Zim banks to reduce lending

FINANCIAL institutions are most likely to reduce lending this year to minimise the risk posed by non-performing loans as was reflected in most banks' 2013 financials.

ABC Holdings limited group chief executive officer Douglas Munatsi said the group had appointed Zimbabwe managing director Hashmon Matemera to handle the issue of non-performing loans to ensure they did not have a negative effect on the group's overall performance.

Speaking at an analyst briefing in the capital last week, ABCH group chief finance officer Beki Moyo said significant impairments had been recorded in Mozambique, Tanzania and Zimbabwe. Three entities accounted for 82% of the total impairments.

Net impairments increased by 137% to BWP328 million during the 12-month period compared to same period 2012.

Moyo said a total of five customers accounted for 73% of the impairments.

He said the bank was targeting to improve credit management, from granting to collection, improve documentation and increase security to reduce the default rate.

Loans were up by 15% to BWP10,6 million. NPLs for the group stood at 12% against a group target of 3%.

"Big companies are squeezing the small companies. Most of them are undercapitalised and are highly borrowed and are not able to sell their products," Moyo said.

A Harare-based economist said the issue of NPLs reflects the negative environment characterised by the underperformance of the manufacturing sector at 39% capacity and negative inflation figures.

"Banks have to have cautious lending so that they will not continue to carry impairments as it weighs them down. Banks survive on performing loans which is not the case now," the economist said.

In a statement, NMBZ Holdings Limited chairman Tawanda Mundawarara said the slowdown in the economy had increased the default risk. He said impairment losses on loans and advances amounted to $16,6 million in 2013 compared to $4 million in 2012.

"The board of directors took a decision to write off loans and advances amounting to $1,2 million during the year under review after recovery efforts had not yielded the anticipated results," Mundawarara said.

Addressing analysts on Thursday, NMBZ chief executive officer James Mushore said NPLs stood at $38,7 million compared to $24 million in 2012 and the NPL ratio stood at 19,9%.

The group targets to reduce the NPLs to 15% this year. He said the group would adopt cautious lending this year.

NMBZ posted a loss of $3,8 million for the full year ended December 2013 as compared to a profit of $7,6 million in 2012.

Mundawarara said the memorandum of understanding (MoU) putting a cap on charges and interest rates had a pronounced effect on the bank's profitability for the period under review, as the risk has not been reduced in line with the controlled returns.

Interest income for NMBZ stood at $33 million from $27,3 million in 2012 while non-interest income was up $36,3 million from $32,1 million.

Standard Chartered Bank for the year ended December 31 2013 posted a decline in profits of $9,6 million from $17,3 million. While interest income was up to $26,1 million from $18,3 million.

Stanbic Bank on the other hand posted an increase of profit to $18,3 million for 2013 from $17,2 million in 2012.

Interest income grew to $35 million from $32 million while non-interest income stood at $44 million from $40,3 million.

Stanbic Bank chairman Sternford Moyo said fees and commission income grew by a marginal 5%, a reflection of the reduction in charges in line with the MoU.