Stanbic Bank has posted an inflation adjusted profit after tax of ZWL1.1 billion for the year ended 31 December 2020, recovering from a ZW$44 million loss in the prior year.
The Standard Bank subsidiary posted a ZW$ 3.1 billion profit for the year under review in historical cost terms, exceeding comparative period performance of ZW$477 million.
In a statement accompanying the results, Stanbic’s Chairman, Gregory Sebborn, said the Bank ended the year with a qualifying core capital of ZWL3.8 billion up from the 2019 figure of ZW$651.2 million, well ahead of the regulatory minimum of ZW$25 million.
The leading financial services institution has remained ahead of the 2021 minimum capital threshold which is the local currency equivalent of USD30 million.
Sebborn bemoaned the adverse effects COVID-19 had on the economy particularly during the lockdown periods.
“The outlook for 2021 remains grim on account of the resurgence in the number of COVID-19 infections. Sustenance of the positive developments achieved in the second half of 2020 will be hugely dependent on the impact of COVID-19 in the outlook and potential Government interventions to control any adverse developments. The GDP growth rate of 7.4% projected by Government for 2021 could be at risk if the impact of COVID-19 on economic performance is not significantly mitigated through availability of a sustainable and affordable vaccine,” said Sebborn.
In an accompanying statement, Stanbic Bank Chief Executive (CE), Solomon Nyanhongo said inflation adjusted net interest income declined by 18% from ZW$2 billion in 2019 to ZW$1.7 billion, despite the strong growth in the bank’s gross lending book from an inflation adjusted balance of ZW$4.3 billion to ZW$9 billion as demand for local currency funding continued to increase in line with growing working capital requirements.
Nyanhongo said lending rates remained subdued during the year and could not match the 14% average month on month inflation on account of market and regulatory constraints and, in turn, contributed to the receding interest income.
“The Bank recorded a 53% increase in its net fee and commission income, growing from ZW$1.7 billion in 2019 to ZW$2.6 billion. The improvement in our fee and commission income was largely underpinned by the impact of the rapid depreciation of the local currency against the USD on our foreign denominated commission income,” said Nyanhongo.
Sebborn said apart from COVID-19, other perennial challenges constraining economic growth prospects in 2020 included erratic weather/rainfall patterns, low business confidence and high inflation levels. Gross Domestic Product (GDP) is estimated to have declined by 4.1% according to the Reserve Bank of Zimbabwe.
“On a promising note, during the last quarter of 2020, some of the Government’s efforts aimed at promoting price stability have started to bear positive outcomes as evidenced by the relative stability in both the official (at a range of USD1:ZW$81-83) and black market exchange rates,” said Sebborn.
He commended the introduction of the weekly foreign exchange auction system saying it breathed life into the economy with major highlights being the decline in annual inflation from a high of 837.5% in July 2020 to 348% by December 2020 as well as the slowdown in ZW$ money supply growth and improved foreign currency availability to the productive sectors of the economy.
Stanbic Bank supported some of its large corporate clients with foreign currency to enable them to continue producing ethanol which is the key ingredient in producing alcohol-based sanitizers. Some pharmaceutical producers were provided with foreign currency for the purchase of raw materials necessary to manufacture drugs, helping to ensure the health sector maintains the required levels of medication for patients.
“A total of USD145 000 in foreign currency was provided to other clients to procure sanitizers and sterilization chemicals. We also facilitated the acquisition of medicines and hospital equipment by some of our clients in the health sector totaling USD2.5 million,” said Sebborn.
Nyanhongo echoed Sebborn by noting that 2020 was an extremely difficult year in which the economy was confronted by innumerable challenges ranging from a soaring inflationary environment, foreign currency challenges, and declining aggregate demand which was worsened by the devastating impact of the COVID-19 pandemic which disrupted business operations across the world.
Stanbic Bank’s performance was not spared from the adverse impact of the pandemic and the institution invoked its business continuity plans in order to serve clients whilst observing the recommended health and safety measures.
“Our 2020 Corporate Social Investment activities focused mainly on COVID-19 relief as the world continues to fight the pandemic. Through a USD200 000 fund, we provided various designated COVID-19 centres with Personal Protective Equipment (PPEs), PCR test kits, ventilators and sanitizers.,” said Nyanhongo.
Although some of Stanbic Bank’s annual donations were disrupted by the pandemic, the institution assisted the Albino Charity Organization of Zimbabwe’s (ALCOZ) with 1000 units each of sunscreen lotions, antiseptic soaps, antiseptic liquid, sunhats and lip balms to help reduce the harmful effects of the sun on the skin.
The Bank partnered Africa University to support five more students from their university in addition to the bank’s ongoing bursary program for tuition fees. Nyarutombo Primary School in Muzarabani benefitted from the construction and furnishing of a block of two classrooms, toilets and a solar powered borehole.
Other initiatives include a borehole at St Mary’s Mission in Wedza; construction of a 24 bed Waiting Mothers’ Home at Nyamuzuwe Hospital in Mutoko; refurbishing a recovery room and operating theatre at Sally Mugabe Central Hospital Maternity ward as well as an initiative to promote awareness of environment conservation in partnership with Redan (Private) Limited and endorsed by the Environmental Management Agency.
Nyanhongo paid tribute to the members of staff for working tirelessly and remaining resolute in serving clients as the bank introduced new ways of working following the outbreak of the COVID-19 pandemic.
“The health and safety of our staff members remains key during these trying times. The Bank will continue to invest in the relevant personal protective equipment as the country battles to contain this pandemic. As we continued to foster social distancing, the Bank introduced several digital solutions in our quest to offer matchless customer experience during these trying times. As we start the year 2021, we look forward to rolling out more digital solutions as attention remains directed at enriching our customers’ experience,” said Nyanhongo.
The bank remains resolute and dedicated to its five strategic pillars, with Client Centricity being the bedrock.