eBusiness Weekly
Nelson Gahadza
ZB Financial Holdings has admitted the merger between its bank and building society has taken longer than anticipated and has rescheduled completion of the transaction in 2022.
The plans have now spanned for more than eight years after the ZB Bank Limited board in 2014 approved the group’s merger of the two units and the merger was to ensure compliance with the minimum capital requirements for both the bank and the building society.
According to the group’s financials for the year ended December 31, 2021, all its subsidiaries, with the exception of ZB Building Society, were in compliance with prescribed minimum capital requirements.
“The target was to finalise the consolidation of the Group’s banking operations, that is, ZB Bank Limited, ZB Building Society and Intermarket Banking Corporation, by December 31, 2021, but the transaction has taken longer than anticipated, and is now scheduled to be completed in 2022,” Shepherd Fungura, the group’s chief executive said.
The Reserve Bank of Zimbabwe (RBZ) set minimum capital requirements for the various classes of banking institutions as part of measures to promote the resilience of the financial sector.
Banking Institutions were required to comply with the minimum capital requirements by December 31, 2021.
At the close of 2021, thirteen out of eighteen operating banking institutions (excluding POSB with no statutory minimum capital requirement) complied with the new minimum capital requirements effective December 31, 2021.
The RBZ then gave the undercapitalised banking institutions dispensations to comply with the capital requirements by 31 December 2022 to allow for finalisation of their respective raising initiatives.
During the year under review, ZB Bank Limited posted a profit after tax of $1,866bn in 2021, as compared to $1,018bn in 2020.
Its total assets stood at $37,029bn as at 31 December 2021, from $19,986bn as at December 31, 2020.
ZB Building Society posted a profit after tax of $0,817bn in 2021, as compared to a loss of $0,089bn in 2020.
Fungura said the Society’s total assets stood at $2,936bn as at December 31, 2021, from $1,798bn as at December 31, 2020.
ZB noted that it expects to finalise expansion of its reinsurance business into the Botswana market during the financial year 2022 as a way of increasing revenue streams and unlocking shareholder value.
During the year under review, the group’s Net insurance related earnings improved from a loss of $0,003 bn in 2020, to a profit of $0,830bn in 2021, on the back of a seven percent rise in gross premiums from $1.845 bln in 2020 to $1,982bn in 2021.
The group recorded a 38 percent decrease in insurance related expenses, from $1,847 bln in 2020 to $1,152bn in 2021.
In the year under review, ZB Reinsurance posted a profit after tax of $0,447 bn in 2021 compared to $0,139 bn in 2020.
Its total assets increased in real terms from $1,349 bn as at December 31, 2020 to close the year 2021 at $1,861 bn.
“The company maintained good relations with its cedants and retrocession partners during the year,” said Fungura, adding that the expansion into the Botswana market is set to be finalised in FY2022, after the company managed to get an operating licence.
ZB Life Assurance posted a loss of $0,028 bn in 2021, compared to $0,217 bn in 2020 and its total assets increased in real terms from $5,235bn as at December 31, 2020 to $5,888 bn as at December 31, 2021.
For the year 2021, the Group recorded a 122 percent increase in total income from $5,288bn in 2020 to $11,736bn on the back of an improved non funded-income.
Banking commissions and fees contributed significantly, rising by 83 percent, from $1,836 bn in 2020 to $3,366 bn in 2021.
“The fair value adjustments increased by 1 526 percent from $0,218 bn in 2020 to $3,548 bn in 2021 mainly as a result of improved performance of the Zimbabwe Stock Exchange and investment property valuations,” said Fungura.
Net interest income registered a solid performance during the year 2021, rising by 212 percent, from $1,060 bn in 2020 to $3,304 bn in 2021.
Fungura said as the loans and advances book rose, loan impairment charges also rose by 37 percent, from $0.453bln in 2020 to $0,621 bn in 2021. Resultantly, net income from lending activities rose from $0,607 bn in 2020 to $2,683 bn in 2021, a 342 percent increase.
Meanwhile, operating costs rose by 83 percent from $4,442 bn in 2020 to $8,124 bn in 2021, largely as a result of the inflationary environment.
Profit from ordinary activities also rose by 327 percent, from $0,845 bn in 2020 to $3,612 bn in 2021.
The Group’s total assets increased by 66 percent in real terms, from $30,504 bn as at December 31, 2020 to $50,493 bn as at December 31, 2021.
Fungura said the growth rate, however, remained below average inflation. Deposits and other related funding account balances grew by 72 percent, from $11.425bln as at 31 December 2020 to $19.670bln as at 31 December 2021.
