Reforms weigh down Barclays' income

HARARE - Barclays Bank of Zimbabwe Limited (Barclays) says banking reforms recently imposed by the Reserve Bank of Zimbabwe are heavily restraining growth of its non-funded income.

In February, banks — through the Bankers Association of Zimbabwe (Baz) ? signed a memorandum of understanding with the central bank under which the institutions agreed to a raft of measures including paying interest on deposits, scrap bank charges on deposits of $800 and below, and cap loan interest to 12,5 percent.

“Non-funded income growth of four percent is subdued reflecting constrained transactional growth and effects of capped fees and charges,” said George Guvamatanga at Barclays’ annual general meeting (AGM) last week.

This comes as Guvamatanga, also Baz president, also said the banking sector could lose over $40 million annually in revenue due to the reforms.

Under the MoU, the banks agreed to pay a four percent interest on deposits of $1 000 and above held over a period of at least 30 days.

Banks were required to charge up to 0,5 percent of cash withdrawal amount subject to minimum charge of $2,50 while ledger fees, maintenance and service fees were to cost up to $4 per account, while debit cards were to be made mandatory.

Depositors were to be charged a withdrawal fee of $2 for not using an automated teller machine with point-of-sale machines attracting a fee of between 10c and 50c.

No charges were to be levied on cash deposits.

However, Guvamatanga said the bank’s outlook was strong, as they envisaged continued growth in a quality loan book.

“The loan book is growing but loan loss ratio remains low at one percent.

“We continue to evolve our products in line with economic developments and to respond to customer needs.”

“Benefits are already being realised, including new product initiatives and structuring of loan and risk management products,” said Guvamatanga.

The bank’s loans-to-deposit ratio increased from 40 percent as at December 31, 2012 to 44 percent as of end of May while run rate on interest income for the year-to-date to May went up 53 percent as compared to prior year period. During the period under review, the bank managed to acquire 24 state of the art automated teller machines (ATMs) but its branch network remained unchanged.

Guvamatanga pointed out that the Barclays’ performance to December 2013 is projected to reflect its focus on maintaining a strong balance sheet and liquidity position and cautious deployment in customer assets.

“We will continue with investment in technology and channel enhancement and increasing transaction volumes with higher growth in e-channel volume,” said Guvamatanga.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.