Zimbabwean banks’ aggregate net profit for the quarter to March rose 30 percent to $50 million compared to $38,55 million recorded in the corresponding quarter last year as cost containment measures in the sector begin to pay off.
In its quarterly report, the Reserve Bank of Zimbabwe (RBZ) said profitability was also driven by an increase in non-funded income driven by the rise in use of plastic money.
The use of plastic money has increased since the country was hit by cash shortages which manifested early last year.
“The various policy measures put in place by the central bank to promote the usage of electronic payments have assisted in reducing demand for cash.
“Further, banking institutions continue increasing their focus on serving previously unserved and underserved segments in line with financial inclusion drive,” the RBZ said.
Zimbabwe has 19 banking institutions 16 of which made profits during the quarter under review while the remaining loss-making institutions are “employing turnaround strategies to return to profitability”.
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According to the RBZ, aggregate banking sector deposits as at 31 March 2017 marginally increased by 0, 61 percent to $6,55 billion from $6,51 billion as at December 31, 2016.
Commercial banks accounted for 83 percent of the sector’s deposits and 74 percent of the total loans.
Deposits were dominated by demand and time deposits which accounted for 56, 9 percent and 27,87 percent of total deposits respectively.
Interest income continued to be the major driver accounting for 56,24 percent of total income, which totalled $0,26 billion for the quarter.
Fees and commission made up 36 percent of the banking sector’s total income mix. Salaries and employment benefits dominated the sector’s total operating expenses at 45, 55 percent.
The apex bank said the sector was in a healthy position during the quarter under review. To maintain efficiency and improve their earnings capacity, banking institutions have been implementing measures such as pushing for adoption of electronic platforms and alternative delivery channels such as agency banking model.
“The financial condition of the banking sector was considered satisfactory as at March 31, 2017, on account of adequate capitalisation, satisfactory earnings performance, satisfactory asset quality and high liquidity ratio,” said the RBZ.