Queues grow shorter as banks in Zimbabwe brim with profit
THE cash crunch in Zimbabwe could be easing for foreign banks, executives say, as international and regional finance institutions have adequate liquidity to support transactions even as some lean on their parent groups for support.
Profits have been chiming in for foreign banks in Zimbabwe — among them units of South African-owned banks such as Standard Bank and Nedbank.
Interim after-tax profit for the period to June at Standard Chartered Zimbabwe rose to $6.1-million (about R85-million) compared to a pre-tax profit of $1.2-million in the 2015 half-year. Barclays Zimbabwe has reported a $3.277-million profit for the same period compared to an interim profit of $1.299-million in 2015. Profit for Standard Bank’s unit in Zimbabwe (Stanbic) flattened out at $10.5-million for the first half. Its 2015 fullyear profitability jumped 15% to $23.9-million.
However, MBCA Bank, the Zimbabwean unit of Nedbank, said after-tax profit for the halfyear to June slumped by 55% to $1.2-million.
Despite the cash shortages, Reserve Bank of Zimbabwe governor John Mangudya said last month that “there has been an improvement in the level of banking sector nonperforming loans to 10.05% as at June 30 2016” compared to 10.82% at the end of last year.
George Guvamatanga, MD of Barclays Zimbabwe, said: “We maintain high liquidity buffers to ensure that all our nostro and local settlement accounts have adequate funds to effect customer transactions. Depositors want the assurance they will get their money when they need it.”
A nostro account is held by an international finance institution on behalf of a local bank and is used to settle international transactions for the local bank’s clients.
In line with strategies adopted by other banks, Barclays Zimbabwe has introduced a $500 weekly withdrawal limit. Other, mostly foreign, banks have a $300 daily withdrawal limit.
Lillian Hapanyengwi, head of corporate affairs at Standard Chartered Zimbabwe, said the bank remained “highly liquid” and had sufficient capacity to support transactional activities.
Two bank managers said the cash situation had improved, although some local banks — such as CABS, controlled by Old Mutual, and ZB Bank, in which the government has a stake — were still struggling during periods of high cash demand, such as month end and paydays for civil servants.
ZB Financial Holdings CEO Ron Mutandagayi said the bank had been “reducing lending” as it had been unable to get customers “who we thought were good for the funding we have”.
Despite being among the banks that experience high demand for cash at month end, ZB Bank saw its interim after-tax profit jump 46% to $5.9-million.
Zimbabwe has struggled with acute cash shortages in the past two months, with banks and cash machines running out of US dollar notes. Long queues formed in banking halls.
Cash withdrawal limits were set at $100 a day at the height of the shortages, with Steward Bank and CABS among those that completely ran out of banknotes. But the situation has improved, a snap survey showed, with most foreign-owned banks witnessing no queues and withdrawal limits going up for most banks.
Stanbic Zimbabwe was managing the situation and had not yet turned to its parent company for liquidity support, a spokesperson said.
“Zimbabwe is experiencing a shortage of cash USD notes, not liquidity. Stanbic Zimbabwe has sufficient liquidity, and will not need support from Standard Bank Group,” said Standard Bank spokeswoman Kate Johns.
Nedbank’s unit, MBCA Bank, continued to get support from its parent company, said spokeswoman Joanne Nel.
Guvamatanga said the intended exit of Barclays from Zimbabwe provided the “opportunity for a serious investor to come on board” amid earlier indications that Bob Diamond’s Atlas Mara is keen on some of Barclays Africa’s assets.
Foreign banks have struggled with regulatory issues such as the indigenisation policy and state requirements to fund new black farmers.
Finance Minister Patrick Chinamasa said in the mid-term fiscal policy review last month that “the banking sector has remained profitable”, owing to “lower loan loss provisions, lower interest expenses and cost rationalisation”.
Zimbabwe is experiencing a shortage of US dollar notes, not liquidity