IDBZ targets $1bn capitalisation

HARARE - State-owned Infrastructure Development Bank of Zimbabwe (IDBZ) targets to grow its asset base more than ten-fold from $87 million to $1 billion in the next four years.

Willard Manungo, the bank’s chairperson, said the financial institution has crafted a new strategic plan to guide its business operations from 2013 to 2018.

“The plan rides on, and largely derives its objectives from ZimAsset,” he said.

However, market experts warned that IDBZ’s plans are too ambitious considering Zimbabwe’s deteriorating economic situation characterised by an acute liquidity crisis, high non-performing loans and stagnant bank deposits.

Of the 18 banks operating in Zimbabwe, only CBZ Holdings has an asset base of over $1 billion while four banks hold 60 percent of the $4,7 billion deposits in the system.
Some banks have already closed, weighed down by indiscriminate lending and failure to raise fresh capital.

Despite the gloomy economic outlook, Manungo said the bank — planning to issue a $100 million housing bond this year — remains bullish about its prospects.

“In line with the new economic programme, ZimAsset, the institution will increase its focus and resource allocation towards the key mandate of infrastructure development by leveraging on its key competencies in advisory service and project and management,” he said.

Manungo, who is also Finance ministry’s permanent secretary, noted that IDBZ will be involved in housing delivery in a significant way through servicing of land and construction of related offsite infrastructure.

“The initiative is expected to contribute significantly to ameliorating the dire housing situation across all major urban centres, while ensuring sustainable income streams for the group,” he said.

This comes as IDBZ recorded a drop in net profit to $2,2 million in the year ending December 2013 from $3,5 million the previous year as performance was hit by liquidity challenges.

The bank’s liabilities decreased to $112 million from $123 million in 2012 while total assets were worth $106 million down from $112 million the previous year.
In the trading period, net income jumped to $10,8 million from $9,4 million.

“This performance was achieved in spite of declining interest margins and a reduced loan book,” said Manungo.

“The performance was mainly driven by non-interest income which reflects the strategic shift in focus by the group towards long-term infrastructure related business,” he said adding that the bank’s performance was also hamstrung by long-term legacy foreign debt of $40 million.

Government, which owns 87 percent of the bank was considering a special purpose vehicle to house the debt as a strategy to re-capitalise the financial institution.

“The net result would be a well-capitalised institution capable of mobilising funding through lines of credit in regional and international capital markets on the strength of its balance sheet,” Manungo said.

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