Non- interest and interest incomes boosts banks earnings performance

Harare – The banking sector remained profitable posting an aggregate net profit of $283.98 million for the nine months ended 30 September 2018 compared to a net profit of $160.73 million for the corresponding period in 2017, which is a 76.68 percent increase, according to RBZ’s sector report for the quarter.

The report attributed the improved earnings performance to non-interest income arising from a surge in digital transactional volumes as well as interest income from investments in securities, mainly treasury bills.

During the period under review, the major profitability indicators, return on assets and return on equity improved from 1.89 percent and 11.15 percent, to 2.56 percent and 16.64 percent, respectively.

According to the report, fees and commission continues to drive growth in total income as it increased by 15.75 percent from $318.97 million during the nine months ended 30 September 2017 to $369.20 million during the corresponding period in 2018, and accounted for 35.50 percent of total income, as at 30 September 2018.

In the period under review, interest income from loans and advances constituted 29.73 percent of total income compared to 36.54 percent in 2017, while interest on investments and securities accounted for 21.01 percent against 15.46 in 2017.

According to the report, the sector’s total assets maintained an upward growth trajectory during the period under review from $12.35 billion as at 30 June 2018 to $13.55 billion as at 30 September 2018.

In the period under review, aggregate core capital increased by 7.24 percent, from $1.38 billion as at 30 June 2018 to $1.48 billion as at 30 September 2018 buoyed by increased earnings recorded by the sector.

The report also pointed out that there was an improvement in the banking sector loan portfolio as reflected by a decline in NPL ratio from 8.63 percent last year to 6.69 percent as at 30 September 2018.

Total banking sector deposits amounted to $9.57 billion, as at 30 September 2018, while total loans and advances were $4.01 billion, translating to a loan to deposit ratio of 41.88 percent.

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