Barclays to up credit lines

HARARE - Barclays Bank Zimbabwe (BBZ) says it might increase its loan book to $80 million depending on the prevailing market conditions.

Last year, the bank disbursed $40 million in lines of credit.

“By end of May we might probably double that amount. We are comfortable that we still continue to have the support of the group,” its chief finance officer Sam Matsekete told an annual general meeting on Thursday.

George Guvamatanga, BBZ’s chief executive, also said, at the same occasion, that they were going to increase focus on the quality of the loan book.

“Loan loss ratio at 0,7 percent reflects a strong loan portfolio,” he said, adding that “under a stable to improving economic landscape, Barclays would sustain growth in the loan book and offshore lines of credit from current levels”.

“At current run rate, the bank would close the year at lower than planned loan and deposit levels,” he said.

BBZ has maintained non-performing loans at one percent against the banking sector’s average of 17 percent.

In the bank’s trading update for the four months to April 2014, Guvamatanga said net interest income grew by 13 percent year-on-year, indicating slower growth in loans compared to prior year.

Non-funded income growth of one percent was subdued reflecting constrained growth in transactional activity.

“We are experiencing sustained transaction volumes albeit at slower than planned growth,” Guvamatanga said.

He added that they would consider the demands of the current economic landscape which require responsive and scalable business approach and that this would continue to inform the bank’s strategy and business model. “The economic landscape requires significant decisive interventions to enhance investor confidence, promote local production and contain imports bill. Clarity on key policies that local and foreign investors consider, is critical,” he said.

As part of cost containment measures, Guvamatanga said the bank would try and control operating costs for this year to be within 2013 levels.

“There continues to be pressure on certain cost lines especially occupancy and IT-related lines. Going forward, cost, scale and efficiency initiatives will become more critical under sub-optimal economic performance,” he said.

The bank’s capital adequacy ratio relative to current business levels, are adequate and above regulatory levels.

“The bank will continue to review its capital base into the future to support growth targets and work towards the 2020 regulatory minimum levels,”Guvamatanga said.

On the economic outlook, Guvamatanga said the economy had lots of opportunities but with significant uncertainties.

He noted that the economy was still characterised by slower economic growth rate, weak aggregate demand, low disposable incomes and unresolved debt overhang coupled with certain unclear policies keeping the perceived country risk high.

“We however see certain sub-sectors and players in the market who have adapted their business models continuing to do well,” he said.


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ORIGINAL - 19 May 2014

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