eBusiness Weekly
Tawanda Musarurwa
An increase in non-interest income lifted ZB Financial Holdings revenue for the five-months to May 31, 2018 by 10 percent to $32,5 million, from $29,5 million in the comparable period.
Non-funded income constituted 63 percent of total income throughout the period under review.
“The improved performance was attributed to increases in banking fees and commissions, which was a result of the acquisition of new clients as well as the number of transactions,” said chief executive Ron Mutandagayi in a trading update.
Other income also increased by 72 percent, which management attributed to “increased deal flow in advisory and fund raising mandates”.
Gross interest income for the period fell by 1 percent from $10,5 million as at 31 May, 2017 to $10,4 million as at May 31, 2018.
The reduction in the gross interest income was a result of lower portfolio earning rates as well as constrained growth in the loan book.
“On the other hand, said Mutandagayi, “the softening of interest rates on the market in sympathy with the increased liquidity situation resulted in interest expense falling by 6 percent to $2,94 million compared to $3,13 million in 2017.”
Resultantly, net interest income increased marginally by 1 percent to $7,5 million in 2018 compared to $7, 4 million last year.
Net earnings from lending and related activities increased by 9 percent from $6,9 million as at May 31, 2017 to $7,5 million as at May 31, 2018.
ZBFH’s life assurance business firmed during the period with premiums increasing by 22 percent to $5,3 million during the five-months under review, compared to the out-turn of $4,3 million prior comparable period. Policy surrenders increased during the period and the claims ratio deteriorated from 40 percent to 48 percent.
The net life technical result improved to $2, 8 million for the period compared to $2, 6 million in 2017.
The subsidiary recorded a 10 percent reduction in reinsurance premiums from $8,4 million in 2017 to $7,6 million in 2018 was recorded on the back of delayed booking of certain risks.
The loss ratio was contained below 50 percent resulting in the net reinsurance technical profit of $4,4 million.
This out-turn was 5 percent lower than $4,6 million recorded in 2017, said the CEO.
Operating expenditure increased during the period by 10 percent from $20,4 million in 2017 to $22,3 million in 2018 in sympathy with general price movements. The increase was attributed to expansion in computer, information technology and communication costs.
Notwithstanding the above increase, the cost to income ratio improved marginally to close at 69 percent for the period, compared to 70 percent in 2017.
Cost reduction measures will be reinforced in the second half of the year to maintain the cost to income ratio below 70 percent for the full year in 2018.
Profits ahead of target
The Group’s operating profit for the period under review increased to $10,2 million from $9,2 million in 2017, representing an 11 percent improvement.
The transfer to the life fund came in at $1, 8 million compared to $1,5 million for the prior period.
The provision for taxation for the five months to May 31, 2018 was $2,1 million compared to $1,5 million for the prior period.
The net profit for the 5 months to May 31, 2018 came in at $6,2 million compared to $6,1 million for the prior period.
Management says the performance for the five-months period under review was “ahead of planning targets for the period”.
ZBFH’s total assets for the period under review stood at $550,6 million, up 6 percent since the end of 2017.
Deposits increased by 6 percent over the same period from $347,1 million at December 31, 2017 to $367,7 million at May 31, 2018. Savings and demand deposits increased by 24 percent and 43 percent respectively and in the process substituted more expensive wholesale deposits which reduced by 28 percent.
The group maintained a fair distribution of deposits by sector.
The aggregate liquidity ratio closed the period at 71 percent with a substantial amount of deposits remaining in cash or near-cash balances in order to support customer demands.
TBs remain “asset of choice”
Total earning assets constituted 75 percent of total assets with Treasury Bills (TBs) having remained the asset of choice in an environment with limited alternative investments.
The portfolio of TBs increased by 23 percent to close the period at $192,3 million.
