Bayport Financial Services Third Quarter Earnings Soar 8% Higher

Bayport Financial Services, the leading deposit taking non-bank financial institution after Izwe Loans posted record high year earnings competing with the likes of commercial banks. Bayport third quarter earnings rose by 8% - a 3% slow down compared to quarter two – to ZMW5 9.94million. The ZMW 2.2billion balance sheet non –bank institutions YTD earnings are ZMW 165.37million surpassing commercial banks such as First National Bank with a balance sheet of ZMW 6billion.

Interest income rose 7.8% to ZMW 225.91million as net interest income rose 18.5% due to a leaner interest expense and thin credit impairment base. Bayport’s ZMW 2billion balance sheet at ZMW 587million shareholders equity was able to deliver an annualised Return on Equity – ROE of 37.55% a whisker shy of 39.7% in Q2.

Financial Analysts view Bayport as a defacto commercial bank seeing that despite it not having a banking licence; it is able to deliver profitability higher than commercial banks with bigger balance sheets. Bayport is an example of very efficient but simple banking models with paymaster in charge of collections at sources hence the efficacy in managing credit impairments. This institution has the markets lowest Credit impairment to income ratio. Another school of thought argues that Bayport doesn’t have a complex product offering hence is able to seamlessly operate without technicality of having to have a diverse clientele whose credit behaviours can be predicted.

Commercial banks can learn a great deal from Bayport especially in the area of collections of loan repayments. We forecast Bayport to finish as the only microfin in the Top 5 financial institutions this year. At this rate we expect Bayport to seriously consider commercial banking status because the market can imagine what the level of earnings would be if the entity added trading, transactional banking and other income lines.

Earlier in the year the Securities and Exchange Commission mentioned that Bayport had lodged in an application to list a ZMW 300million medium term note -3yr to 5yr- on the Lusaka Stock exchange – LuSE. With no doubt we forecast this offering to be fully subscribed given the nonbank financial institutions performance. We encourage more of these capital raising initiatives using the stock exchange as these contribute to deepening of the financial markets.