Omega Ukama 
GETBUCKS Microfinance Bank (GetBucks) says the recent hike in interest rates has put pressure on the company’s profit margins.
In a statement accompanying results for the year ended June 30, 2019, Rungamo Mbire, the company’s board chairman said the cost of funding had increased as “financiers seek to maintain the value of their money in response to increased overnight accommodation rates that were set at 50 percent per annum and recently increased to 70 percent per annum”.
“These developments have put pressure on interest margins and cost to income ratios of the bank,” he said.
The rate increase follows another review in June, which saw the overnight rate climbing from about 15 percent to 50 percent.
The central bank has justified the rate adjustments as part of its efforts to arrest inflation, which according to estimates, has spiralled past 280 percent.
Mbire pointed out that the pressure on margins was there even before the rate increases.
The bank reported a 153 percent increase in profit to $11,4 million for the year to June due to “higher fees and commissions on loans, and fair value gains on investment property”. However, its interest margin declined during the period under review from the previous year “due to increased cost of funding”.
“However, the bank achieved higher fees and commissions to counter the decline,” the chairman said.
Mbire noted that the bank’s profitability has also been under pressure from the general increase in costs, which has been driven by inflation.
“The period has also seen a rise in the rate of inflation which has put pressure on the cost of business.
“The bank has responded by rolling out a low-cost business model ensuring that technology is used to service customer requirements,” said Mbire.
Meanwhile, the company’s directors have recommended a 0,042 cents per share final dividend. This will bring the total dividend for the year to 0,096 cents per share after the bank paid an interim dividend of 0,054 cents per share during the period under review.
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