HARARE: The banking sector bucked the economic headwinds in 2015 with aggregate net profit more than doubling to $127,47 million, according to latest data from the Reserve Bank of Zimbabwe (RBZ). In 2014, aggregate profit was $52,8 million. RBZ governor John Mangudya said 15 out of 18 banks recorded profits in the period under review.
“In a few institutions, increased provisioning for bad and doubtful debts, however, weighed down on their performance resulting in losses,” he said. Total banking sector deposits grew by 11,2% to $5,6 billion in 2015 while loans amounted to $3,9 billion.
Mangudya said against the sluggish growth in credit, the loan to deposit ratio declined to 68,8% by the end of December 2015 from 78,4% in 2014. A local economist, Prosper Chitambara, said there has been improvement and stability in the financial sector and the banking sector was sound. He said the country was limited on monetary policy due to dollarisation. Chitambara said the net aggregate profit went up because the main source for the sector was interest income and interest rates could have been up.
He said rates for deposits were very low. “The decline in non-performing loans helped banks in that losses decline and banks no longer making provisions for bad loans,” he said. The ratio of non-performing loans has declined markedly to 10,87% as at December 31 from a peak of 20,45% in September 2014.
Mangudya said improvement in the ratio of non-performing loans was largely attributable to the disposal of qualifying loans to the Zimbabwe Asset Management Company and “the effective credit risk management strategies employed by banks including intensified collections and workout plans”.