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ZB to fully capitalise mortgage division

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ZB to fully capitalise mortgage division

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FINANCIAL services group ZB Financial Holdings (ZBFH) says it expects its mortgage lender to be fully capitalised by year-end after the transaction failed to be completed last year.

BERNARD MPOFU

As first reported by The NewsHawks, the government, in collaboration with local and international bankers, including buccaneering business tycoon Kudakwashe Tagwirei, is working on an ambitious project to create the biggest financial services company in Zimbabwe, with an asset base of over US$2.5 billion.

The core of the project will involve merging leading financial institutions, including CBZ Holdings, ZB Financial Holdings, First Mutual Holdings Limited (FMHL) and First Mutual Properties (FMP).

For the year 2021, ZBFH recorded a 122% increase in total income from ZW$5.288bn in 2020 to ZW$11.736bn. This performance outturn was on the back of improved non-funded income.

Banking commissions and fees contributed significantly, rising by 83%, from ZW$1.836bn in 2020 to ZW$3.366bn in 2021.

“As at 31 December 2021, all group companies, with the exception of ZB Building Society, were in compliance with prescribed minimum capital requirements,” the company said in its audited full-year financials for the period ending March 2022.

“The target was to finalise the consolidation of the group’s banking operations, that is, ZB Bank Limited, ZB Building Society and Intermarket Banking Corporation, by 31 December 2021, but the transaction has taken longer than anticipated, and is now scheduled to be completed in 2022.”

The minimum capital requirement for building societies, according to the Reserve Bank of Zimbabwe, stands at US$20 million.

 The fair value adjustments, according to the financials, increased by 1 526% from ZW$0.218bn in 2020 to ZW$3.548bn in 2021 mainly as a result of improved performance of the Zimbabwe Stock Exchange and investment property valuations.

Net interest income registered a solid performance during the year 2021, rising by 212%, from ZW$1.060bn in 2020 to ZW$3.304bn in 2021.

 “As the loans and advances book rose, loan impairment charges also rose by 37%, from ZW$0.453bn in 2020 to ZW$0.621bn in 2021. Resultantly, net income from lending activities rose from ZW$0.607bn in 2020 to ZW$2.683bn in 2021, a 342% increase,” the company said.

 “Net insurance-related earnings improved from a loss of ZW$0.003bn in 2020, to a profit of ZW$0.830bn in 2021, on the back of a 7% rise in gross premiums from ZW$1.845bn in 2020 to ZW$1.982bn in 2021, whilst a 38% decrease in insurance related expenses was recorded, from ZW$1.847bn in 2020 to ZW$1.152bn in 2021.”

Meanwhile, operating costs rose by 83% from ZW$4.442bn in 2020 to ZW$8.124bn in 2021, largely as a result of the inflationary environment. Profit from ordinary activities rose by 327%, from ZW$0.845bn in 2020 to ZW$3.612bn in 2021.

Transfer to the life fund declined by 51% from ZW$0.963bn in 2020 to ZW$0.472bn in 2021 due to subdued performance by the underlying assets. Net profit registered a 20% increase, from ZW$1.712bn attained in 2020 to ZW$2.058bn in 2021. Meanwhile, the group’s total assets increased by 66% in real terms, from ZW$30.504bn as at 31 December 2020 to ZW$50.493bn as at 31 December 2021.

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