(HERALD) Banking sector set to rebound
Banking sector set to reboundThursday, 28 April 2011 21:47
spirit
Spiritage Infrastructure and Enterprise Solutions chief executive Mr Kangai Maukazuva (left) explains one of the telecommunication initiatives that the company offers as the group chief executive, Mr Zach Wazara, looks on in the capital yesterday. The company plans to launch a diverse range of telecommunica- tion services countrywide.
By Bright Madera
THE banking sector is expected to continue to enjoy significant growth in relation to the recovery of the mainstream economy, now expected to grow by an estimated 9,3 percent this year.
The introduction of the multiple currency system in 2009 instilled confidence in a market emerging from a decade of hyperinflation.
Since then, confidence in the formal sector has gradually recovered.
A local research company said, using the deposits/Gross Domestic Product ratio as an indicator, the ratio was as low as 5 percent on dollarisation and 23 percent by December 2009 while estimates by December of 2010 were at 27 per-cent.
"It is now a realistic target to reach regional deposits to GDP of above 35 percent, though this highly depends on the confidence levels of depositors on the system," said the research company.
According to the report, advances/ deposits ratios have also been on an emphatic rise on the back of the threat from Finance Minister Tendai Biti to invoke Section 31 of the Banking Act, which gives his ministry the right to prescribe how banks would use depositor funds.
Against this backdrop, the 2010 loans/ deposits ratio represented a marked improvement to an estimated average of over 70 percent by year-end 2010.
As of January 2011, the listed banks accounted an estimated 39,4 percent of the national deposits, which stood at US$2,6 billion.
Of the US$1,4 billion attributed to listed banks CBZH came out tops with 39 percent of the listed banks' total deposits while BancABC, Barclays and Interfin followed with 14 percent, 12 percent and 10 percent respectively, as TNH anchored the list with a paltry 4 percent.
On the advances side, CBZ Bank was also leading, accounting for 45 percent of the listed banks advances while BancABC and Interfin followed at 13 percent each.
This was at a time when most banks returned to profitability last year, as the economy stabilised, following the adoption of the multi-currency system and the transition to a market-driven economy.
High economic growth in 2010 was spurred by strong performance in agriculture, mining and increased availability of consumer goods, which enforced a stable inflation environment.
The sector's net profitability improv-ed 232 percent to US$58,7 million with the bulk of their income coming from non-interest income.
Ideally, the main income stream for banks should be net interest, which should be able to cover their operational costs.
Only two banks made losses, notably Barclays and Premier, compared with seven banking institutions, which were in the negative for the 2009 financial year.
CBZ was the most profitable bank at US$20,9 million, followed by Standard Chartered Bank with US$8,3 million.
Stanbic Bank, a member of the Standard Group, which was voted the Bank of the Year for 2010, stands at US$7,9 million, while Kingdom was at US$4,1 million.
FBC Bank completed the top five list of profitable banks after achieving US$3,7 million in profits. Other noticeable results were realised in POSB with US$3,43 million and BancABC at US$3,39 million.
posted by MrK @ 6:20 PM
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