Financial services provider, ZB Financial Holdings profits surged 54 percent to $ 21.8 million for the year 2018 from $ 14.2 million recorded the previous year buoyed by significant gains in net income from lending and trading activities under the Group’s banking portfolio.
The group also recorded an increase of six percent in gross insurance premiums from $ 30.8 million in 2017 to $ 32.8 million driven by a 17 percent growth in life assurance premiums under its insurance portfolio.
Other operating income increased by eight percent from $ 41.8 million to $ 45 million largely comprised of banking commissions.
Net income from lending and trading activities recorded a 29.1 percent improvement from $ 14.8 million in 2017, to $ 19.1 million in 2018 on the backdrop of a 23.2 percent increase in interest and related income.
“This (Rise in interest income) was driven by a 31 percent growth in earning assets constituting the loan book and the trading book as the group capitalized on the liquidity glut in the early part of the year,” Group chief executive officer Ronald Mutandagayi told analysts at the company results briefing.
Lending towards individual stood at $ 67 million, consuming 44 percent of total advances, while 20.8 million was channelled to services sector (14 percent) and advances to agriculture recorded $ 12.1 million constituting eight percent of total advances.
With interests from lending having improved, the group managed to consolidate its lending returns on account of tight credit selection processes that has put the group’s loan book defaults at sustainable levels.
The group’s Non-performing Loans (NPLs) ratio fell to 4.6 percent, safely below RBZ overall sector target of five percent.
“A notable improvement in the quality of the group’s assets exposed to credit risk was observed with the non-performing loans ratio having improved to 4.6 percent at 31 December, 2018, compared to 10.7 percent reported at 31 December 2017.This improvement is a result of collection efforts and credit expansion through tight credit selection processes in an environment where credit absorption in the productive sector has remained low,’’ added Mutandagayi.
Total assets increased by 26.2 percent to $ 663.2 million from
$525.7 million on the backdrop of growth in money market investments, investment securities and mortgages and other advances.
The group embarked on a source market expansion drive which resulted in the Diaspora Banking unit and this has yielded interests from source markets as transaction flows are expected to firm in the short term.
Analysts are however skeptical of market trends in the current year which are expected to have a negative bearing to the general performance of the banking sector services and the overall economy as inflationary pressures and tight foreign currency liquidity remain unchecked.