Hyperinflation weighs on Standard Chartered

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STANDARD Chartered Bank Zimbabwe (StanChart) says it recorded a $134 million loss in the financial year to December 2019 due to the country’s hyperinflationary environment.
This was after the southern African country’s inflation had surged from 57 percent in January to 521 percent in December.
Lovemore Manatsa, StanChart’s board chairman, said the bank achieved a profit after tax of $103,8 million, on a historical cost basis compared to the $18,4 million in 2018.

“However, in inflation adjusted terms, the bank incurred an after tax loss of $133,9 million, compared to a loss of $82,8 million in 2018, underscoring the impact of inflation on the bank’s performance and balance sheet hence the need to urgently address fundamental economic issues,” he said last week in a statement accompanying the bank’s financial results.

Zimbabwe’s operating environment continued to be challenging and volatile in 2019 exacerbated by the impact of yet another drought.

Preliminary forecasts by economic experts suggest that the economy contracted by as much as 6,5 percent in 2019 on the back of acute foreign currency, fuel and electricity shortages as well as reduced agriculture production.
Manatsa said while the authorities are committed to reducing inflation and restoring exchange rate stability, 2020 will most likely be another difficult year due to continuation of weak fundamentals, the impact of the global Covid-19 outbreak and another poor agricultural season.
He added that the prevailing headwinds can only be reduced if Zimbabwe re-engages with key global financiers as well as a “collective effort by all internal stakeholders to implement broad-based market reforms to address political, social and economic issues”.

Manatsa said the bank’s digitisation strategy continues to bear fruits as evidenced by the reduction in cost of providing banking services to its customers.
“The quality of the bank’s loan book continued to improve as reflected by the significant reduction in the non-performing loans ratio from 2,1 percent as at December 31, 2018 to 0,1 percent as at December 31, 2019.
“The balance sheet remained strong, highly-liquid and well-capitalised compared to the minimum regulatory requirements,” he said.
He added that the financial institution is considering various options to meet the revised December 2020 core capital target of the local currency equivalent of US$30 million and is confident it will achieve the minimum capital requirements by the set deadline.
newssdesk@fingaz.co.zw