Five commercial Banks grapple with credit impairments - Deputy BOZ Governor
The Bank of Zambia says at least five local commercial banks have 50% non-performing loan portfolios. A non-performing loan refers to where a borrower is not making interest payments or repaying any principal, with the possibility of recovery deemed doubtful. Debts with which there is doubt as to collectability.
This is according to Central Bank Deputy Governor Dr. Bwalya Ng’andu. Dr Ng'andu refused to disclose the affected banks out the nineteen (20) registered commercial banks. He was speaking at the public hearing regarding the restructured Intermarket Bank Corporation -IBC now to be called the Zambia Industrial and Commercial Bank - ZICB which is set to re-open by November this year, a year exactly after it was repossessed by the Central Bank.
Dr. Ng'andu further stated that depositors with outstanding balances in the defunct IBC will not be given any interest for their money because the Bank was non-operational. He further confirmed that the New Managing Director of ZICB is Mr. Ignatius Mwanza. He also confirmed that NAPSA, Industrial Development Corporation -IDC, Madison Group are some of the shareholders of the ZICB.
Meanwhile Dr. N’gandu said that it is important that commercial banks publish simplified books of accounts to assist the general public be informed on financial performance of the commercial banks.
“It is important that Banks publish the accounts but you; their clients must also read the statements, if you cannot read the accounts, then find someone to assist in the interpretation of the figures so that there is feedback” he stated.
And Dr. N’gandu said that the new financial regulations in place that require banks to have the increased financial capital requirements came at the right time as more commercial banks could have gone under from 2012 to date as a result of the global economic downturn.
“The minimum capital requirement has acted as a safeguard to bank’s operation in Zambia, no wonder there is resilience and sustainability, and we have not had a bank winding up business of late” he said.
The minimum primary capital requirement for commercial banks is now standing at ZMW104 million for locally owned banks and ZMW520 million for foreign owned banks.
Contrary to general public perceptions, “Banks do not always have a good day that is why as a regulator, we ensure that we keep monitoring banks that have higher ratios of non - performing loans. The Central Bank is in constant touch with the affected banks to harmonize their books” he promised.