AGRIBANK has recorded a profit of $2,9 million in the first five months of the year to May 31, 2018, a move that thrusts the agriculture financing institution on a path to more profits by year end. The profit represents a 13 percent jump from earlier projections of a $2,5 million profit in the period January to May.
This came out during Agribank’s annual general meeting held in Harare last week.
The performance to May this year comes after Agribank posted a commendable $7,9 million profit in 2017, compared to $4,8 million in 2016 on the back of significant growth in non-funded income.
Staff cost to income ratio, which is at 29 percent below the Government threshold of 30 percent, also contributed to Agribank’s profitability.
Agribank chief executive officer Mr Sam Malaba told the AGM that from the profit recorded last year, a dividend of $3 million was declared to Government, the shareholder.
However, the shareholder ploughed back the dividend to the bank so that it recapitalises.
Mr Malaba said Agribank was “grateful” for Government’s support.
As at December 31 last year, Agribank’s regulatory capital was $54,9 million, which was way above the minimum regulatory capital of $25 million.
Agribank, which was directed by Government to focus on its core business of lending to farmers, says there are opportunities for the business to grow going forward.
Mr Malaba said one of the opportunities lies with finding a technical partner for the bank, who will inject long-term funds.
“The bank is pleased to advise that Government, as the shareholder, has given the green light for the bank to secure a strategic partner, as part of Government’s State Enterprises Reforms.
“The process has already commenced with the setting up of a technical committee, which will prepare a roadmap for the engagement of a strategic partner for the bank.
“This represents a major opportunity for the bank. The strategic partner will inject long-term equity capital and access to international lines of credit for expanded support towards agriculture financing,” said Mr Malaba.
Agribank also sees the opening of USD and Euro accounts in March this year as yet another, “major breakthrough” for the bank as it enables it to attract exporters.
Already, the bank now has a number of tobacco merchants on its books.
Mr Malaba also said expanding support to the agriculture sector, where it is targeting $105 million agriculture financing, would be key to boost the bank’s operations.