ZB defies the odds

HARARE - ZB Financial Holdings (ZB) is one of the few companies in the banking industry that have managed to weather the storm and record consistent profits in the last few years.

Several financial institutions such as Trust Bank, Royal, NDH Holdings, Allied Bank, Tetrad, Interfin and AfrAsia among others folded up after they struggled to survive in a dollarised environment.

The Financial Gazette’s John Kachembere speaks to ZB chief executive Ron Mutandagayi to find out how the group is performing. Below are excerpts of the interview.

Q: May you please share with us how you have managed to turn ZB Financial Holdings from a loss-making unit into a commercially viable group?
A: The group undertook several strategic initiatives, which included adopted value (cost management) and growth (revenue enhancement) Transformation strategies, closed down marginal operations in asset management and stock-broking, out-sourced cleaning and security services, synchronisation of operations for units in related business lines, office space rationalisation and we adopted the open-plan office set-up and aggressive bad debt recoveries.
We also took it upon ourself to clean-up of the non-performing asset book, introduced new products and enhancement of operating systems and technologies.
Our strategy also included the introduction of a paperless front office where deposits and withdrawals were digitised.

Q: I also understand that Transnational Holdings Limited is due to reclaim a 26 percent stake in ZB, how is this likely to impact the group’s performance in the near future?
A: Transnational Holdings Limited (THL) is a significant shareholder in ZBFH.  As management, we do not ordinarily have the mandate of commenting on speculation regarding our valued shareholders.
Suffice to say that the Group continues to post remarkable results: for the Half Year period to 30 June 2018 the ZBFH Group posted a net Profit After Tax of $9,35 million (a 14.5 percent improvement on $8,17 million over the comparative period of 2017).
Going forward, we believe that the ZBFH Group will continue creating the best value for its stakeholders without any challenges.

Q: What is your comment on Zimbabwe’s economic outlook considering the latest developments in the country’s new dispensation?
A: The country is poised for recovery, underpinned by, among other things, the impressive performance of the agriculture sector (tobacco output registering record output), improved mining sector production and also renewed international investor interest.
However, the extent of growth depends on the policies that the government will continue to pursue and how appealing those policies will be from both an international community perspective as well as a local investor point of view.

Q: From where you stand, what is the future of the banking sector in Zimbabwe?
A: The digitalisation drive will remain key in shaping the future of the banking sector in Zimbabwe.
Electronic based transactions will continue to dominate the financial space, as the economy increasingly adopts plastic money and Internet banking. 

Q: What are some of the challenges that you are facing in the banking industry and how is ZB dealing with these challenges?
A: There are a number of challenges which the banking sector is facing, among them:
• Informalisation of the economy; ZB joins all players in seeking to understand and tailor-make appropriate products which  suit the demands and tastes of the informal sector.
These measures include relaxing some stringent rules that usually apply to bigger corporates when dealing with SMEs.
The bank is also exploring setting up a microfinance unit as announced  by the GCEO on August 9, 2018 at the media and analysts briefing for the reviewed half year results as at 30 June 2018.
• Transitory nature of deposits; ZB is trying by all means to get corporates in its books who have lower propensity to withdraw their funds to invest for longer tenors. This will enable the Bank to offer longer term facilities to its borrowers.
• Eroded savings culture; The Bank continues to put in place measures to build confidence and stimulate a savings culture amongst the banking public through country-wide road-shows , mainstream media as well as brand activation at trade shows  notably ZITF and ZAS.
• Persistent cash and forex shortages;   ZB is encouraging the use of card and mobile-based platforms when making transactions.
In general, ZB has improved its delivery channels through adopting a digitalization strategy.
ZB is also in strategic partnerships with schools, Zesa, Telecoms (for airtime top ups and mobile money transfers), ZymPay (for ease of bill payments for the Diaspora market), among others.
• A notable challenge is the issue of card cloning and cyber security; ZB is putting in place measures to mitigate against these frauds through consumer awareness programs as well as heightening card security features in line with international standards. We are also taking an industry approach through Bankers Association of Zimbabwe.

Q: How much has ZB mobilised for on-lending to companies this year? And how is this likely to be distributed?
A: The group’s banking arms have over $400 million in deposits all of which is available for lending to deserving businesses.

Q: What new products is ZB promising to deliver to its existing and potential clients in 2018?
A: Money Transfer such as ZymPay
•       Diaspora Banking
•       Hospital Cash Plan

Q: What is the best investment you’ve made?
A: Over the years we have made the following investments that we are proud of and are predominantly in line with our digital transformation strategy and the need to enhance our customer experience;
Technology- Throughout the group, ZB continues to invest in technology and updating its systems to match global trends.
We recently introduced an enhanced card and internet banking system and we are soon commissioning the new life assurance policy administration system
• Modernisation of our banking halls notably 21 Natal Road, Avondale, Fife Street Bulawayo, Mutare , Borrowdale and the new Glendale branch. Refurbishment works for Douglas Road Branch will commence soon.
• Staff- we continue to support our staff through our training centre and external exposures.
We  also run a staff clinic and have recently launched an internal wellness campaign.

Q: If you could turn back time, what would you change in your life?
A: This is an interesting question that we have also looked at especially as we turn 67 years old. We look at the milestones achieved and the growth in terms of channels, staff, balance sheet and return to shareholders.
We look at the positive impact to the community through sustainable corporate social responsibility programs that include education assistance, agricultural projects, health, the development of arts and culture , environmental issues  and other such CSR activities through National Parks and Wildlife and various partners and all we see is growth.
We boast of several micro-businesses which we supported and have since developed into larger entities.
We look at innovative solutions which  we have launched into the market ahead of competition notably cash management systems, cheque images & statements, bancassurance, agency banking, ZETDC prepaid electricity payments, SMS Banking, alerts, and paperless banking.
Our record speaks to growth, development, innovation, sustainability and profit; when we look back we can truly say that ZB helps you to go BIG and achieve your financial freedom whether you are a child , an adult, a church, a miner, a farmer or large institution or an SME. 
If we could turn back time,  we would not change anything as our successes and challenges  have made us who we are today.

Q: What other information would you want to share with your stakeholders?
A: The ZBFH group is currently working on several initiatives designed to enhance the customer journey as well as to boost financial inclusion of the informal sector, among them being:
• Continuation of the branch refurbishment exercise in order to improve general ambience
• Customer Care Clinics and Wellness programs are on-going up to Q4 2018, as the Group endeavours to ensure its clients GO BIG
• The Group is considering setting up a Micro-finance institution (MFI) in order to be better able to serve the Micro, Small and Medium enterprises (MSMEs)
• Aggressive brand activation in the Diaspora market and growth in mortgages
• The paper-less initiative remains a key focus area  as the Group tackles the middle and back offices on its digitalisation journey.

— The Financial Gazette

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