GetBucks records subdued profit
Financial services provider, GetBucks Microfinance Bank’s performance for the first quarter to March 31, 2021 was subdued with after tax profit falling 78 percent as effects of Covid-19 persisted.
The quarter under review saw the first month in a level four lockdown in Zimbabwe as the second wave hit.
Although the quarter was characterised by fair trading levels for the Microfinance Bank, the group recorded after tax profit of $12,3 million for the quarter under review, which was a significant decline from the $58,2 million recorded during the same period last year.
The loan book closed off at $146,1 million compared to March 2020’s $131,1 million.
Total equity closed the quarter at $149,9 million, representing a 41 percent decline from the $254,4 million as at March 2020.
“The Covid-19 pandemic saw partial shutdowns in some sectors resulting in reduced business activity and the Microfinance Bank’s ability to offer some services,” said chief finance officer Wimbayi Chigumbu in a trading update for the period.
But, despite the Covid-19 lockdown restrictions at the start of the quarter due to the second wave of the pandemic, the environment remained generally stable.
The foreign exchange auction system, introduced by the Reserve Bank of Zimbabwe (RBZ) contributed to the stability as it has resulted in a stabilisation of the exchange rate.
Additionally, during this period, the RBZ maintained a strong grip on reserve money growth resulting in a slow increase in money supply growth, thereby further stabilising exchange rates.
But the tight monetary position, said GetBucks, made it harder for the Microfinance Bank to access wholesale lines of credit.
“The environment has been tough for micro-lending institutions owing to inability to keep up with inflation and the attendant rate of increase in expenditure,” said Chigumbu.
Going forward, the Microfinance Bank’s strategies are anchored on increasing transactional income from retail and international banking business.
The anticipated bumper harvest from agriculture is also expected to boost economic activity in the country, which will also be an added advantage to financial services providers. The economy is projected to rebound by 2,9 percent in 2021, albeit the adverse effects of Covid-19.
In line with the uncertainties caused by the pandemic, the financial service provider has strategies in place such as cost containment while also pursuing other measures to meet minimum capital threshold set at US$5 million by December 31, 2021.
Said Chigumbu: “We expect the impact of the Covid-19 pandemic to continue to be adverse across most sectors and that the policy environment will have low predictability. Access to new funding lines and cost containment will be key to the Microfinance Bank’s growth during the next quarter.
“Measures to manage costs have been instituted during the period in order to mitigate hyperinflation and to right size the Microfinance Bank in line with reduced levels of activity across the economy.”-ebusinessweekly.cl.zw
