In a recent trading update, ZB Financial Holdings Limited (ZBHL) outlined its resilient performance and strategic focus amidst a challenging economic landscape in Zimbabwe. Despite facing headwinds such as an El Niño-induced drought and adjustments to new currency modalities, ZBHL has reported substantial growth in its financial metrics for the first quarter ended March 31, 2024. This robust performance underscores the financial institution’s commitment to delivering value-adding solutions and enhancing shareholder returns through innovative strategies.
Zimbabwe’s economic growth projection for the year has been adjusted downward from 5.5% in 2023 to 3.5%. This anticipated slowdown is largely attributed to adverse climatic conditions expected to increase the nation’s grain import bill significantly. In response to these economic pressures, ZBHL’s trading update, conveyed by Tinashe Masiiwa, the group’s general counsel, highlights a strategy resiliently crafted to navigate the predicted short-to-medium-term economic difficulties.
For the quarter under review, ZBHL posted an inflation-adjusted profit after tax of ZWL$967.557 billion, marking a significant 78% increase compared to the same period the previous year. The group’s total income adjusted for inflation soared by 120% to ZWL$2.347 trillion, driven largely by a 214% surge in fair value credits and foreign exchange income. This remarkable increase reflects adjustments in asset values in response to the volatile economic environment.
Moreover, the group achieved a 53% rise in sustainable trading income, buoyed by a 69% increase in non-funded income. Despite a 30% increase in total expenses, ZBHL effectively implemented tight cost-containment strategies to manage operational costs efficiently.
ZBHL reported a modest 2% growth in inflation-adjusted assets, totaling ZWL$21.792 trillion. This growth was constrained by stricter monetary policies introduced by the central bank, which impacted the group’s ability to mobilize deposits and extend credit. Nevertheless, the group maintained an impressive average liquidity ratio of 60% throughout the quarter, illustrating its strong financial footing.
Asset quality remained robust, with non-performing loans kept below the regulatory benchmark of 5%. Total equity for the group also increased, reaching ZWL$10.444 trillion as of March 31, 2024, up from ZWL$9.476 trillion in the previous year, further evidencing the group’s solid performance and financial health.
Masiiwa noted that all business units within ZBHL are compliant with minimum regulatory capital requirements, with the exception of ZB Building Society. The group is actively addressing these discrepancies to ensure full compliance across all divisions.
Looking ahead, ZBHL is focused on sustaining earnings and continuing its cost-containment measures as strategic priorities. The group’s comprehensive approach to navigating the economic challenges involves leveraging its strong capital and liquidity positions to seize growth opportunities and mitigate risks associated with turbulent market conditions.
ZBHL has also been preparing for the upcoming publication of its 2023 financial results, expected by May 30, 2024. This timeline includes an extension sought to incorporate additional processes necessary to comply with the IFRS 17 insurance contract requirements, ensuring that the group’s reporting remains transparent and adheres to the highest standards of financial accountability.
As ZB Financial Holdings Limited continues to navigate through Zimbabwe’s economic storm, its strategic initiatives and robust financial management position it well to not only withstand current economic challenges but also to capitalize on potential opportunities. The group’s focus on sustainable revenue generation, investment diversification, and effective cost management underscores its commitment to enhancing value for its stakeholders while supporting the broader economic landscape of Zimbabwe.
Source: Newsday
