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Agribank Profits Up, As Bank Focus On Tier 1 Capitalization

Financial services provider, Agricultural Development Bank of Zimbabwe (Agribank) recorded profits for the third year running, surging 63 percent for the year ending 31 December 2018 to $ 12.9 million as compared to $ 7.9 million recorded the previous year.

This was due to increased transactions from the ICT delivery channels and electronic banking coupled with stronger performance from interest income against the background of marked growth in the loan book during the year.

Gross loans and advances by the bank grew 53.4 percent from $ 95.9 million in 2017 to $ 147.2 million in 2018 while the corresponding interest income grew by 76 21.2 percent from $ 30.5 million for 2017 to close 2018 at $ 37.1 million.

“The loan book growth reflected expansion in support to agriculture through both on-balance sheet and off-balance sheet facilities. The strategy is focused on growing and maintaining a quality loan book, with special focus on agriculture,” Agribank chief executive officer Sam Malaba told press at the release of the bank’s financials.

Total assets increased by 14 percent from $ 268.84 million in December 2017 to $ 306.40 million as at December 2018 due to lines of credit accessed through RBZ and capital injection of $ 10 million by the shareholders received in 2018.

The bank is focusing on a capitalization drive to meet the $ 100 million capital requirement for a tier 1 bank status by January 2020.

Currently Agribank capitalization stands at $ 72.6 million against the regulatory middle tier peg of $ 25 million.

“The bank is targeting $ 100 million capitalization by January 2020. Various strategies are being pursued to achieve this, which includes organic growth, additional capital injection from the shareholder and courting a strategic partner,” said Malaba.

Outside the $ 10 million extended by shareholders, the bank has gone on to secure $ 20 million facility from Afreximbank.

The bank also seeks to mobilize capital from regional finance institutions to the tune of $ 40-$ 50 million.

But expected poor performance from the agriculture sector owing to erratic rainfall and ravages of cyclone Idai in parts of Manicaland and Masvingo provinces presents challenges for the recovery of loans from the farmers.

“It will be a tough year but we have to wait and see, ascertain the negative effects on the agriculture production side,” Malaba warned.

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