Harare, Zimbabwe – Leading financial services institution, Stanbic Bank, has posted a historical cost profit of ZWG27.1 million for the six months ended 30 June 2024, amid changes in its functional currency from ZWL.
The historical cost profit of ZWG27.1 million was achieved after accounting for technical losses of ZWG389 million (ZWG319 million net after tax) incurred on the investment property portfolio.
In a statement accompanying the results, Stanbic Bank Chief Executive Solomon Nyanhongo said that without these losses, the adjusted profit (commonly referred to as “headline earnings”) is ZWG346 million, representing the true, sustainable performance going forward.
Nyanhongo explained that following the change in the Bank’s functional currency from the Zimbabwean dollar (ZWL) as of 1 January 2024, there were technical accounting adjustments included in the Bank’s Income Statement and Statement of Comprehensive Income.
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“These adjustments arose from differences in the fair values of property assets when expressed in the former ZWL functional currency compared to the underlying valuations in the open market in real terms,” said Nyanhongo.
He noted that Stanbic Bank ended the first half of the year with net interest income of ZWG374 million, which was within expectations, supported largely by new foreign currency lending assets written during the period, as demand for foreign currency facilities remained high.
Nyanhongo also pointed out that interest income from local currency facilities was subdued due to the reduction in minimum lending rates from 130% to 20%, following the 5 April 2024 monetary policy statement.
“The Bank’s fee and commission income performed as expected, largely spurred by increased transaction volumes passing through the various service channels, driven by the acquisition of new customers and an increase in wallet share from existing customers,” added Nyanhongo.
The expected credit loss allowances for the period rose to ZWG24.9 million, largely driven by new lending assets written in both foreign and local currency, as demand for funding remained on an upward trend. The Bank’s credit book remains sound, evidenced by its NPL ratio of 0.67%, well below the regulatory threshold of 5%.
Stanbic Bank’s operating expenses were contained within expectations, as efforts were focused on implementing various cost-containment measures. The cost-to-income ratio ended the period at 51% (without Day 1 adjustments), compared to the internal benchmark of 50%.
In the same statement, Stanbic Bank Board Chairman Gregory Sebborn noted that the institution ended the period under review with qualifying core capital of ZWG1.5 billion (USD107 million), surpassing the local currency equivalent of the required USD30 million regulatory minimum core capital.
Sebborn emphasized that Stanbic Bank continues to support the growth and development of various industries through its Business and Commercial Banking, as well as Corporate and Investment Banking portfolios, in alignment with its unwavering commitment to sustainability.
“Our dedication to driving growth within our country remains at the forefront of our operations,” said Sebborn. “This is indeed in line with Stanbic Bank’s purpose: Zimbabwe is our home, we drive her growth.”
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