Agribank to pay interest on savings
AGRICULTURE Development Bank (re-branding to Agricultural Finance Company) says it will soon start paying interest on local savings and foreign currency accounts (FCA), as part of its drive to broaden the banking group’s deposit base.
This will be in compliance with Statutory Instrument 65A of 2020, instituted by the Reserve Bank of Zimbabwe (RBZ) in June last year, where it instructed the banks to pay interest on savings and fixed deposit accounts to promote financial intermediation and stimulate production.
In order to grow its depositor base, Agribank said it was in the process of procuring 5000 Point of Sale (POS) machines, which are VISA and Wi-Fi enabled for the convenience of customers.
The bank indicated it was focussing on merchant POS machines particularly to grow its share on local deposits, transactions and commissions.
In a statement accompanying Agribank half-year results to June 2021, acting chief executive officer Elfus Chimbera said the initiatives were meant to expand the bank’s financial inclusion objective mainly through microfinance and affordable financial products.
“The bank continues to focus on deposit mobilisation initiatives in order to sustain and grow the business.
“…it will also take advantage of the statutory instrument 65A of 2020 that compels banks to pay interest on local savings accounts and foreign currency (FCA) savings accounts to grow its deposit base.
“The directive is expected to promote financial intermediation and stimulate production,” said Chimbera.
This comes on the back of a $499, 7 million profit after tax, a 268 percent growth from last year’s mainly driven by growth in the loan book, fees and commissions’ income buttressed by the bank’s increased involvement in the agricultural sector after a good rainfall season.
“Good rainfall season resulted in a tremendous growth of the loan book especially for small scale farmers in the tobacco and sugar cane sectors,” he added.
‘‘In the first half to June 2021, Agribank’s net interest income grew to $745, 31 million a 1 068 percent from $63, 8 million recorded in the same period last year, while total operating income registered a 315 percent growth to close the period under review at $1, 6 billion.
There was however significant growth in operating expenses which closed the period under review at $954, 54 million a growth of 462 percent compared to last year’s $169, 8 million, stemming mainly from hyper-inflationary cost-push pressures.
Additionally, the advent of the Covid 19 pandemic came with unexpected costs as the bank raced to meet compliance requirements like pandemic personal protective equipment (PPEs).
The bank’s cost to income ratio closed the period at 59 percent up from 44 percent reported in 2020.
Earlier this year Agribank indicated that it will be re-branding under a new holding name “Agricultural Finance Company” (AFC) Holdings. The banking institution will now have four subsidiaries encompassing AFC Commercial Bank, AFC Insurance, AFC Land and Development Bank, and AFC Leasing Company. According to the government, the
organisation is aimed at providing funding across the whole agriculture value chain from communal to large-scale farmers.-herald.clz.w
