Alpha Media Holdings

Banks profits grow 311%

BY MTHANDAZO NYONI ● Follow us on Twitter @NewsDayZimbabwe

PROFIT in Zimbabwe’s banking sector rose by 311% during the first quarter ended March 31, 2022, underpinned by interest on loans and advances, a Reserve Bank of Zimbabwe (RBZ) report showed on Monday.

Sector profits increased to $27,05 billion, with interest income from loans, advances and fees and commissions constituting 34,36% and 30,32% of total income, respectively.

The report came as the RBZ hiked interest rates to 200% on Monday, from 80% previously, placing the banking sector on track for further windfalls in the coming months.

However, much of the sector’s earnings will continue to be compromised by high inflation rates, which hit 191,7% this month, from 131% in May, making the search for real returns a difficult task across all of Zimbabwe’s economic sectors.

The RBZ said total deposits reached $582,26 billion during the review period, 22,23% ahead of the same period in 2021.

The sector combined asset base increased by 27,04% to $969,24 billion from $762,96 billion during the year ended December 31, 2021.

“Banking sector loan portfolio quality remained strong, as reflected by the nonperforming loans to total loans ratio of 1,57% as at March 31, 2022, against the international benchmark of 5%,” the central bank said.

“Stress test results for the period under review show varying degrees of resilience in the banking sector with majority of banking institutions having sufficient capital buffers to provide loss absorption capacity and enable institutions to continue with their financial intermediation role through times of stress such as the current COVID-19 pandemic,” it said.

“Stress test results of moderate and major credit shocks of 25% and 40% of performing loans becoming nonperforming, indicated resilience of the majority of banking institutions with capital adequacy ratios (CAR) above the regulatory minimum of 12%,” the central bank added.

In the outlook, the central bank said the banking sector was expected to remain “safe and sound, with banking institutions adapting to the dynamic operating environment.”

It said the various measures it is implementing were expected to maintain financial stability to ensure that banking institutions continued to offer adequate financial support to all sectors of the economy.

Business

en-zw

2022-06-29T07:00:00.0000000Z

2022-06-29T07:00:00.0000000Z

https://alphamedia.pressreader.com/article/281625308991159

Alpha Media Group