BANKS in Zimbabwe have started to see a rise in interest income, driven by an increase in lending following a long spell of “cautious” deposit management and a disproportionate reliance on non-funded income.
This comes as the banking sector’s aggregate loan-to-deposit ratio has been increasing, from below 50 percent in 2019 to around 80 percent by end of August 2021, according to the Treasury.
Steward Bank said its net interest income rose to $706 million for the half year to August 31, 2021, from $206 million during the prior comparable period.
The bank, a subsidiary of EcoCash Holdings Zimbabwe, posted a 263 percent surge in profit to $252 million, in historical terms, up from $69 million recorded in the half year to August 2020 driven by an increase in net interest income.
ZB Financial Holdings said its net interest and trading income increased by 313 percent for the quarter ended September 30, 2021 on the back of an 89 percent increase in the loan book and trading assets.
The financial services group achieved an average interest margin of 30 percent for the quarter, an increase of 18 percent compared to the prior period.
Another bank, Stanbic, recorded a 218 percent growth in net interest income, closing the half year to June 30, 2021 at $2,6 billion, outstripping prior period income of $803 million. This was attributed to strong growth in interest earning assets during the period as new lending assets were written.
Ecobank Zimbabwe said its net interest income improved despite reporting a seven percent decline in post-tax profit for the half-year ended June 30, 2021 to $1,85 billion. This was attributed to the business slowdown experienced in the period due to Covid-19 restrictions which resulted in what the bank termed “a challenging economic environment”.
“Despite this overall sluggish performance, it is important to note the growth in net interest income and fees and commission by 88 percent and 37 percent from $935 million to $1,76 billion and $555, 98 million to $761,72 million respectively,” managing director Moses Kurenjekwa said in a statement accompanying the midterm financials.
Meanwhile, FBC Holdings Limited (FBC) says a rebound in economic activity resulted in improved performance during the quarter ended September 30, 2021, leading to the financial institution realising $9,1 billion in total income.
The institution said the $9,1 billion income was anchored by a marked growth in net fee and commission income, net interest and related income, as well as investment income.
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