ZB Financial Holdings’ inflation adjusted operating costs rose to $9,4 billion in the half year to June 2022, a 58 percent increase from $5,9 billion recorded in the prior year largely emanating from the upward pressure on cost structure from the inflationary environment.
During the period under review, the major issues in the domestic operating environment continued to be instability in the exchange rate regime and worsening inflation profile.
The local currency depreciated by 237,1 percent against the USD from US$1: $108,67 on January 1, 2022 to US$1: $366,27 on June 30, 2022 with the local currency depreciating the most in the second quarter 2022, by 157,2 percent, from US$1: $142,42.
Shepherd Fungura, the group’s chairman, in a statement of financials said during the half year period, year on year inflation averaged 103,2 percent, whilst month on month inflation averaged 14,3 percent, between January 2022 and June 2022.
“Although the annual inflation outturn for the half year to June30, 2022 improved from the comparative period in 2021, it is worth noting that, where in the same period in prior year annual inflation was on a downward trajectory, in 2022 year on year inflation is actually on an upward trajectory, and monthly inflation is now in double digit,” he said.
However, the group’s net interest income registered rose by 55 percent from $2,6 billion in 2021 to $4,1 billion this year. Inflation adjusted loan impairment charges rose by 207 percent from $0,747 billion last year to $2,2 billion.
Fungura said the group has made significant progress towards its organisational transformation programme designed to transform the organisation into a more people centric and to enhance its customer journey.
The transformation journey is also aimed at delighting the Group’s customers through a combination of digitalisation and service excellence.
“As part of the transformation, the Group has come up with new structures designed to remove silos in its operations, and is currently making new appointments in line with the new structure and this exercise is scheduled for completion in the third quarter of 2022,” he said.
He added that the Group also continued to progress in the conversion of branches into one-stop customer service centres, with 14 branches already converted to service centres as at June 30, 2022.
According to the Group’s financials, the group posted inflation adjusted net earnings after taxation of $6,069 billion, an increase of 165 percent over the previous year, whilst in historical cost terms the net earnings after taxation increased by 2 001 percent to 20,37 billion.
“This performance was underpinned by growth in inflation adjusted total assets of 13 percent to $124,8 billion,” said Fungura.
He said during the half year period, the group recorded a 147 percent rise in the inflation adjusted total income from $8,44 billion in 2021 to $20,87 billion and a 779 percent increase to $25,72 billion in historical cost terms.
“This performance outturn was mainly underpinned by a 1 039 percent rise in other operating income, which rose from $0,97 billion in June 2021 to $11,14 billion in June 2022, followed by banking commissions and fees which rose from $3,35 billion in June 2021 to $3,88 billion in June 2022,” Fungura said.
Net insurance income for the group increased by 45 percent from $0,69 billion in June 2021 to $1,01 billion in June 2022, on the back of a 43 percent rise in gross premiums from $2,04 billion in June 2021 to $2,93 billion in June 2022.
According to Fungura, net profit registered a 165 percent increase, from $2,28 billion attained in June 2021 to $6,06 billion in June 2022.
In terms of individual division performance, under the banking operations, ZB Bank Limited’s inflation adjusted net profit after tax improved from $1,4 billion in 2021 to $5,1 billion for the period ending June 30, 2022.
During the period, the bank’s total assets increased to $91,3 billion from $81,06 billion as at December 31, 2021.
ZB Building Society inflation adjusted net profit after tax improved from $191,76 million in June 2021 to $1,03 billion for the period ending June 30, 2022.
The society’s total assets increased from $6,4 billion as at December 2021 to $7,4 billion during the period under review.
The ZB Insurance operations recorded a net profit after tax in inflation adjusted terms from $2 77,56 million in 2021 to $990,70 million for the period ending June 30, 2022.
Fungura said the company’s total assets for the period increased to $5,6 billion, representing a 203 percent increase.
“The company maintained good relations with its cedants and retrocession partners during the period while the expansion into Botswana market is now at an advanced stage, as the company opened for business on June 1, 2022,” he said.