification strategy to drive growth,” financial services firm, IH Securities said, in an analysis of EcoCash’s financials under review.
“The bank is poised to drive digital banking expansion as it invests in technologies to enhance operational efficiencies and increase product offering to consumers. Steward’s focus on the low-income mass market compels it to maintain a liquid balance sheet to service the high transaction needs of this customer base.”
IH Securities said therefore, the short-term nature of Steward’s deposits inhibits its ability to earn interest income, relying predominantly on transactional income.
“However, considering the anticipated depressed consumer liquidity due to the El Niño drought, transaction volumes and values are expected to decline, posing downside risk to the Bank’s earnings,” it said.
Prior to the reconstruction exercise, EcoCash recorded revenue of ZWL$874,7 billion, a 64% increase from the prior period’s ZWL$534,1 billion.
Profit for the year was ZWL$287,3 billion, a 423% increase from prior year loss of ZWL$89 billion.
The profit was owing to a net monetary gain of ZWL$1,67 trillion during the period under review, up from a prior year comparative of ZWL$506,92 billion.