Stanchart profits up 12pc

HARARE - Standard Chartered Plc (Stanchart)’s Zimbabwean unit recorded an $8 million profit after tax in the half year to June 2014, up 12,5 percent from $7,1 million recorded in prior comparable period.

The local financial institution, wholly-owned by British-based Stanchart, registered a 16 percent growth in profit before tax to $11,7 million during the period under review from $10 million.

Its board chairman, Samuel Rushwaya, said the performance was on the back of loan impairment recovery.

“The bank seeks to protect its profitability in the current environment and position itself for growth into the future,” he said.

Despite the challenging operating environment, Stanchart Zimbabwe managed to maintain its revenue earning capacity in line with prior comparable period, with total operating income increasing to $34,9 million from $34,6 million.

Non-interest income decreased slightly to $22,4 million from $22,6 million while net interest income increased to $12,5 million from $12 million realised in the first half of 2013.

Loans and advances decreased to $187,3 million from $203 million whilst deposits from customers slightly increased to $330 million from $329 million in prior comparable period.

“The bank has taken a more conservative approach to lending in the face of rising non-performing loans occasioned by the difficult operating environment,” Rushwaya said.

This comes as the Reserve Bank of Zimbabwe (RBZ)’s  governor John Mangudya, in his maiden monetary policy statement last week, said non-performing loans at Zimbabwean banks had swelled to 18,5 percent of total loans, or $705 million, as of June 2014 from 1,6 percent in 2009.

This has given the central bank impetus to create a company that will buy bad debt from banks.

The Zimbabwe Asset Management Corporation (Zamco) will purchase non-performing loans and banks will be obliged to sell the debt under commercial terms, assign collateral and all other rights.

The company will seek “to clean up and strengthen banks’ balance sheets and provide them with the liquidity to fund valuable projects for the economy to rebound and to mitigate loss of confidence,” the bank said.

Rushwaya noted that on-going efforts by authorities to revive the interbank market and restore the central bank’s lender of last resort role are essential to improve financial intermediation by the banking sector.

He added that the bank remains committed to the long-term interests of its customers and all other stakeholders and will continue facilitating the development and growth of the Zimbabwean economy.

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