Stanbic Bank gears for headwinds as profit rises

COMMERCIAL banking giant, Stanbic Bank Zimbabwe Limited says it has lined defences to ride out of any new threats stemming out of Covid-19 induced drawbacks.

Stanbic chairperson Gregory Sebborn, who spoke as Stanbic doubled inflation adjusted profit after tax to ZW$5,2 billion (US$36,3 million) during the year ended December 31, 2021, said the financial institution would also keep a close eye on inflation and currency fragilities.

Stanbic, a unit of South African headquartered Standard Bank Group, had posted ZW$1,81 billion (US$12, 7 million) profit after tax during the comparable period in 2020.

“The outlook remains somewhat uncertain due to currency instability, the Covid-19 pandemic and the growing inflationary pressures,” Sebborn said in a statement accompanying the bank’s financial statements.

“However, the bank will continue to ensure that strategies are in place to mitigate the possible negative effects of these factors,” he added.

The bank had posted ZW$1,81 billion profit after tax during the comparable period in 2020.

Net income interest income growth was supported by surges in average interest earning assets.

“The bank achieved an inflation adjusted profit for the year of ZW$5,2 billion, growing from ZW$1,8 billion in the prior year,” chief executive officer Solomon Nyanhongo said.

“The 2021 inflation adjusted net interest income increased from ZW$2,7 billion (US$18,6 million) in 2020 to ZW$8,1 billion (US$57 million), largely underpinned by the improved growth in our average interest earning assets from ZW$11,7 billion (US$82, 1 million) to ZW$34,1 billion (US$239, 4 million) as new lending assets and financial investments were acquired,” the Stanbic CEO said.

Stanbic maintained a healthy lead in net interest income during the period.

Bank earnings have increasingly been led by non-interest income, which has been driven by a rise in digital transaction fees.

At Stanbic, net fee and commission income climbed to ZW$7,3 billion (US$51, 256 million) during the review period, compared to ZW$4,2 billion (US$29, 4 million) previously.

The Stanbic CEO attributed the growth to relaxation of pandemic induced lockdowns during the review period.

“The relaxation of the lockdown conditions led to the uplift in the volumes of transactions which were passing through our various service channels,” he said.

“However, the persistent foreign currency shortages on the foreign currency market impacted negatively on the level of trading activity, resulting in depressed trading income,”

Loans and advances increased, more than doubled to ZW$30,99 billion (US$217,5 million), riding on advances in mortgage loans personal unsecured lending and business lending, among several factors.

Deposits grew to ZW$91,76 billion (US$644, 2 million) in the period under review, from ZW$57,11 billion (US$400 million) previously, driven by foreign currency deposits and money supply growth.