Banks brace for income knock

HARARE - Local bankers say the Reserve Bank of Zimbabwe (RBZ)’s newly introduced withdrawal charges are anticipated to eat into income, with some pointing out financials were set to reflect the effect in the first half of 2017.

Well placed bankers told the businessdaily that the new charges — introduced by the central bank Monday in line with cash shortages afflicting the economy — were going to eat into profits as most local financial institutions had recorded increased withdrawal traffic due to the present cash challenges.

“It is a no brainer; this will definitely eat into income in the medium term. I am sure the first half of 2017 will have the extent to which the new charges will affect local banks…

“In my opinion though, the move was long overdue, because in the past you would have say a $5 charge for a $1 000 withdrawal, but if people are getting $20 per withdrawal the charge then becomes unreasonable,” a Harare-based banker who spoke anonymously said.

While questions were sent to the Bankers Association of Zimbabwe (Baz) on Monday at 11:22AM, the association has not yet responded outlining its position on the new charges.

Efforts to get a verbal comment were also made to no avail.

However, another banker also pointed to the income knock.

“Look, you have banks that make an excess of $5 million from non-interest income alone, how do you think they will fare in the coming reporting periods?

“This figure will obviously be down because the more withdrawals depositors made, the higher the income was going to be, but this regulation introduces a new matrix altogether,” the banker said.

Prior to Zimbabwe’s cash shortages a few months ago, the banks were charging $2,50 for ATM withdrawals and about three percent  (of the withdrawn amount) for cash withdrawals from inside banking halls.

However, earlier this week the RBZ ruled that cash withdrawal charges be lowered.

The new ATM cash withdrawal charges include $0,50 for $50 and $5 for $500, while over-the-counter withdrawals from banking halls are charged at $0,25c for $20, $0,63 for $50 and $2,50 for $200.

Much to the relief of many depositors, central bank governor John Mangudya said “while cash withdrawal limits have reduced significantly ... there has not been a proportionate reduction” in the levels of bank charges.

Zimbabwean banks are offering local bond notes to cover up for a dollar shortage that has resulted in long bank queues.

“In order to align cash withdrawal charges to amount withdrawn, a proportional pricing model has been adopted to replace the current fixed charges.

“The applicable charges for cash withdrawal is a maximum of one percent and 1,25 percent of amount withdrawn for ATM and over the counter respectively,” Mangudya said.

Zimbabwe has sunk into a cash crisis because of lower productive capacity and low exports. Its net importer status has also worsened the situation, with authorities saying the country has become a cheap source of hard currency.

The country has been using a multi-currency regime backed by the US dollar and calls for the adoption of the rand have been rejected by the government.

The current dollar crunch has affected businesses, with companies unable to pay for crucial imports such as raw materials and equipment for production.

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