Nedbank Zimbabwe posts impressive set of results

One of Zimbabwe’s largest financial institutions, Nedbank Zimbabwe’s after-tax profit for the year to December 31, 2023, bulked 203 percent to $186,33 billion compared to $61,41 billion over the prior year, largely driven by the 428 percent increase in loans and advances to the private sector.

This led to a 182 percent increase in net funded income (NII).

The managing director, Dr Sibongile Moyo, revealed in a statement of financials that the placement of excess liquidity in both ZWL and USD money market instruments also augmented NII performance.

“Non-funded income (NIR) from client transactions, excluding unrealised foreign exchange gains, grew by 191 percent due to an increased number of active accounts, increased volumes of international payments and our digital platforms, internet banking and ATMs.

“The overall increase of 251 percent recorded on NIR included unrealised foreign exchange gains of $502,925 billion arising from the revaluation of the bank’s foreign currency net open position as the ZWL further depreciated against the USD over the period,” she said.

During the period under review, operating costs, excluding impairment provisions and net monetary loss, grew by 152 percent over the prior year, mirroring the trend in inflation and the disparate foreign exchange rates often applied to the settlement of bills in ZWL.

“The expense lines contributing to growth include employee compensation and increased business volumes on click-based technology platforms that support digital banking,” Dr Moyo said.

The bank’s statement of financial position grew by 89 percent, mainly from growth in customer deposits and retained profits, leading to growth in shareholders’ funds.

Dr Moyo said deposits from customers grew by 67 percent to $763,265 billion due to real growth in foreign currency deposits and in ZWL deposits. At the same time, loans and advances grew by 428 percent as lending in foreign currency increased.

For the year under review, the bank’s non-performing loans (NPL) and credit loss ratio (CLR) were maintained at 0.25 percent and 2.02 percent, respectively.

“The capital adequacy ratio (CAR) was 28 percent, well above the prudential guidelines of 12 percent,” Dr Moyo said.

According to Dr Moyo, the usage of foreign currency in the local economy increased as businesses pivoted their operating models for sustainability.

She noted that the banking sector remained resilient, and Nedbank ended the period with strong growth in profitability, capital, and dividend payments.

During the year under review, the regulatory core capital of US$44,57 million was above the regulatory minimum capital of US$30 million.

Dr Moyo said the bank endeavours to put client experience at the centre of enhancements to business processes and touch points.

She said that in line with the bank’s commitment, it embarked on the journey to implement robotic process automation (“RPA”), utilising software robots to automate repetitive, manual, and rule-based tasks to streamline key processes.

“The RPA solutions have enhanced operational efficiency, client two-way interaction with the bank, and responsiveness,” she said.

She noted that in August 2023, the Bank launched American Express (AMEX) acquiring services in Zimbabwe, adding to Mastercard and Visa and further enhancing the Bank’s international card payments programme access for websites, e-commerce, point of sale (POS), and automatic telling machines (ATMs) in the country.

“Since we introduced American Express, we have witnessed a 226 percent increase in volume of transactions by international cardholders using our e-commerce and other channels at various merchants, including airlines and tourist operators,” she said.

During the period under review, the bank enabled interoperability on its mobile banking, POS, and ATM channels to accept USD payments, and Zimswitch enabled cards, thus opening channels up for use in USD by customers of all banks in the market.

As a result, the percentage of digitally active clients on the bank’s books grew to 67 percent by the end of 2023.

The bank’s chairman, Shepherd Shonhiwa, said the banking sector continued to show resilience in 2023 even when the global economy was wary of a banking crisis spillover from the United States.-ebusinessweekly