Harare – African Banking Corporation of Zimbabwe Limited, a subsidiary of ABC Holdings Limited recorded a net profit of $3.7 million for the six months to June 30 2018, representing a 14 percent increase from $3.2 million recorded in the same period last year.
This was largely driven by growth in non-interest income on the back of an improvement in fees and commission together with strong foreign exchange dealing income.
Similarly, total non-interest revenue at 9.3 million, was 50 percent higher than the corresponding period in the prior year.
The Bank’s Chairman, Alvord Mabhena said the improvement in fees and commissions was a result of new initiatives implemented in the digital space which are starting to bear fruit.
“Furthermore, foreign exchange dealing income has surpassed prior year levels owing to an increase in foreign currency volumes in the current year from gold miners and agriculture sector, mainly tobacco. The resulting in digital related revenues and foreign currency dealing income has more offset the decline in traditional non-interest revenue streams.”
On the other hand, net interest income, at $13.0 million, declined by 15 percent from $15.5 million recorded in the same period last year.
Mabhena said the decline resulted from the Bank’s low credit risk appetite which has continued to put downward pressure on lending volumes and, in turn, interest income.
“However, this decline in lending related interest income has been partly offset by interest income from government paper coupled with a decline in interest expenses owing to a decrease in overall costs of funds arising from an improved liability mix,” he said.
Operating costs for the period were 4 percent higher than the comparable period last year.
Mabhena said the increase was driven by employee costs which exceeded the prior year levels following new strategic staff recruitments and cost of living adjustments awarded to staff in the current year.
He said the current year, loan impairments charges were 92 percent higher when compared to the previous year.
“Despite the year-on-year increase, current year impairments represented a remarkable improvement as the prior year numbers included some significant once off recoveries on legacy debt.”
Mabhena added that, looking into the second half the Bank’s digital service offerings, which have been revamped to better serve customer demands, coupled with continued innovation, should further drive revenue growth.
“We believe that digital channels are key to the delivery of customer satisfaction in light of the current crippling cash and liquidity challenges and the resultant market-wide shift to plastic money.”
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