eBusiness Weekly
Nelson Gahadza
Getbucks Microfinance Bank Limited (Getbucks) says the bank’s diversified asset portfolio mix saw the property assets counter eroding effect of inflation on monetary assets.
The Microfinance Bank grew its total assets by 44 percent to $1 billion for the year ended 31 December 2021 compared to $70 million in prior year, as a result of a diversified asset portfolio made up of property carried at fair value and monetary assets in the form of loans.
“This portfolio mix is in line with the value preservation strategy of the Microfinance Bank, which saw the property assets counter the eroding effect of inflation on monetary assets,” Dr Rungamo Mbire, the Bank’s chairman said in a statement of financials.
Dr Mbire said in 2021, the operating environment continued to be characterised by significant challenges, with the Covid-19 pandemic continuing to affect businesses both globally and locally.
He said whilst the annual inflation rate closed at 60.74 percent in December 2021 from 348.6 percent in December 2020, the operating environment continued to experience significant increases in prices of goods and services.
Dr Mbire said during the year under review, the Microfinance Bank recorded a net profit of $192 million representing a 366 percent increase from prior year loss of $72 million.
“This was largely as a result of a reduction in the net monetary loss from $48 million in 2020 to close at net monetary profit of $25 million in 2021, largely due to the Microfinance Bank’s assets being predominantly monetary,” he said.
He noted that operating expenses increased by 55 percent during the year under review from $258 million to $399 million and the increase was lower than the average inflation for the year under review.
The Bank’s borrowings for the period increased from $161 million in 2020 to $284 million as the Microfinance Bank managed to mobilise new lines of credit.
“However, customer deposits shrunk by 58 percent to close at $79.2 million from $187 million due to the general market’s reluctance to hold on to monetary assets considering the inflationary pressure and fear of real monetary loss due to currency depreciation,” said Dr Mbire.
He added that the loan book grew from $132million in 2020 to close at $179 million in 2021. Dr Mbire indicated that the Bank does not have material foreign currency denominated commitments.
During the period under review, the Microfinance Bank’s net equity position was $474 million translating to USD4,4 million at the official exchange rate as at 31 December 2021.
Dr Mbire said in order to ensure compliance with the regulatory minimum capital requirement extended deadline of 31 December 2022, the Microfinance Bank is working on a recapitalisation plan through a rights issue.
“The capital raised will help the Microfinance Bank address the regulatory minimum capital requirement of US$5 million equivalent.
‘‘ The raised capital will reduce the Microfinance Bank’s cost of funding, as well as capacitate the Microfinance Bank’s expansion drive,” Dr Mbire said.
He noted that investments in technology will continue to be the core focus of the Microfinance Bank’s strategy to deliver financial services.
He added that the local currency continues to be buffeted by inflation and exchange loss against all the major currencies hence the Bank will continue to implement capital preservation initiatives to preserve shareholder value.
