Banking sector records ZiG10 billion in profits
ZIMBABWE’S banking sector profitability remained sound in the first half of the year registering aggregate profits amounting to ZiG10,42 billion, according to the Reserve Bank of Zimbabwe (RBZ).
In its Mid-Term Monetary Policy Statement (MPS), the RBZ said the bulk of the financial services sector’s income came from non-interest income, which accounted for 87,57 percent of total income — which stood at ZiG16,48 billion.
“The banking sector remains profitable with all banking institutions reporting aggregate profits of ZiG10,42 billion for the half-year ended 30 June 2024,” reads the MPS statement in part.
The central bank, however, said reliance on non-funded income compromises the quality and sustainability of earnings.
The key profitability indicators, return on assets and return on equity ratios were 13,37 percent and 35,74 percent at the end of the period under review.
Efficiency in the banking sector as measured by the cost-to-income ratio was satisfactory at 57 percent as at June this year.
The cost-to-income ratio is expected to improve as banking institutions continue to increase reliance on digital platforms for service delivery, as well as automation of processes that are cost-effective.
In terms of deposits and liquidity of the banking industry, the average prudential liquidity ratio of 59,52 percent was recorded, a marginal decline from 61,95 percent as at March 31, 2024.
As at the half year under review, total deposits in the banking industry amounted to ZiG43,60 billion largely driven by foreign currency deposits, which accounted for 79,52 percent of total deposits.
Turning to the need for fair and affordable bank charges, the Reserve Bank said it continues to actively engage banking institutions to ensure affordable and accessible banking services, to promote financial inclusion and as part of market conduct supervision.
“Furthermore, banking institutions and deposit-taking microfinance institutions were directed to exempt individual accounts maintaining a daily balance of US$100 or less (or equivalent in
local currency), for a period of up to 30 days, from monthly maintenance or service fees,” reads part of the MPS statement.
To further promote the use of electronic means of payment, the Reserve Bank is with effect from September 1, 2024, exempting electronic transactions of less than US$10 or the ZiG equivalent from bank charges.
“This measure will remove the cost of using electronic means of payments by according such transactions a near-cash characteristic, consistent with the Reserve Bank’s drive towards digital cash,” reads the MPS statement in part.-ebsinessweekl
