Bank enhances capacity to support foreign currency related payments

BancABC has enhanced its capabilities to support foreign currency-related transactions in line with the obtaining environment.

Transactions in the country have become largely skewed towards foreign currency, with the central bank estimating over three quarters of local transactions are in US dollars.

According to the bank, due to the highly dollarised environment, the volume of transactions in local currency on digital platforms have also been declining.

Transactions have significantly shifted to US dollars and in some instances, on a cash basis. Adapting to the changing transaction behaviour of consumers, banks have also been investing heavily in the US dollar transaction capabilities in its digital platforms.

As such, banks also developed US dollar products in line with consumer requirements, which encourages them to continue using formal banking channels.

“The group expanded existing capabilities to support foreign currency-related transactions in a highly dollarised environment and continued with its capital preservation strategies of hedging asset portfolios against inflation and currency erosion while ensuring that costs remain well contained.

“The executed strategy worked well as it delivered improved performance as demonstrated by increase in profitability and attainment of regulatory capital from organic growth,” said BancABC.

This also comes as the group has put focus on investing in digitalisation in line with the customer needs and the obtaining digitalisation drive in the country and world over.

In a performance review, the group highlighted its support for the digitalisation drive and “heavily” invested information technology and carried out various system upgrades to improve customer experience, reliable and dependable transactional platforms.

The investment made in technology, delivery channels and human capital has been designed to further grow and broaden the group’s revenue streams.

Meanwhile, the group has reported a surge in profitability for the interim period to June 30, 2023 driven by digital income, among other factors. According to the group its profit after tax rose 641 percent to $118,6 billion compared to $16 billion recorded during the same period in the prior year.

According to the group, the performance was driven by growth in total income, which rose to $234,5 billion during the reporting period from $56,9 billion reported in June 2022.

“Key income drivers were currency revaluation gains, foreign currency-based income, digital income, and fair value gains on investment properties,” said the group.

Total assets more than doubled, increasing by 121 percent to $790,8 billion at the reporting date from $358,4 billion at 31 December 2022 owing to a strong balance sheet that had a mixture of US dollar denominated assets, US dollar linked assets and ZWL assets.

“Nevertheless, the group continued to adopt cautionary lending approach due to tightening liquidity situation, and the need to maintain adequate cashflows to meet customer demand,” said BancABC.

During the period under review, loans and advances increased by 81 percent in inflation adjusted terms to $117,1 billion compared to $64,8 billion recorded during the prior year period mainly due to effect of exchange rate on US dollar based loans and new disbursements.

As at close of the period, 30 June 2023, the capital adequacy and liquidity ratios were well above the regulatory minimum at 44 percent and 73 percent, respectively. The group closed the period under review with a core capital of US$32,2 million at 30 June 2023 against the required regulatory minimum of US$30 million.

Going forward, the bank has also indicated it will maintain a tight grip on costs to enable spending in areas that create value for customers, shareholders, staff, and other stakeholders.-ebsuinessweekl