eBusiness Weekly
Bank consistently productive n ZSE listing a possibility
Kudzanai Sharara and Michael Tome
The decision by Government to partially privatise the People’s Own Savings Bank is meant to enhance the bank’s capacity to underwrite more business to the productive sectors, as well as access expertise and technology to improve banking operations and competitiveness, a senior official with the company has said.In emailed response to Business Weekly, People’s Own Savings Bank’s (POSB) chief executive officer Admore Kandlela, said contrary to popular sentiment that most parastatals will find it hard to find suitors because of their debt overhang, the situation was different with POSB as the bank has consistently performed well in terms of profitability among other banking metrics.
He said, the bank, which has already put in place a technical committee to co-ordinate the privatisation process, will also take this opportunity to widen the frontiers of financial inclusion through targeting informal businesses and the marginalised in the remote areas. POSB boasts of the largest customer base of 824 403 as at the end of October 2018.
“This (the huge customer base) places the bank as a champion of financial inclusion, in addition to serving low income groups. The bank serves the largest proportion of pensioners and civil servants countrywide,” Kandlela said.
POSB is one of the few State-owned Enterprises that is profitable, and declared a dividend of $1,9 million for the half-year ended June 30, 2018. For the full-year to December 31, 2017, the Bank paid $2,4 million in dividend to the Government. The dividends were, however, ploughed back into the business in order to improve the capital position of the bank, said Kandlela.
In the recently concluded Banks and Banking Survey 2018, POSB was judged as the best performing bank in terms of efficient utilisation of assets, and according to Kandlela, this is testimony to the bank’s competitiveness in its sector.
“POSB’s presence in digital space is guaranteed. In spite of foreign currency shortages and lengthy procurement processes and hitches which affect deployment of solutions and innovations, the bank robust digitalisation plans and has asserted its position with its Cellbank (utilised by 77 percent of the bank’s active customers), internet banking, mobile application, merchant POS, own POS and agent POS.”
In an interview with Business Weekly, general manager risk and security Wilbert Fungura, said the partial privatisation agenda is positive as it presents a potential gateway to capitalisation of the bank.
“We are glad to advice that Government has earmarked us for privatisation which means we shall engage in a joint venture or even listing on the stock exchange. I believe that the future of the bank is brighter than ever.
“Privatisation is a good move for POSB because it will actually enable us to capitalise the bank because we need a lot of capital to underwrite more business so I think that will assist the bank to enable POSB to grow so that it can actually embrace most of the financial inclusion initiatives where we have to rope in all those people who are currently underbanked,” he said.
In its last set of results, the profit and growth trajectory continued into the new year with the bank recording a net profit of $8,11 million for the half year to June 2018.
This was on the back of a strong performance from its loan book with interest income increasing by 27 percent to reach $8,43 million, up from $6,62 million recorded in the previous period.
The bulk of the Bank’s income, however, came from non-interest income which grew by 14 percent to $14,21 million from $12,51 million prior year comparative. This was on the back of increased usage of the Bank’s electronic banking platforms.
The Bank is good at managing its costs with operating expenses increasing by 2 percent to $13,63 from $13,37 million reported in prior period.
The cost to income ratio also improved to 63 percent down from 73 percent recorded in the comparative period as cost management and operational efficiency continue to be key priority for management.
The Bank has over the years created value for its shareholders, with shareholders’ funds increasing by 6 percent to $57,71 million from $54,45 million recorded in December 2017 mainly attributed to organic growth.
The bank has a customer deposit base of $159,8 million and total liabilities at $172,2 million. Share capital for the bank stood at $23,3 million as at June 2018 while total equity amounted to $57,7 million.
In terms of key banking metrics, POSB has its liquid asset ratio at 58 percent which is higher than the regulatory requirement of 30 percent.
The Bank has capital adequacy ratio of 31,34 percent which though lower than the 33,09 percent for the previous year is higher than the RBZ minimum required capital adequacy ratio.
