- The banking sector recorded an aggregate profit of ZWL$13.46 billion in HY20 from ZW$929.95 million
- Loans and advances increased by 94.49%
- Loans to productive sectors of the economy constituted 83.69% of total banking sector loans
Harare – Non-performing loans (NPLs) in Zimbabwe’s banking system are falling despite the economic crunch hitting across industries as the banking sector also recorded profits during the half year ended 30 June 2020, the Central Bank reported in the latest Mid-Term Monetary Policy Statement.
Variables such as the state of the economy, standard of living, consumer income and bank interest rates have an influence on NPLs, over which Zimbabwe has been battling through an economic slowdown over the recent years.
According to the report, the quality of the banking sector loan portfolio continued to improve as reflected by an improvement in the NPLSs to total loans ratio from 1.75% as at 31 December 2019 to 1.03% as at 30 June 2020.
During the period under review, the banking sector recorded an aggregate profit of ZWL$13.46 billion, up 1349% from ZW$929.95 million for the corresponding period in 2019.
“The key revenue drivers were other non-interest income, mainly from revaluation gains on foreign currency assets,” RBZ said.
Against the economic slowdown, total banking sector loans and advances increased by 94.49% from ZW$19.42 billion as at 31 December 2019 to ZW$37.77 billion as at 30 June 2020.
The growth was attributed to the translation of foreign currency denominated loans at the prevailing interbank exchange rate, which moved upwards in June from a fixed rate of US$1:ZW$25 following the introduction of the foreign exchange auction system.
Loans and advances stood at ZW$6.2 million as at end-June 2019.
Loans to productive sectors of the economy constituted 83.69% of total banking sector loans during the period under review with the agricultural sector gaining a larger chunk at 26.97% followed by financial (16.75%), manufacturing sector (13.69%), and mining (11.11%).
Meanwhile, total banking sector deposits amounted to ZW97.40 billion during the period under review, representing an increase of 182.32% from ZW$34.5 billion as at December 2019.
“The increase in the deposit base was mainly attributable to revaluation of foreign currency denominated deposits,” the Central Bank said.
“The deposit base is dominated by FCA and local demand deposits, which accounted for 52.59% and 40.66%, of total deposits, respectively.”
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