ZB Financial Holdings reports subdued FY2020 financial performance

Cites decrease in fair value adjustments, freeze on banking fees as drivers to revenue underperformance

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Financial Highlights

  • Total income declined by 9% to ZW$3.323bn
  • Net profit after taxation of ZW$1.065bn tumbled by 45% from ZW$1.939bn recorded in 2019
  • ZB Bank Limited posted a 23% decline in profit
  • The Group’s total assets increased by 21% in real terms to ZW$18.977bn

HARARE – After encountering delays in finalising the auditing process, ZB Financial Holdings (ZBFH) has finally released audited financial statements for the year ended 31 December 2020. The results show a 45% decline in net profit after tax of ZW$1.065 billion compared to ZW$1.939 billion attained in 2019.

The Group, which provides financial solutions to the commercial and merchant banking sector in Zimbabwe as well as retail banking services, insurance operations, and strategic investments, saw its revenue for the period tumble by 9% from ZW$3.656 billion in 2019 to ZW$3.323 billion.

That decline was primarily attributed to an 87% decrease in fair value adjustments, from ZW$1.032bn in 2019 to ZW$0.136bn in 2020.

Banking commissions and fees also fell in real terms by 8%, from ZW$1.242bn in 2019 to ZW$1.142bn in 2020, as inflation continued to outpace rate adjustments for commissions and fees.

“The subdued revenue performance in 2020 was mainly due to the combined effects of low-cost absorption as performance of most economic sectors receded,” Acting Group CEO, Fanuel Kapanje said.

He added that this was compounded by the freeze on banking fees by the authorities which was necessary to ameliorate the effects of COVID-19 on industry and the general public.

Meanwhile, the Group’s total assets increased by 21% in real terms, from ZW$15.636bn as at 31 December 2019 to ZW$18.977bn as at 31 December 2020. Deposits and other related funding account balances grew by 15%, from ZW$6.155bn as at 31 December 2019 to ZW$7.108bn as at 31 December 2020.

ZB Bank Limited which is the Group’s flagship asset posted a profit of ZW$0.633 billion, a decline of 23% as compared to ZW$0.819 billion in 2019.

“The reduction in profitability was mainly as a result of an increase in operating expenses from ZW$1.632bn in 2019 to ZW$2.284bn in 2020,” said Kapanje.

ZB Building Society posted a loss of ZW$0.055 billion during the period under review, reducing from a profit of ZW$0.285bn in 2019. Its assets increased from ZW$1.043bn as at 31 December 2019 to close the year 2020 at ZW$1.119bn.

ZB Reinsurance posted a profit of ZW$0.086 billion in 2020 down from ZW$0.113 billion recorded in 2019 while ZB Life Assurance profit of ZW$0.135 billion in 2020 was also down compared to ZW$0.650 billion in 2019.

Mr. Kapanje highlighted that growth in life assurance premiums has slowed down significantly as household incomes are affected by inflation.

On the outlook, the Group said that it will proceed with cautious optimism in the short to medium term.

“It remains imperative for the Group to continuously seek ways to preserve its capital from value erosion occasioned by inflation.”

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