ZB back in the black

HARARE - ZB Financial Holdings (ZB) has returned to profitability after posted a $4,1 million after tax profit in the first half of 2015 from  loss of $2,5 million in the same period last year on the back of relentless implementation of cost management.

The group’s chief executive Ron Mutandagayi told an analysts briefing yesterday that the macro level economic factors in the country continued to cause performance volatility as the group’s total revenue had reduced by an aggregate two percent.

“The revenue reduction was saddled by a 35 percent reduction in revenue from lending activities which was partially offset by improved outturn in reinsurance operations, life assurance operations and commissions and other income which performed better by 36 percent, 20 percent and seven percent respectively as compared to 30 June 2014,” he said.

In the period under review, ZB posted a $2,2 million reduction in income from lending activities after a prudential interest reservation of an amount of $9,9 million, which would otherwise have formed part of revenue.

“Underlying loan assets amounted to $132,5 million having reduced by nine percent from $146,2 million as at 31 December, 2014 as a result of the combination of loan settlements and reduced credit creation.

“A conservative loans to deposits ratio of 59 percent was maintained, keeping in line with the volatile nature of the deposit base,” Mutandagayi said.

The ZB boss noted that the group was currently awaiting the merger of its banking operation and banking society, with the transaction awaiting regulatory approval.

“Operationally we are already functioning as one, but we are waiting for the nod and after we get it we will need about three months to implement the merger. We are targeting tier 1 status and hope the merger will raise about $50 million towards this and we will trade up until we meet the $100 million threshold by 2020,” he said.

An eight percent reduction in re-insurance expenses on profitable business drove the improved outturn on the technical results by 36 percent, as increased collections on written premiums improved mortality profits.

Expenses were also cut by 19 percent below the level incurred during the same period in 2014, achieving a saving of $5,5 million.

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