Bank lending grows by 23pc

Total banking sector loans and advances increased by 22,98 percent to $175,60 billion between June 30, 2021 and September 30, 2021, largely attributed to the translation of foreign currency denominated loans.

Foreign currency loans accounted for 32 percent of total banking sector loans as at 30 September 2021.

Fundamentals in the local financial services sector have improved over the past few years, with the sector poised to finance economic requirements, the central bank has said.

In the past, a number of bank failures in the country were caused by poor corporate governance, insolvency and imprudent lending activities.

This was worsened by low confidence in the banking sector due to high transactional costs and marginal rates on deposits. However, both monetary policy intervention and strategies on the part of the banks themselves, have pulled the sector out of the doldrums.

The level of banking sector financial intermediation has remained moderate as reflected by the loans to deposits ratio of 46,87 percent as at September 30, 2021, which registered a marginal increase from 45,84 percent reported as at June 30, 2021.

Bank loans have been mostly to the productive sector, which accounted for 80,89 percent of the loans, consumptive borrowing took 17,35 percent and other sectors accounted for 1,76 percent of loans.

The Banking Sector and micro finance houses have been financing agriculture through direct loans to farmers and indirectly through loans to value chain players such.

Most commercial banks have a specialised agriculture unit within their operational structures complemented by quite a number of non-governmental and developmental finance organisations actively involved in funding small holder farming projects across the country.

Banks have previously said the industry lends only to corporate clients of high repute and to the employees of these companies. The absence of a credit bureau in Zimbabwe has also made profiling of borrowers difficult.

The banking sector loan portfolio quality remained strong with the nonperforming loans (NPLs) to total loans ratio of 0.61 percent as at September 30, 2021, against the generally acceptable international threshold of 5 percent.

The Reserve Bank continues to utilise its early warning system framework to closely monitor developments in the banking sector’s credit risk exposures.-The Herald