3
BANK SUPERVISION
2014 ANNUAL REPORT
Table of Contents
GOVERNOR’S FOREWORD .....................................................................................................................................4
DIRECTOR’S PREFACE ...........................................................................................................................................6
CHAPTER 1: OVERVIEW OF MACROECONOMIC ENVIRONMENT .....................................................................8
CHAPTER 2: CONDITION & PERFORMANCE OF THE BANKING SECTOR ..................................................... 12
CHAPTER 3: SUPERVISORY ACTIVITIES & MEASURES TO PROMOTE STABILITY ..................................... 35
CHAPTER 4: LEGAL DEVELOPMENTS ............................................................................................................... 46
CHAPTER 5: RESOLUTION OF TROUBLED BANKS ......................................................................................... 50
CHAPTER 6: OUTLOOK ........................................................................................................................................ 54
APPENDICES ......................................................................................................................................................... 56
1
Table of Figures
Figure 1: Real GDP 2010-14 and 2015 Projections (%)....................................................................................9
Figure 2: Annual Inflation Profile (%), March 2010 – Dec 2014 .................................................................... 11
Figure 3: Architecture of the Banking Sector .................................................................................................... 12
Figure 4: Total Banking Sector Assets ($ billions) ........................................................................................... 13
Figure 5: Composition of assets ......................................................................................................................... 14
Figure 6: Composition of liabilities ..................................................................................................................... 15
Figure 7: Banking Sector Capitalisation Levels: 2009 – 2014 ....................................................................... 16
Figure 8: Capital Adequacy Ratio (2013 – 2014)............................................................................................. 17
Figure 9: Banking Sector Assets and Loans .................................................................................................... 18
Figure 10: Sectoral Distribution of Credit .......................................................................................................... 19
Figure 11: Non-performing loans to total loans (2011 – 2014) ...................................................................... 20
Figure 12: Sources of Income ............................................................................................................................. 21
Figure 13: Composition of Total Income as at 31 December 2014 .............................................................. 22
Figure 14: Profitability Indicators ........................................................................................................................ 22
Figure 15: Trend in Banking Sector Deposits ($millions) ............................................................................... 23
Figure 16: Deposit Distribution per Banking Class .......................................................................................... 24
Figure 17: Commercial banks’ asset base to total banking sector assets ................................................... 25
Figure 18: Distribution of Commercial Bank Deposits as at 31 December 2014........................................ 25
Figure 19: Commercial Banks’ Net Capital Base 2011 to 2014 .................................................................... 26
Figure 20: Commercial Bank Loans to Total Banking Sector Loans -2012 to 2014 .................................. 27
Figure 21: Average Earnings Indicators for Commercial Banks – 2011 to 2014 ........................................ 28
Figure 22: Income Mix for the Commercial Banking Sector - 31 December 2014 ..................................... 28
Figure 23: Building Societies’ Loans and Assets for the Period 2011 to 2014 ........................................... 30
Figure 24: Income Mix for the Year ended 31 December 2014 .................................................................... 31
Figure 25: Key Performance Indicators for Microfinance Sector ................................................................... 33
Figure 26: Distribution of Loans (Dec-2013 – Dec-2014) ............................................................................... 34
Figure 27: Minimum Capital Requirements Based on Strategic Tiers.......................................................... 38
Figure 28: Financial Inclusion Indicators (2011 & 2014) ................................................................................ 43
Figure 29: Mobile Banking Statistics.................................................................................................................. 45
Figure 30: Supervisory Interventions to Bank Failures ................................................................................... 50
2
PURPOSE OF THE REPORT
The purpose of this annual report is to provide an analysis of the condition and performance of
the banking sector in Zimbabwe for the year ended 31 December 2014. This report presents an
overview of the supervisory operations and activities during the period under review.
3
GOVERNOR’S FOREWORD
1. The Reserve Bank, as the custodian of banking sector stability, has instituted a number of
measures to promote banking sector resilience and financial stability deepening. The
sustainable development of the financial sector is an inseparable part of economic growth
and prosperity. The financial services sector accounted for 7% of the country’s Gross
Domestic Product in 2014.
2. The Reserve Bank remains resolute in its mandate to maintain the safety and soundness of
the banking system through proactive supervision and enhancement of its supervisory tools
and techniques in line with best practice.
3. Cognisant of the constrains in the macroeconomic environment and the need for a strongly
capitalised banking sector, the Reserve Bank reviewed minimum capital requirements for
banking institutions by categorising banks into three tiers. Banks are expected to comply with
the new minimum requirements by 2020 and the institutions are working conscientiously to
meet the target date.
4. The Reserve Bank, has also instituted a wide range of measures to address credit and
liquidity risks in the banking sector. In collaboration with Afreximbank, debt-backed securities
(Aftrades) were introduced to bolster interbank market liquidity flows under a US$200 million
facility. The securities have unlocked deposits held by surplus banks and stimulated the
interbank market.
5. The Zimbabwe Asset Management Corporation (ZAMCO), which is a special purpose vehicle
whose primary objective is to acquire and/or resolve non-performing loans in the banking
sector was successfully established during the course of the year.
6. Further, the Reserve Bank has also initiated the process of setting up a credit reference
system to facilitate credit information sharing amongst banks and microfinance institutions
and to bridge information asymmetry. These measures should see increased financial
intermediation coupled with efficient allocation of scarce resources, reduced information
asymmetries and facilitation of the effective management of credit risk.
7. The Reserve Bank also initiated measures to strengthen the regulatory and supervisory
framework through amendments to the Banking Act. These amendments will, among other
4
objectives, strengthen the governance systems and processes as well as foster strong
leadership in banks.
8. A resolute framework for dealing with troubled and insolvent banks has been adopted, which
has seen the Central Bank setting targets for cleaning up the banking sector. In addition a
Contingency Planning & Systemic Crisis Management Framework has been prepared as part
of fostering financial stability.
9. The Reserve Bank applauds efforts by Government to capitalise the central bank. This will
go a long way in bolstering confidence in the financial sector and strengthening the Reserve
Bank’s role in the financial services sector through reviving active interbank trading
consequently improving financial support to key productive and export sectors of the
economy.
10. The Reserve Bank will continue to closely monitor developments both on the local and
international market in our efforts to safeguard monetary and financial sector stability. We
continue to urge banking institutions to prime their operations, enhance their risk
management and corporate governance systems in a manner that adds value, and contribute
meaningfully by intermediating and facilitating real economic activities.
11. Financial inclusion also remains a key agenda for the Reserve Bank in order to uplift the
living standards of the marginalized segments of our society.
12. In conclusion, I would like to thank all our stakeholders for their continued support throughout
the year. A robust financial system strengthens the positive role of finance to economic
growth and stability.
5
DIRECTOR’S PREFACE
1.
The banking sector remained generally safe and sound with most banking institutions
maintaining adequate capital levels and sufficient liquidity to meet maturing obligations.
On average, the sector experienced receding levels of credit and liquidity risks compared
to prior years.
2.
There were 19 operating banking institutions as at 31 December 2014. Four institutions
which were closed during the course of the year are now at various stages of winding
down, as detailed ahead in this report.
3.
Some of the constraints emanating from the macro-economic environment that affected
the sector include the slowdown in industrial production, power outages, relatively high
level of formal unemployment, and low aggregate demand.
4.
Total banking sector assets increased by 5.64% over the year to $7.12 billion as at 31
December 2014, while banking sector deposits and loans & advances were $5.08 billion
and $4.01 billion, respectively.
5.
There has been a notable stabilisation in the loans and advances growth rate since
December 2012, mainly reflecting a cautious lending approach taken by banking
institutions against the background of high level of non-performing loans. A number of
measures including enforcement of sound credit risk management, establishment of
ZAMCO and establishment of a robust Credit Reference System will contribute towards
reduction and resolution of non-performing loans.
6.
In line with the 2020 minimum capital requirements, banking institutions have designed
recapitalisation plans showing major sources of capital growth as a combination of
organic growth and fresh capital injection. The sector also recorded an improved earnings
position compared to the prior year.
7.
The Reserve Bank continued to monitor the performance of the sector through its wide
range of supervisory tools, including risk-based on-site examinations, off-site surveillance
and regular meetings with banking institutions.
8.
Banking institutions also complemented Reserve Bank’s efforts to foster banking sector
stability through the adoption of strategic initiatives pertaining to fundamental factors such
as strong capitalisation, robust governance practices and risk management systems as
6
well as up-to-date technological investments.
9.
The Reserve Bank continued to collaborate with other supervisory authorities in the
financial services sector both locally and regionally. The bank participated in two
supervisory colleges for regionally active banks with a presence in Zimbabwe.
10. The central bank also put forward proposals to amend the current Banking Act to
incorporate among others, provisions on enhanced corporate governance, directors’
fiduciary duties and liability, anti-money laundering, consumer protection and problem
bank resolution.
11. Going forward, the Reserve Bank will continue in its efforts to enhance oversight of the
banking sector, through continuous review of the performance of the sector,
enhancement of supervisory tools and co-operation with other regulatory authorities
12. The Reserve Bank is significantly indebted to all the stakeholders in the banking sector,
including banking institutions and other domestic regulatory authorities for their continued
contribution and cooperation towards achievement of a stable financial sector.
Director - Bank Supervision
7
CHAPTER 1: OVERVIEW OF MACROECONOMIC ENVIRONMENT
1.1
The condition and performance of the Zimbabwean banking sector is influenced by both
endogenous and exogenous factors. Developments in the global, regional and domestic
economies have an impact on the banking sector in view of the convergence of the global
financial systems and economic integration.
Global Economic Developments…
1.2
According to the World Bank’s Global Economic Prospects Report (January 2015) global
growth at 3.3% in 2014 struggled to gain momentum as many high-income countries
continued to grapple with legacies of the global financial crisis and emerging economies
were less dynamic than in the past.
1.3
Although economic activities in the United States and the United Kingdom gathered
momentum as labour markets stabilised and monetary policy remained extremely
accommodative, recovery was slow in the Euro Zone and Japan. In addition, China
underwent a managed slowdown.
1.4
Economic growth in developing countries in 2014 was depressed reflecting not only weak
external demand, but also domestic policy tightening, political uncertainties and supplyside constraints.
1.5
Against the background of declining international commodity prices, economic growth in
Sub-Saharan Africa declined from 5.2% in 2013 to 4.8% in 2014. Commodity dependent
economies in Sub-Saharan Africa, including Zimbabwe, experienced reduced export
revenues and deterioration in their balance of payments positions.
Domestic Economic Developments…
1.6
The sluggish global economic growth weighed down the Zimbabwean economy’s growth
potential in 2014 with an estimated growth of 3.1% in 2014 compared to 4.5% achieved
in 2013. Positive growth was largely achieved by the agricultural sector while lower than
anticipated performance was endured by mining and manufacturing sectors.
8
Figure 1 below indicates the growth trends of real GDP, agriculture, mining and
1.7
manufacturing over the period 2010-14 and projected growth in 2015.
Figure 1: Real GDP 2010-14 and 2015 Projections (%)
40
35
37.4
30
25
24.4
23.4
20
15
10
13.8
11
11
5
0
-5
4.5
2
2010
11.7
1.4
2011
2012
3.4
3.1
2013
2014
Mining
Manufacturing
2015
-10
Real GDP
1.8
Agriculture
The agriculture sector remains one of the key drivers of the economy, with the sector
estimated to have grown by 23.4% in 2014, up from -2.6% realized in 2013, benefiting
from the favourable 2013/14 rainfall season, support from government and cooperating
partners. However, growth in the agriculture sector is expected to slow down to less than
3.5% in 2015 due to inadequate financing and drought experienced during the 2014/15
season.
1.9
The growth of the mining sector is estimated to have declined from about 11.7% in 2013,
to -2.1% by the end of 2014, due to depressed gold, platinum and diamond output in
response to subdued commodity prices on the world market.
1.10
The manufacturing sector is estimated to have declined by 4.9% in 2014, on account of
persistent challenges affecting the sector, which include antiquated plant and machinery,
inadequate power supply, inflexible labour laws, influx of cheap imports, high cost of
production, weak effective demand, as well as persistent liquidity constraints.
1.11
Other economic sectors that are estimated to have registered positive growth in 2014 are
distribution, hotels and restaurants (3.9%), finance and insurance (2.0%), electricity and
9
water (3.5%), construction (2.6%), and transport & communication (0.9%).
Balance of Payment Developments…
1.12
The decline in metal prices experienced in 2014 undermined export earnings for most
mining companies, resulting in lower mineral export earnings of $1.91 billion in 2014
compared to $2.06 billion in 2013. As a result, the country’s balance of payments deficit
remained high at $351 million in 2014 despite registering a marginal improvement from
$366 million in 2013.
1.13
The marked appreciation of the US dollar against the South African Rand further
exacerbated Zimbabwe’s external sector position. The country experienced a high import
bill of $6.4 billion against exports earnings of $3.1 billion during the year, resulting in a
trade deficit of $3.3 billion for 2014. The lower crude oil prices experienced in the last
quarter of 2014 resulted in decline of the trade deficit from $3.9 billion in 2013.
1.14
Lack of export competitiveness and a relatively high import bill combined with limited
access to affordable offshore lines of credit and depressed capital and financial inflows
resulted in the continued precarious balance of payments position. This negatively
affected the country’s ability to build foreign exchange reserve buffers.
1.15
In the absence of foreign reserve buffers, the current account deficit which was estimated
at 25% of GDP in 2014, was largely financed by inflows from the diaspora and debt,
creating short term and long term offshore lines of credit to the private sector.
Inflation Developments…
1.16
Annual headline inflation, which had rebounded into positive territory in the third quarter
of 2014, slid back into negative territory in the fourth quarter of 2014. Annual headline
inflation decelerated from 0.09% in September 2014 to -0.001% in October and further to
-0.8% in November and December 2014. Resultantly, annual average inflation declined
from 1.6% in 2013 to -0.2% in 2014.
1.17
The decline in inflationary pressures in the fourth quarter 2014, was mainly attributed to
10
the decline in non-food inflation. Annual non-food inflation, which averaged 1.4% for the
first 9 months of 2014, significantly fell from 1.6% in October 2014 to 0.1% in December
2014. Non-food inflation also registered the largest negative rates on a month-on-month
basis of -2.4%, -3.0% and -2.1% for October, November and December, 2014,
respectively.
1.18
Figure 2 below shows the annual inflation profile from the first quarter of 2010 to the fourth
quarter of 2014.
Figure 2: Annual Inflation Profile (%), March 2010 – Dec 2014
12
10
8
6
4
2
0
-2
-4
-6
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Food
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Headline
Non- Food
Source: ZIMSTAT, January 2015
1.19
The country’s inflation developments are expected to continue to be influenced by the
changes in oil and food prices as well as the Rand/US$ exchange rate dynamics. Broadly,
inflation is expected to remain in the negative territory for the greater part of 2015,
reflecting the effects of depressed international oil and food prices and weaker currencies
against the US$.
11
CHAPTER 2: CONDITION & PERFORMANCE OF THE BANKING SECTOR
Architecture of the Banking Sector
2.1
The banking sector in Zimbabwe is positioned to offer a wide range of financial services to
the economy by the reason of its composition and sophistication. As at 31 December 2014,
the banking sector was composed of commercial banks, a merchant bank, building societies
and a savings bank. In addition, the Reserve Bank had credit-only-MFIs and developmental
financial institutions under its supervision, as shown in the table below.
Figure 3: Architecture of the Banking Sector
2.2
Type of Institution
Number
Commercial Banks
14
Merchant Banks
1
Building Societies
3
Savings Bank
1
Total Banking Institutions
19
Credit-only-MFIs
147
Infrastructure Development Banks
1
Small & Medium Enterprises Corporations
1
The Infrastructure Development Bank of Zimbabwe (IDBZ) and the Small & Medium
Enterprises Development Corporation (SMEDCO) came under the supervision of the
Reserve Bank following amendments to the Banking Act [Chapter 24:20] in 2014.
Balance Sheet Structure
2.3
The banking sector continues to be dominated by the commercial bank subsector (80%) in
terms of total assets. Total banking sector assets amounted to $7.12 billion as at 31
12
December 2014, an increase of 5.34% from $6.74 billion as at 31 December 2013.
2.4
The trend in total banking sector assets from December 2009 to December 2014 is depicted
in the graph below:
Figure 4: Total Banking Sector Assets ($ billions)
8
7.12
7
6.73
6.12
6
5
4.73
4
3.69
3
2
2.18
1
0
2009
2.5
2010
2011
2012
2013
2014
The growth in total banking assets from $6.73 billion as 31 December 2013 to $7.12 billion
as at 31 December 2014 million was mainly attributed to loans & advances reflecting focus
on core business of lending. The table below shows composition of banking sector assets.
13
Figure 5: Composition of assets
Dec-12
Dec-14
US$ million
%
US$ million
%
US$ million
%
414.17
6.68%
400.17
5.94%
362.81
5.10%
Balances With Central Bank
463.64
7.47%
456.98
6.78%
524.44
7.37%
Balances With Domestic Banks
222.95
3.59%
192.52
2.86%
233.37
3.28%
7.63
0.12%
5.09
0.08%
8.40
0.12%
Balances With Foreign Institutions
204.63
3.29%
272.62
4.04%
157.28
2.21%
Securities And Investments
333.93
5.38%
517.74
7.68%
639.69
8.99%
3,237.57
52.20%
3,454.33
51.24%
3,632.64
51.07%
Foreign Claims
165.97
2.68%
148.93
2.21%
40.18
0.56%
Fixed Assets
530.35
8.55%
525.75
7.80%
542.39
7.63%
Other Assets
192.70
3.11%
238.90
3.54%
365.74
5.14%
Off-Balance Sheet Items
425.29
6.86%
526.25
7.81%
606.34
8.52%
ASSETS
Domestic Notes And Coin
Assets In Transit
Loans And Advances
Total Assets
2.6
Dec-13
6,202.63
6,741.275
7,113.31
Securities and investments remained subdued on the back of limited tradable instruments in
the market notwithstanding an increase of 19.06% from $517.74 million as at 31 December
2013.
2.7
Banking sector liabilities largely comprised demand deposits, which constituted 29.59% of
total liabilities as at 31 December 2014. Savings deposits to total deposits decreased from
8.07% in 2013 to 7.51% in 2014 reflective of the low savings culture in the economy attributed
to generally low salaries and difficult macro-environment.
2.8
The table below shows the composition of liabilities in the banking sector for the period
December 2012 to December 2014:
14
Figure 6: Composition of liabilities
LIABILITIES
Dec - 12
US$ millions
Dec - 13
%
US$ millions
Dec - 14
%
US$ millions
Demand Deposits
2,322.40
37.44%
2,152.77
31.93%
2,106.70
29.59%
Savings Deposits
269.25
4.34%
299.77
4.45%
305.25
4.29%
1,113.66
17.95%
1,165.98
17.30%
395.81
19.61%
Foreign Currency Deposits
44.32
0.72%
24.52
0.36%
156.07
2.19%
Negotiable Certificates of
Deposit
62.32
1.00%
73.46
1.09%
101.46
1.43%
421.48
6.8%
549.08
8.15%
534.50
7.51%
13.68
0.22%
0.24
0.004%
0.62
0.01%
294.54
4.75%
616.69
9.15%
525.52
7.38%
34.25
0.55%
6.76
0.10%
25.48
0.36%
Capital and Reserves
749.09
12.08%
845.55
12.54%
982.98
13.81%
Other Liabilities
453.74
7.32%
480.19
7.12%
378.63
5.32%
Off-Balance Sheet Items –
Liabilities
423.44
6.83%
526.25
7.81%
606.34
8.52%
Time Deposits/Fixed
Deposits
Balances With Other Banking
Institutions
Liabilities in Transit
Foreign Liabilities
Securities and other Funding
Liabilities
Total Equity & Liabilities
6,202.63
6,741.27
7,119.35
Capitalisation
2.9
The banking sector reported a core capital base of $811.20 million as at 31 December 2014,
up from $790.35 million as at 31 December 2013. The increase in the capital position was
largely attributed to retained earnings by some banking institutions during the year.
2.10
A total of 14 out of 19 operating banking institutions, excluding POSB, were in compliance
with the prescribed minimum core capital requirements as at 31 December 2014.
2.11
The table below shows the trend in net capital base and core capital levels from 2009 to
2014.
15
Figure 7: Banking Sector Capitalisation Levels: 2009 – 2014
1000
926.57
900
779.47
800
644.21
700
600
500
400
699.11
458.03
382.21
365.71
511.62
425.73
560.7
487.79
325.96
300
200
100
0
2009
2010
2011
Core Capital
2.12
2012
2013
2014
Net Capital Base
The total net capital base in the banking industry increased by 24.54% from $699.11 million
as at 31 December 2013 to $926.57 million as at 31 December 2014.
2.13
The banking institutions` net capital base is largely composed of tier 1 capital, which
constituted 87.54% of net capital base as at 31 December 2014.
2.14
The banking sector recorded an average capital adequacy ratio 18.49% as at 31 December
2014, up from 14.06% as at 31 December 2013. However, five banking institutions were in
breach of the minimum capital adequacy ratio of 12%.
2.15
The trend in the banking industry’s average capital adequacy ratio (CAR), from December
2013 to December 2014 is indicated in the figure below.
16
Figure 8: Capital Adequacy Ratio (2013 – 2014)
25.00%
20.00%
17.86%
18.61%
19.14%
Jun-14
Sep-14
17.33%
15.90%
15.00%
10.00%
5.00%
0.00%
Dec-13
2.16
Mar-14
Dec-14
The losses recorded by some banking institutions and the increasing non-performing loans
in the sector continue to pose a threat to the banking sector’s capital levels.
Bank Lending and Asset Quality
2.17
Total banking sector loans & advances increased by 7.22% from $3.32 billion as at 31
December 2013 to $4.01 billion as at 31 December 2014.
2.18
Loans and advances accounted for 51.02% of total banking assets as at 31 December 2014,
a position which is largely comparable to 51.24% recorded as at 31 December 2013. Seven
banking institutions accounted for 67.86% of banking sector loans.
2.19
The graph below reflects the trend in growth of loans & advances in relation to growth in total
banking sector assets, as noted above.
17
Figure 9: Banking Sector Assets and Loans
8
7.12
7
6.56
6.2
$ Billions
6
5
4.76
4
4.01
3.32
3.24
3
2.55
2
1
0
2011
2012
2013
Total Assets
2.20
2014
Total Loans & Advances
Banking sector’s lending was predominantly skewed towards individuals (25.88%),
agriculture (16.12%), services (16.36%) and manufacturing sectors (12.72%).
2.21
The distribution of the banking sector lending to the various sectors as at 31 December 2014
was as indicated below:
18
Figure 10: Sectoral Distribution of Credit
Transport; 1.99%
Services
16.36%
Individuals
25.04%
Mining; 4.50%
Financial Firms; 3.11%
Manufacturing
12.72%
Other
14.61%
Agriculture
16.12%
Communication;
1.91%
Construction; 3.64%
2.22
The banking sector loans to deposits ratio was 78.94% as at 31 December 2014, from
102.36% as at 31 December 2013.
Non-Performing Loans…
2.23
Credit risk in the banking sector remained high as reflected by the ratio of non-performing
loans to total loans (NPL/TL) of 15.91% as at 31 December 2014.
2.24
The high level of non-performing loans is partly a reflection of macroeconomic challenges
that have militated against borrowers’ ability to service loans, as well as institution specific
weaknesses.
2.25
The graph below depicts the trend in the ratio of non-performing loans to total loans over the
period 2011 to 2014:
19
Figure 11: Non-performing loans to total loans (2011 – 2014)
18.00%
15.92%
15.91%
Dec 2013
Dec 2014
16.00%
13.46%
14.00%
12.00%
10.00%
8.00%
7.55%
6.00%
4.00%
2.00%
0.00%
Dec 2011
2.26
Dec 2012
The establishment of ZAMCO and Credit Registry coupled by institution specific measures
being instituted by various banking entities are envisaged to address the scourge of NPLs
as outlined in Chapter 3.
Profitability
2.27
The banking sector remained profitable with an aggregate net profit of $50.84 million for the
year ended 31 December 2014, compared to $3.39 million reported for the same period in
2013.
2.28
A total of 14 banks out of the 20 operating banking institutions (including POSB) recorded
profits for the year ended 31 December 2014.
2.29
The losses recorded by the six (6) banking institutions were attributed to high levels of nonperforming loans, liquidity challenges and lack of critical mass in terms of revenue to over
operating expenses.
20
Composition of Income…
2.30
The major source of income for the banking sector for the year ended 31 December 2014
was interest income, which constituted 62.67% of the total income of $766.24 million earned
by banks. Non-interest income accounted for 37.33% of total income and comprised fees
and commissions (87.35%), foreign exchange dealing profits (9.02%) and other (3.63%).
2.31
The diagram below depicts the sources of income of the banking sector for the year ended
31 December 2014.
Figure 12: Sources of Income
Other , 1.36%
Fees and
Commission,
32.60%
Interest Income
from Loans and
Advances , 55.28%
Foreign Exchange,
3.37%
Interest Income
from Investments &
Securities, 5.41%
2.32
Interest from
Interbank deposits,
1.98%
Total operating income for the banking sector increased by 2.92% from $744.52 million for
the year ended 31 December 2013 to $766.24 million for the year ended 31 December 2014.
2.33
The composition of total income is shown in the figure below:
21
Figure 13: Composition of Total Income as at 31 December 2014
100%
$40.54m
$42.53m
$249.74m
$321.12m
$73.77m
$39.56m
$451.55m
$556.83m
31-Dec-11
31-Dec-12
$28.57m
$14.08m
$302.92m
$338.58m
$40.31m
$34.96m
$642.07m
$698.95m
31-Dec-13
31-Dec-14
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Interest income
2.34
Foreign Exchange Income
Fees & Commissions
Other Non-Interest Income
Profitability indicators for the banking sector as measured by the Return on Assets (ROA)
and Return on Equity (ROE) improved during the year ended 31 December 2014 as reflected
in the figure below.
Figure 14: Profitability Indicators
25%
17.58%
20%
ROA
ROE
15%
10%
5.45%
4.60%
5%
1.12%
2.70%
1.21%
0%
2011
2012
22
0.80%
0.14%
2013
2014
2.35
The increase in profitability was attributable to an increase in operating income, which
increased by 2.92% and a decrease in operating expenses, which decreased by 4.71% from
$702.56 million in 2013 to $669.48 million in 2014. Resultantly, the sector’s average cost to
income ratio marginally improved from 96.60% for the year ended 31 December 2013 to
93.90% for the year ended 31 December 2014.
2.36
The decrease in operating expenses was mainly attributable to cost containment measures
and a decrease in provisions for loan losses, which declined by 10.59%, from $116.44 million
to $104.11 million over the period.
Liquidity & Funds Management
2.37
Total deposits increased from $4.70 billion as at 31 December 2013 to $5.08 billion as at 31
December 2014. Deposits however, remained short-term in nature, thus adversely affecting
the tenure of loans The situation was exacerbated by limited inter-bank trading, general
market illiquidity and limited lender of last resort function of the Reserve Bank.
The figure below illustrates the growth trends in banking sector deposits for the period
December 2009 to December 2014.
Figure 15: Trend in Banking Sector Deposits ($millions)
5,080.00
4,962.07
4,728.07
4,371.17
4,220.45
3,584.57
2,567.61
23
31-Dec-14
30-Sep-14
30-Jun-14
31-Mar-14
31-Dec-13
30-Sep-13
29-Mar-13
31-Dec-12
30-Sep-12
30-Jun-12
31-Mar-12
31-Dec-11
31-Dec-10
705.76
31-Dec-09
5600
5200
4800
4400
4000
3600
3200
2800
2400
2000
1600
1200
800
400
0
30-Jun-09
2.38
2.39
As at 31 December 2014, the commercial banking subsector accounted for 82.10% of
banking sector deposits as shown in the table below.
Figure 16: Deposit Distribution per Banking Class
1.47%
1.72%
14.71%
82.10%
Commercial Banks
2.40
Building Societies
Merchant Banks
Other banks
Notwithstanding the general liquidity challenges in the market, the banking sector average
prudential liquidity ratio of 34.76% as at 31 December 2014 was above the regulatory
minimum of 30%, and has been stable since March 2014.
2.41
Nine (9) banking institutions were, however, not compliant with the prudential liquidity ratio
regulatory requirement as at 31 December 2014.
2.42
The measures being taken by non-compliant banks to regularise their liquidity positions
include recapitalization, and balance sheet restructuring entailing among other measures,
fixed asset disposals, and curtailment of loan growth.
SECTORAL ANALYSIS
Commercial Banks
2.43
The banking sector continues to be dominated by commercial banks, whose total assets
($5.72 billion) grew by 2.44% in 2014, largely spurred by loans and advances.
2.44
The sub-sector accounted for 80.27% of total banking sector assets as at 31 December 2014.
The dominant position of commercial banks in terms of assets is reflected in the chart below.
24
Figure 17: Commercial banks’ asset base to total banking sector assets
$ Millions
8,000
7,000
6,000
1,156
1,405
5,186
5,581
5,715
2012
2013
2014
1,017
5,000
4,000
3,000
2,000
1,000
0
2.45
Commercial Banks
Other Banks
Commercial bank liabilities are largely comprised of deposits, which accounted for 56% of all
the liabilities.
2.46
Total deposits in commercial banks increased by 5.60% from $3.03 billion as at 31 December
2013 to $3.21 billion as at 31 December 2014. The deposits were concentrated in demand
and savings deposits as shown below:
Figure 18: Distribution of Commercial Bank Deposits as at 31 December 2014
Foreign Currency
Deposits 5%
Negotiable
Certificates of Deposit
2%
Fixed Deposits 29%
Demand Deposits
56%
Savings Deposits 8%
25
2.47
The loans to deposit ratio decreased from 111.86% as at 31 December 2013 to 99.33% as
at 31 December 2014. The ratio includes offshore lines of credit accessed by some banking
institutions.
Capital Adequacy…
2.48
Commercial banks’ net capital base increased by $183.15 million or 26.57% to $689.20
million in 2014, largely driven by retained earnings at some banking institutions.
2.49
The average capital adequacy ratio of 17.91% as at 31 December 2014, was above the
minimum required capital adequacy ratio of 12%.
2.50
The growth in the net capital base of the sub sector since 2011 is shown in the diagram
below:
Figure 19: Commercial Banks’ Net Capital Base 2011 to 2014
750.00 $ Millions
689.21
700.00
650.00
600.00
550.00
506.05
500.00
450.00
444.60
415.60
400.00
350.00
300.00
2011
2012
2013
2014
Asset Quality…
2.51
Total loans and advances increased marginally by 0.94% from $3.16 billion as at 31
December 2013 to $3.19 billion as at 31 December 2014. Loans and advances in commercial
banks accounted for 79.62% of total banking sector loans as at 31 December 2014.
2.52
The graph below illustrates the dominance of the commercial banking sub-sector in terms of
total loans and advances for the period 2012 to 2014.
26
Figure 20: Commercial Bank Loans to Total Banking Sector Loans -2012 to 2014
$Millions
4,500.00
4,000.00
3,500.00
816.91
643.61
571.65
3,000.00
2,500.00
2,000.00
1,500.00
2,982.88
3,160.80
3,191.85
2013
2014
1,000.00
500.00
0.00
2012
Commercial Banks Other Banks
2.53
Other Banks
The ratio of adversely classified loans to total loans increased, though at a decreasing rate,
from 15.36% as at 31 December 2013 to 16.35% as at 31 December 2014, reflecting a
deterioration in asset quality within the subsector.
2.54
The high level of non-performing loans is partly a reflection of the constraints in the
macroeconomic environment that have hampered the borrowers’ capacity to service loans
and institution specific weaknesses, such as weak loan administration standards.
Earnings…
2.55
The commercial banking sector recorded an average profit of $2.39 million for the year ended
31 December 2014, an improvement from the average loss of $5.57 million recorded during
the corresponding period in 2013.
2.56
The sub-sector’s average return on asset and return on equity ratios were 0.89% and 5.17%,
respectively.
2.57
The cost to income ratio improved from 137.03% for the year ended 31 December 2013 to
89.48% for the year ended 31 December 2014, largely attributed to realignment of business
27
models by some institutions and the closure of two banking institutions, which had high cost
structures.
2.58
The figure below indicates a comparison of key profitability indicators for the period 2011 to
2014.
Figure 21: Average Earnings Indicators for Commercial Banks – 2011 to 2014
2.59
ROA
ROE
NIM
Cost to Income
Dec 2011
2.7%
17.58%
7.21%
92.97%
Dec 2012
1.21%
5.45%
11.49%
119.21%
Dec 2013
-4.75%
-13.24%
6.48%
81.93%
Dec 2014
0.89%
5.17%
6.61%
89.48%
Interest income and fees & commissions contributed 62.17% and 32.50% of total income,
respectively, indicating that the sub-sector derived the bulk of its income from core business
of financial intermediation.
2.60
The income mix for the commercial banking sub-sector is shown in the pie chart below:
Figure 22: Income Mix for the Commercial Banking Sector - 31 December 2014
32.50%
1.12%
62.17%
4.21%
Interest Income
Income from Foreign Exchange Dealing
Fees and Commission
Other Non Interest Income
28
2.61
The major cost drivers for commercial banks were salaries and rentals which accounted for
52.15% of total commercial banking sector operating costs for the year ended 31 December
2014.
Liquidity and Funds Management…
2.62
Commercial bank deposits increased by 5.60% from $3.03 billion as at 31 December 2013
to $3.21 billion as at 31 December 2014. As at 31 December 2014, commercial banks
accounted for 82% of the total deposits
2.63
Despite the increase in deposits, the short term nature of the deposits constrained the
financial intermediation. Demand deposits constituted 61.08% of the subsector’s total
deposits.
Merchant Banks
2.64
Tetrad Investment Bank, the only operating merchant bank, following the cancellation of
Capital Bank’s banking licence on 4 June 2014, faced liquidity and solvency challenges
stemming from high levels on non-performing loans and a non-viable business model. The
institution entered into a scheme of arrangement with its creditors which expired on 29
January 2015.
2.65
The various recapitalisation initiatives failed to materialize, which resulted in the bank being
placed under judicial management on 31 January 2015 upon expiry of a scheme of
arrangement with creditors. By the close of the 2014 the institution’s board and shareholders
were still in the process of courting investors to resuscitate the institutions.
Building Societies
2.66
The four operating building societies in 2014 accounted for 17.35%, 17.16% and 17.21% of
total banking sector assets, deposits and loans as at 31 December 2014, respectively.
2.67
The sub sector, was however, dominated by one institution in terms of assets, deposits and
loans, which had market share of 69.39%, 85.86% and 65.14%, respectively, as at 31
29
December 2014.
2.68
Total assets for the sub-sector increased by 25.34% from $0.92 billion as at 31 December
2013 to $1.23 billion as at 31 December 2014. The growth was largely as a result of improved
funding as some institutions accessed long-term offshore credit lines.
2.69
The graph below shows the growth trends in total assets and total loans for the sub-sector
for the period 2011 to 2014.
Figure 23: Building Societies’ Loans and Assets for the Period 2011 to 2014
1,400
1234.85
1,200
1,000
921.03
800
717
690.10
600
515.14
511
400
200
405
285
0
2011
2012
Total loans
2.70
2013
2014
Total Assets
Some building societies increased the tenure of their mortgage facilities following improved
access to long term foreign lines of credit.
Capital Adequacy…
2.71
Building societies’ aggregate core capital amounted to $253.81 million as at 31 December
2014, largely as a result of organic growth.
2.72
The average Tier 1 and capital adequacy ratios of 15.06% and 17.33% as at 31 December
2014, respectively, which were above the regulatory minimum.
30
Asset Quality…
2.73
Total building society loans increased by 25.83% from $515.08 million as at 31 December
2013 to $690.10 million as at 31 December 2014, largely attributed to increase in off shore
credit lines for mortgage finance.
2.74
The ratio of adversely classified loans to total loans, however, increased from 4.56% as at
31 December 2013 to 6.32% as at 31 December 2014.
Earnings…
2.75
The sub-sector was profitable with all four institutions recording profits. The combined net
profit for the year ended 31 December 2014 was $43.68 million, representing an
improvement from $40.99 million in 2013.
2.76
The sub-sector derived the bulk of its income from the core business of mortgage lending as
interest from loans and advances accounted for 57.50% of total income as shown in the chart
below:
Figure 24: Income Mix for the Year ended 31 December 2014
Other Income
8%
Fees and Commission
26%
Interest Income on
Investments and
Securities
9%
31
Interest Income from
Loans
57%
Liquidity and Funds Management…
2.77
Total deposits in the sub-sector increased by 25.44%, from $524.85 million as at 31
December 2013 to $697.41 million as at 31 December 2014.
2.78
The sector was mainly funded by fixed and time deposits, which constituted 35.16% and
16.09%, respectively. Access to limited long-term funding by some building societies,
however, continues to constrain growth in mortgage lending.
2.79
One institution recorded a prudential liquidity ratio below the minimum requirement of 30%.
Microfinance Sector…
2.80
The microfinance sector plays a significant role in promoting financial inclusion, selfsufficiency and economic development particularly among the low income groups and smallto-medium enterprises. The sector recorded a gradual growth with the number of registered
credit-only microfinance institutions increasing from 143 as at 31 December 2013 to 147 as
at 31 December 2014. The number of clients served by the sector increased from 150,188
as at 31 December 2013 to 205,282 as at 31 December 2014.
2.81
Total assets increased from $185.73 million as at 31 December 2013 to $202.71 million as
at 31 December 2014, while total loans, which are a major component on the balance sheets
decreased by 4.39% from $164.20 million as at 31 December 2013 to $156.99 million as at
31 December 2014.
2.82
The top ten microfinance institutions controlled 63.20% while the largest MFI commanded a
market share of 19.29% in terms of total loans as at 31 December 2014.
2.83
The key performance indicators for the microfinance institutions under the supervision of the
Reserve Bank are as indicated in the table below.
32
Figure 25: Key Performance Indicators for Microfinance Sector
31 Dec 2013
31 Mar 2014
30 June 2014
30 Sept 2014
31 Dec 2014
143
153
130
135
147
Total Loans
$164.20m
$170.00m
$177.76m
$151.83m
$156.99m
Total Assets
$185.73m
$193.87m
$214.00m
$210.11m
$202.71m
Portfolio at Risk (PaR> 30
days)*
16.03%
27.14%
14.64%
12.08%
11.29%
No. of Clients
150,188
188,990
190,819
220,357
205,282
No. of Loan Accounts
162,221
208,168
209,751
252,565
257,542
334
405
458
482
473
No.
of
Institutions
Licensed
No. of Branches
* Portfolio at Risk > [XX] days - The value of all loans outstanding that have one or more installments of principal past due more
than [XX] days. This includes the entire unpaid principal balance, including both the past due and future installments, but not
accrued interest. It also includes loans that have been restructured or rescheduled. (www.mixmarket.org)
2.84
Portfolio quality as measured by the Portfolio-at-Risk (PaR) (30 days) improved during the
year under review from 16.03% as at 31 December 2013 to 11.29% as at 31 December 2014.
2.85
The noted improvement in the PaR is largely due to enhanced credit analysis in the industry
where some MFIs are increasingly making use of credit checks that promote rigorous
analysis of borrowers to avoid over-indebtedness in line with the provisions of the
Microfinance Act gazetted in August 2013.
2.86
Notwithstanding the above efforts, the level of the PaR (11.29%) remains well above the
internationally acceptable level of 5%, largely reflecting the negative impact of the liquidity
challenges in the economy.
Distribution of Loans as at 31 December 2014…
2.87
There has been a notable shift towards productive lending by microfinance institutions as
reflected by the increase in the proportion of productive lending from 29.11% as at 31
December 2013 to 46.70% of total loans as at 31 December 2014. This is partly attributable
to microfinance institutions’ alignment with the lending terms and conditions of some funders,
and the development of innovative products to enhance support to SMEs. Meanwhile, there
is a notable overlap as some of the loans accessed for consumption reasons are used to
fund household productive activities (micro-projects).
33
2.88
The distribution of loans is indicated in the table below.
Figure 26: Distribution of Loans (Dec-2013 – Dec-2014)
Type of Lending
Consumption
Developmental/Productive
Total
2.89
Dec-13
Mar-14
Jun-14
Sept-14
$116.40
$121.08m
$119.09m
$82.24m
(70.89%)
(71.22%)
(67.99%)
(54.17%)
$47.80
$48.92m
$58.65m
$69.58m
(29.11%)
(28.98%)
(33.00%)
$164.20m
$170.00m
$177.76m
Dec-14
(45.83%)
$151.83m
$83.55m
(53.30%)
$73.44m
(46.70%)
$156.99m
The growth of the microfinance sector and impact on economic growth and development
continues to be constrained by a number of factors which include funding challenges,
inadequate technical skills, weak information and communication technology (ICT) and
management information systems, and weak credit information sharing systems.
Developments in the Microfinance Sector…
2.90
In view of the shortage of critical skills in the sector, the Reserve Bank has engaged relevant
stakeholders on the feasibility of developing a Microfinance Certification Program to facilitate
enhancement of the skills level of microfinance practitioners.
2.91
The Microfinance Certification Program is expected to enhance skills levels in the sector at
a time when the Reserve Bank has begun to license deposit taking microfinance institutions,
which are expected to enhance financial inclusion efforts in the country.
2.92
The Reserve Bank has also conducted capacity building programs through workshops to
enhance technical skills within the sector.
34
CHAPTER 3: SUPERVISORY ACTIVITIES & MEASURES TO PROMOTE STABILITY
MAJOR SUPERVISORY ACTIVITIES
3.1
The Bank Supervision division carried out numerous on-site and off-site activities in line with
its supervisory plan during the course of the year 2014, as discussed hereunder:
Licensing…
3.2
A total of 130 licenses were issued to credit only microfinance institutions in 2014, comprising
29 new and 101 renewal applications.
3.3
There were no new banking licenses issued in the year ended 31 December 2014.
Cancellation of licences…
Capital Bank
3.4
The Reserve Bank cancelled the operating licence for Capital Bank Corporation (formerly
Renaissance Merchant Bank) on 4 June 2014 in line with section 14 (4) of the Banking Act
[Chapter 24:20].
3.5
This follows a resolution by the board of Capital Bank on 23 January 2014 to request a
cancellation of the bank’s registration in line with the October 2013 resolution of the majority
shareholder, National Social Security Authority (NSSA), to wind up the bank.
3.6
The bank had been operating in an unsafe and unsound financial condition epitomized by
critical under capitalisation, persistent losses, chronic liquidity challenges and inordinately
high levels of non-performing loans.
Allied Bank
3.7
The Reserve Bank cancelled Allied Bank Limited’s banking licence on 8 January 2015,
following voluntary surrender of the licence by the institution’s board of directors.
3.8
The surrender of the licence was against the background of futile recapitalisation initiatives
and the resultant failure by the bank to trade out of severe solvency and liquidity challenges.
35
Curatorships…
Interfin Banking Corporation
3.9
On 31 December 2014, the Reserve Bank cancelled the banking licence for Interfin Bank
Limited, which had been under curatorship since June 2012. This followed the
recommendation of the Curator to terminate curatorship, against the background of
numerous failed recapitalisation initiatives.
Acquisitions…
BancABC
3.10
In April 2014, Reserve Bank approved the acquisition of a majority stake in ABC Holdings
Limited by Atlas Mara Co-Nvest in a transaction worth $210 million. ABC Holdings Limited is
the holding company for BancABC Limited. Atlas Mara was listed on the London Stock
Exchange in December 2013.
On-Site Examinations…
3.11
In line with the Reserve Bank’s mandate of ensuring financial stability, Bank Supervision
Division conducted a total of eleven (11) full-scope risk-based on-site examinations in 2014.
The Division also carried out a number of targeted examinations, as well as follow-up
examinations during the course of the year.
3.12
The examinations determined that most systemically important institutions were
fundamentally sound. These institutions have embraced and implemented sound risk
management systems and corporate governance structures, and are generally compliant
with banking laws and regulations. Further, they have continued to upgrade their core
banking systems, providing a platform for introduction of new banking products.
3.13
The following weaknesses were, however, noted in some banking institutions:
i.
misalignment of business strategy to resources;
ii.
lack of shareholder support in providing the requisite capital;
36
iii.
ineffective board and senior management oversight of operations;
iv.
high level of non-performing loans, mainly arising from weak credit risk management
systems;
v.
abuse of depositors’ funds through non-performing insider or related party exposures;
and
vi.
non-compliance with laws, regulations, guidelines as well as own policies and
procedures.
3.14
Reserve Bank will continue to closely monitor banking institutions to ensure timely resolution
of identified weaknesses on an on-going basis, in line with the Risk-Based Supervision
Framework.
Supervisory Colleges…
3.15
In line with international best practice on consolidated supervision, the Reserve Bank, as the
Lead Supervisor for the African Banking Corporation Holdings Limited group, hosted the
inaugural Supervisory College meeting for the group from 17 to 18 November 2014.
3.16
Participants were drawn from countries where the group has operations, namely Bank of
Botswana, Bank of Mozambique, Bank of Tanzania, Bank of Zambia and Reserve Bank of
Zimbabwe. The Securities and Exchange Commission of Zimbabwe which supervises
stockbroking and asset management subsidiaries of the group was also involved.
3.17
The current co-operation and coordination arrangements by the supervisors is underpinned
by a Memorandum of Understanding (MoU), which was signed in 2002 and is in line with the
mandate of the Multidisciplinary Financial Stability Committee, comprising financial sector
regulators.
3.18
Going forward, the Reserve Bank will periodically conduct supervisory colleges as a platform
for the exchange of information between home and host supervisory authorities for the
planning and performance of key supervisory tasks and also for the preparation of handling
emergency situations.
37
MEASURES TO PROMOTE FINANCIAL STABILITY IN THE BANKING SECTOR
3.19
The Reserve Bank took a number of measures to promote and deepen stability in the banking
sector during the course of 2014 as outlined hereunder.
Revision of Minimum Capital Requirements
3.20
In the 2014 mid-year Monetary Policy Statement, the Reserve Bank announced revised
minimum capital requirements for banking institutions, in line with Section 6 of the Banking
Act.
3.21
The revised minimum capital requirements are focused on three strategic groups as detailed
in the figure below.
Figure 27: Minimum Capital Requirements Based on Strategic Tiers
Segments
Tier I
Type of Institution
Commercial banks & all
Capital requirements
Current
Proposed
$25 million
$100 million
foreign banks
Activities
Core banking
activities plus
additional services
Tier II
Commercial banks, Merchant
$25 million
$25 million
banks, Building societies,
Core banking
activities only
Finance & Discount houses
Tier III
Deposit Taking Microfinance
$5 million
banks
$10 million
Deposit Taking
Microfinance
activities
3.22
Banking institutions have up to 2020 to comply with the minimum regulatory requirements
stipulated for their chosen strategic grouping.
3.23
The strategic segmentation allows for the existence of smaller, profitable banks with strong
governance and risk management systems that play a meaningful role in the economy.
3.24
Banking institutions in Tier II can migrate to the Tier 1 strategic group provided they meet the
38
capital requirements and the risk management systems are commensurate with the nature
and scope of their activities.
Non-Performing Loan Resolution…
3.25
The Zimbabwean banking sector experienced a gradual increase in the level of nonperforming loans (NPLs) since adoption of the multicurrency system in 2009 from 1.6% in
2009 to 16% as at 31 December 2014. High levels of NPLs pose a threat to financial stability
and economic growth.
3.26
Cognisant of the need to holistically address the non- performing loans (NPLs) scourge,
Cabinet approved the establishment of the Zimbabwe Asset Management Corporation (Pvt)
Ltd (ZAMCO), a Special Purpose Vehicle (SPV). ZAMCO, which was set up in July 2014,
aims to provide a workable solution to the problem of non-performing loans in the banking
sector through the acquisition, restructuring, managing and disposal of NPLs.
3.27
As at 31 December 2014, the company was now operational, with the requisite governance
structures and NPLs amounting to $65 million had been acquired using other financing
mechanisms provided for in its funding strategy.
3.28
The establishment of ZAMCO should go a long way in removing toxic assets and
strengthening banks’ balance sheets and provide them with the liquidity to reinvigorate the
economy and promote financial stability.
Credit Reference Bureau (CRBs)…
3.29
One of the factors that exposed banking institutions in Zimbabwe to heightened credit risk
was the high level of information asymmetry and the lack of an effective credit information
sharing mechanism. There are limited avenues for banking institutions and other credit
providers to check and/or share information on the credit history of borrowers. As a
consequence, some multi-banked clients became serial defaulters with non-performing loans
at several banking institutions.
3.30
Against this background, the Reserve Bank is working on bridging the information asymmetry
gap in the banking sector through establishing a central credit registry system within its
structures. The credit reference system shall comprise a credit registry and private credit
39
reference bureaus.
3.31
The credit registry will be established in the Reserve Bank and will collect credit information
from all banking institutions and microfinance institutions. It will serve as a databank for
licensed private CRBs. The private CRBs will access the credit information from the credit
registry and provide reports to their subscribers.
3.32
Proposed amendments to the banking act have been incorporated to provide for adequate
legislation to cover operations of the credit registry and appropriate regulations for the
licensing and operation of private credit reference bureaus.
3.33
Regulations for the licensing, supervision and operations of private owned credit reference
bureaus will be issued once the relevant amendments to the Banking Act have been passed.
3.34
Pursuant to the above, and cognizant of experiences from other countries, the Reserve Bank
will:
a) engage all key relevant stakeholders;
b) adopt a phased approach in the setting up of a credit reference bureau; and
c) facilitate necessary amendments to the Reserve Bank Act to provide for the
establishment of a credit reference registry.
Contingency Planning & Systemic Crisis Management Framework…
3.35
In line with financial stability initiatives, the Reserve Bank formulated a Contingency Planning
& Systemic Crisis Management Framework during the year under review.
3.36
The need for contingency planning and systemic crisis preparedness emanates from the vital
role played by the financial system in the economy, and the system’s vulnerabilities to internal
and external shocks that can lead to extensive economic and social costs in light of its
complexities and interconnectedness. This is evidenced by far reaching ramifications of the
2007-2009 global financial crisis.
3.37
In this regard, the framework outlines the financial sector regulators’ policy responses in
preventing and resolving systemic crises, as well as .the key components of contingency
planning and systemic crisis management. These include sound institutional arrangements
with explicit inter-agency coordination mechanisms and powers that allow for the early
40
intervention into a problem bank to prevent its failure.
3.38
The Framework is designed to enhance the preparedness of Government and regulatory
authorities in the face of systemic financial stress. Engaging in contingency planning prior to
a crisis will help the supervisory authorities to identify the types of actions that may be
necessary during a crisis, as well as the skills, policies and processes that would be required
to support these actions.
3.39
This Framework therefore seeks to:
a) Promote prevention of systemic failures through adequate pre-crisis preparation;
b) Ensure continuity of systemically important financial services including payments,
clearing and settlement systems in the event of a crisis;
c) Provide for speed, transparency and predictability through legal certainty and procedural
clarity coupled with advanced planning for orderly resolution;
d) Enable fast and decisive action to ensure that non-viable financial institutions can exit the
market in an orderly fashion;
e) Provide credible resolution tools which ensure competitive neutrality and limit distortions
of competition;
f) Facilitate cooperation, information exchange and coordination locally and with relevant
foreign resolution authorities before and during a crisis;
g) Enhance the credibility of resolution authorities and thereby promote market discipline
and provide incentives for market based solutions;
h) Avoid unnecessary destruction of value and minimize the overall costs of resolution and
where consistent with other objectives, losses for creditors;
i) Reduce moral hazard problems by desisting from relying on public solvency support and
dispelling the expectation that such support will be available in the event of a crisis which
ultimately reduces the social costs of bank failures.
Update on Basel II Implementation…
3.40
The Reserve Bank is reviewing a number of proposed revisions to the Basel II framework,
which are under consideration by the Basel Committee on Banking Supervision (BCBS) and
community of bank supervisors on the global arena. The Basel Committee on Banking
41
Supervision (BCBS) is expected to complete the revision of the Basel II framework by
December 2015.
3.41
In particular, the proposed revisions to the Standardised Approach for credit risk seek to
strengthen the existing regulatory capital standard in several ways. These include:
i.
reduced reliance on external credit ratings;
ii.
enhanced granularity and risk sensitivity;
iii.
updated risk weight calibrations;
iv.
more comparability with the internal ratings-based (IRB) approach, with respect to the
definition and treatment of similar exposures; and
v.
3.42
better clarity on the application of the standards.
The Reserve Bank adopted the Modified Standardised Approach for credit risk for the local
market and these developments will significantly affect the design of the Basel II framework
that will be implemented by banks in Zimbabwe.
3.43
In this regard, banking institutions will continue parallel running the old framework and Basel
II framework until the current consultations are finalised.
Financial Inclusion Initiatives…
3.44
Financial inclusion is fundamental for sustainable economic development and growth.
According to the FinScope Consumer Surveys conducted in 2011 and 2014, Zimbabwe
recorded a significant improvement in the proportion of the population accessing formal
financial services from 38% in 2011 to 69% in 2014 as shown in the table below.
42
Figure 28: Financial Inclusion Indicators (2011 & 2014)
Indicator
2014
2011
Financially Excluded
23%
40%
Formally served
69%
38%
Reliance on exclusively informal financial products or
services
7.8%
22%
1%
8%
23%
6%
2.17 m
1.45 m
560 000
40 000
3.15 m
-
Reliance on exclusively bank products
Reliance on exclusively non-bank products
No. of banked adults
Cell phone banking adults
No. of people registered for Mobile Banking
3.45
The noted improvement in financial access levels was largely attributed to mobile financial
services.
3.46
The following constraints have continued to hamper the expansion of financial inclusion in
country:
Demand side
a) Requirement for high minimum balances;
b) Low income levels;
c) Inadequate information on financial services and products;
d) diminished confidence in the financial system; and
e) Financial illiteracy.
Supply side
a) Absence of robust credit information systems; and
43
b) Poor infrastructure in rural settings leading to financial institutions’ reluctance to
establish branches.
Regulatory
a) Absence of a coordinated national policy and strategy on financial inclusion; and
b) Capacity and resource constraints.
3.47
The Reserve Bank and other key stakeholders have heightened focus on building an
inclusive financial sector and initiatives are being undertaken aimed at addressing the
identified constraints. .
Microfinance Institutions
3.48
Microfinance institutions play an important role in promoting financial inclusion through the
provision of suitable funding, particularly to the low income groups who are not traditionally
served by conventional banks.
3.49
As at 31 December 2014, there were 147 registered credit only microfinance institutions up
from 95 in 2009. In addition, two applications for deposit-taking microfinance institutions were
under consideration. Deposit-taking microfinance institutions are expected to promote
savings culture in the lower income groups.
Consumer Protection & Financial Literacy
3.50
Consumer protection is a key element in the implementation of financial inclusion strategies
as it promotes public confidence in the financial system. Financially literate consumers are
also empowered to responsibly interface with financial institutions as well as enforce their
rights.
3.51
The World Bank conducted a Consumer Protection & Financial Literacy Diagnostic Review
in July 2014. The preliminary findings noted significant gaps in financial literacy and capability
in the country notwithstanding a high general literacy levels, against a background of a
deficient overall financial consumer protection legal and regulatory framework.
3.52
The findings also noted limited capacity and resources of regulatory authorities to supervise
and enforce consumer protection laws.
44
3.53
The Reserve Bank, the other financial sector regulatory authorities and other stakeholders,
will use the findings of the World Bank review to develop a robust consumer protection
framework for the financial sector, which will facilitate the expansion of financial inclusion to
the majority of the population.
3.54
Meanwhile, the Reserve Bank is periodically issuing consumer education and awareness
bulletins to educate the public on financial services and responsible access.
Mobile Banking
3.55
Zimbabwe experienced phenomenal growth in the usage of mobile phones to access
financial services. The financial services providers have taken advantage of and leveraged
on the high mobile phone penetration rate in the country to offer banking services. The table
below shows selected mobile banking statistics.
Figure 29: Mobile Banking Statistics
Indicator
2014
2013
2012
156.79m
119.14 m
19.96 m
Value of mobile transactions (USD)
$3.6b
$2.09 b
$381.61m
Mobile phone penetration rate
106%
104%
87%
Mobile phone subscriber base
13.5m
13.5 m
12.6 m
3
3
3
20
20
18
Number of E-wallet Agents
25,516
6,900
-
Number of E-wallet Accounts
6,06m
2,44m
0.0032m
Volume of mobile transactions
Number of mobile network operators
Number of banking institutions offering mobile
banking services
45
CHAPTER 4: LEGAL DEVELOPMENTS
4.1
The Reserve Bank and key stakeholders have continued to review the banking sector laws
to ensure that the laws remain relevant and effective in promoting greater resilience and
efficiency of the financial sector as well as supporting the growth of the Zimbabwe financial
system and the real economy.
Banking Act Amendments
4.2
A draft Banking Amendment Bill was circulated by the Ministry of Finance to stakeholders in
August 2014.
Synopsis of the provisions of the Banking Bill
Enhanced Corporate Governance
4.3
Banking institutions and controlling companies will be required to establish effective
procedures of corporate governance, such as independent compliance functions headed by
compliance officers and risk committees to assess the risks faced by their institutions and
companies, develop strategies to mitigate the risks and adjust their capital ratios accordingly.
Board of Directors
4.4
In addition to the current requirements, the Registrar will not approve persons who have been
convicted of offences relating to money-laundering or terrorist financing.
4.5
Further, every board must have at least two executive directors, with the majority of the
directors, including the chairperson, being independent non-executive directors.
4.6
Persons will be disqualified for appointment as directors of banking institutions and
controlling companies if they are directors of four other companies, in the case of nonexecutive directors and three other companies, in the case of executive directors.
4.7
The term of directors on the board will be limited to 10 years, after which they will have to
wait for at least five years before being re-appointed.
46
4.8
Banking institutions will be required to inform the Registrar whenever they make substantial
loans to their directors, shareholders or senior staff.
Directors’ fiduciary duties & liability
4.9
The proposed new law sets out the responsibilities of directors and senior management of
banking institutions and controlling companies in relation to banking institutions. These
accountable persons will have a fiduciary duty, and will be obliged to act in good faith, with
due care, efficiently and free of any conflicting interests.
4.10
In the event of reckless, negligent, or fraudulent conduct/omission, legal action may be taken,
by Reserve Bank or Deposit Protection Corporation, against directors and senior managers
for financial loss to the bank or to the depositors.
Anti – Money Laundering
4.11
The Registrar will be empowered to cancel the licence of a banking institution that has been
engaging in money –laundering.
Shareholding
4.12
Shareholding thresholds in banking institutions for both individuals and companies will be
pegged at 25%. In the interests of openness, shares in banking institutions and controlling
companies are required to be held in the names of their beneficial shareholders, and not
anonymously. This will not apply to such nominee shareholders as executors of deceased
estates and central securities depositories.
Registration of controlling companies by the Registrar
4.13
In terms of the amendments, companies that have control over banks (controlling companies)
will now require registration by the Reserve Bank.
Consumer Protection
4.14
Consistent with consumer protection initiatives, the new law will establish the office of the
Financial Public Prosecutor to mediate and resolve disputes between financial institutions
47
and their customers. The office will endeavour to settle disputes through negotiation,
mediation, conciliation or determination. The function will be carried out by the Reserve Bank.
The new law also seeks to provide for enhanced disclosure of terms and conditions of
business by banking institutions.
4.15
In addition, banks will be required to display terms and conditions of business in their banking
halls, to disclose them to their customers in writing and also to publish in newspapers on a
regular basis.
Credit Registry & Credit Reference Bureaux
4.16
The new law will provide for the registration and supervision of credit reference bureaux,
which is critical in the management of credit risk by banking institutions and to minimise overindebtedness by members of the borrowing public.
Problem Bank Resolution Framework
4.17
The Bill also incorporates a more elaborate problem bank resolution framework which is in
line with international best practice.
4.18
The Banking Act Amendment will give the Reserve Bank power to take immediate and
effective action to deal with problem banking institutions, i.e. institutions that are liable to
collapse.
Non-performing Loans
4.19
The Bill will make it mandatory for insider loans to be approved by a banking institution’s
board and to be wholly secured by acceptable collateral. Insider loans will continue to be
deducted from capital.
Cooperation between Regulatory Authorities
4.20
The law will be amended to provide for cooperation between regulatory authorities such as
Ministry of Finance, Reserve Bank of Zimbabwe, Insurance and Pensions Commission,
Securities & Exchange Commission and Deposit Protection Corporation to ensure smooth
supervision of regulated entities and to avoid regulatory arbitrage.
48
4.21
A Financial Sector Oversight Council will be established, chaired by the Minister and
consisting of the chairpersons of financial regulatory authorities, to ensure proper
collaboration between the various regulatory bodies.
4.22
The Troubled Financial Institutions (Resolution Act) [Chapter [Chapter 24:28] will be repealed
and its provisions will be incorporated into the Banking Act.
4.23
It is anticipated that the legislative process will be completed expeditiously in order to give
effect to the proposed provisions.
49
CHAPTER 5: RESOLUTION OF TROUBLED BANKS
Introduction...
5.1
The Reserve Bank continued to closely monitor developments in distressed banking
institutions, and to respond to the problems in line with the provisions of the Troubled and
Insolvent Banks Policy.
5.2
The Reserve Bank’s response to distressed and weak banks is guided by a ladder of
supervisory interventions designed to address identified weaknesses, improve a bank’s
overall condition and return it to a safe and sound condition, wherever possible. The
framework is aligned to and expounds on section 48 of the Banking Act.
5.3
While the ladder of intervention considers the unique circumstances of each ailing institution,
including the nature, scope, and complexity of the risk profile, the same dictates that there
be severe ( and well understood) consequences for “unsafe or unsound” behavior. In this
regard, severe weaknesses and deficiencies attract more progressive supervisory
interventions including closure and cancellation of licenses as indicated hereunder.
Figure 30: Supervisory Interventions to Bank Failures
High
Closure / Liquidation
Curatorship
Severity
Corrective Order
Memorandum
Commitment Letter
Moral Suasion
Low
Low
Supervisory Intervention
50
High
5.4
As part of monitoring the distressed banks, the Reserve Bank, has been engaging the banks’
respective shareholders, with regards to the proposed turnaround strategies.
5.5
During the period under review, banking institutions with minor problems that could be
corrected in the normal course of business were issued with directives to address the
deficiencies within a given time frame.
5.6
As at 31 December 2014, four banking institutions, namely Metbank Limited, AFRASIA Bank
Zimbabwe Limited, Tetrad Investment Bank Limited and Allied Bank Limited continued to
experience liquidity and solvency challenges. The condition and performance of these
institutions had deteriorated and they commanded low market shares in terms of loans
(4.46%), assets (4.18%) and deposits (4.97%) as at 31 December 2014.
5.7
An outline of the status of the distressed banking institutions is provided hereunder.
Tetrad Investment Bank
5.8
During the year under review, the bank continued to experience severe liquidity challenges
largely due to critical undercapitalization, high levels of non-performing loans, and persistent
losses.
5.9
Against this background, the bank embarked on various liquidity enhancement measures
which, however, failed to provide reprieve to the bank. The bank entered into a Scheme of
Arrangement with its creditors on 24 September 2014, which was due to expire on 31 January
2015. The purpose of the Scheme was to stay mounting litigations against the bank from its
depositors and creditors and to allow for more time to finalize the recapitalisation initiatives
with a potential investor.
Metbank
5.10
During the period under review, the bank faced chronic liquidity challenges largely emanating
from high levels of non-performing loans and a relatively illiquid balance sheet.
5.11
In view of these challenges, the bank embarked on a number of turnaround initiatives that
included recapitalization, debt /equity swaps, property disposals, loan recoveries, and branch
and staff rationalization. The bank also engaged its depositors and creditors with a view to
entering into a Scheme of Arrangement.
51
5.12
The measures are envisaged to ameliorate the bank’s liquidity constrains and place the
institution on a sound footing during the course of 2015.
AfrAsia Bank Zimbabwe Limited
5.13
The viability of the bank continued to be threatened by the persistent liquidity challenges,
critical undercapitalization, high levels of non-performing loans and persistent losses.
5.14
The bank embarked on a number of turn-around strategies including, among others,
recapitalisation by the major shareholder, AfrAsia Bank Limited (Mauritius), who injected $10
million during the year, and disposal of loan collateral, securitization of immovable properties,
use aggressive loan recovery.
Allied Bank Limited
5.15
Allied Bank continued to experience mounting liquidity challenges during the year under
review, largely attributable to critical undercapitalization, high levels of non-performing loans
and persistent losses.
5.16
Various recapitalisation initiatives failed to yield any meaningful results. As part of the
resolution process, the Reserve Bank engaged the Board and shareholders with regards to
the recapitalisation initiatives and prospects of recovery.
Closed Banking Institutions…
Interfin Bank Limited
5.17
The institution which had been placed under curatorship by the Reserve Bank of Zimbabwe
on 11 June 2012, was closed on 31 December 2014, following expiry of the curatorship.
5.18
Interfin Bank Limited had been placed under curatorship following a determination that the
bank was not in a safe and sound financial condition, largely attributed to inadequate
capitalization, concentrated shareholding and abuse of corporate structures, high levels of
non-performing insider and related party exposures, chronic liquidity and income generating
challenges as well as poor board and senior management oversight.
52
Trust Bank
5.19
Trust Bank was closed by the Reserve Bank on 6 December 2013 following a determination
that the bank was no longer financially safe and sound. In particular, the bank was critically
undercapitalized and facing chronic liquidity challenges emanating from high levels of nonperforming loans, persistent losses, and gross abuse of depositors’ funds.
5.20
Management failed to trade the bank out of its liquidity and solvency challenges and the
numerous recapitalisation initiatives failed to yield any meaningful results.
5.21
The bank was subsequently placed under provisional liquidation on 8 October 2014 in terms
of Section 57 of the Banking Act [Chapter 24:20], and the Deposit Protection Corporation
was appointed Provisional Liquidator. Shareholders were afforded an opportunity before the
return date of 8 April 2015 to engage any prospective shareholder to inject capital into the
institution, failure of which the bank will proceed to final liquidation.
Capital Bank
5.22
The Reserve Bank closed Capital Bank following surrender of its banking licence for
cancellation on 7 February 2014. The bank was in an unsafe and unsound financial condition,
including critical undercapitalisation and persistent losses.
5.23
Following cancelation of the licence, the Reserve Bank proceeded to apply to the High Court
for the liquidation of the bank, which application was opposed by the minority shareholders
of the bank.
Royal Bank Limited
5.24
The Final liquidation Order of Royal Bank Limited was granted on 19 November 2014 and
sale of movable assets commenced in December 2014. Sale of immovable property is
expected to commence in January 2015.
53
CHAPTER 6: OUTLOOK
6.1
At the macro-level, the Government of Zimbabwe is implementing a broad based economic
framework, ZimAsset, which seeks to promote economic growth in the medium to long term.
The banking sector is expected to play a facilitatory role under ZimAsset, while also
benefitting from its successful implementation.
6.2
Over the next twelve months, various supervisory initiatives and measures being pursued by
the Reserve Bank, in collaboration with key stakeholders, are envisaged to significantly
address a number of challenges and constraints facing the sector.
6.3
Capitalization of the Reserve Bank by the Government shall go a long way in building
confidence within the economy and in providing the necessary conditions towards the
resumption of the Bank’s Lender of Last Resort function.
6.4
The Reserve Bank has instituted various risk reducing measures to increase the resilience
of the sector. Stability in the sector is expected to improve on account of the resumption of
interbank operations, creation of a credit reference bureau, clean-up of non-performing loans
through the ZAMCO initiative and the resolution of troubled banking institutions.
6.5
The lender of last resort function coupled with the introduction of the Afreximbank Trade Debt
Backed Securities (AFTRADES) securities is expected to stimulate interbank activity which
is critical for financial intermediation over the outlook period.
6.6
The establishment of a central credit registry in the Reserve Bank, which will address the
challenges of information asymmetry between borrowers and lenders, is expected to reduce
the inherent credit risk in the Zimbabwean banking sector. This will also promote risk-based
pricing which may result in a reduction in finance costs for quality borrowers
6.7
The reduction of NPLs through ZAMCO will help revive credit growth, spur activity of
previously over borrowed clients and free up resources trapped in unproductive uses. This
is expected to bolster the economy from a supply side perspective.
6.8
Cognisant of the need to protect the interest of depositors and promote banking sector
confidence, the Reserve Bank will continue to closely monitor the sector and deal decisively
with troubled banking institutions.
54
6.9
The Reserve Bank and other stakeholders are also working towards the development of a
robust consumer protection framework in the financial sector as consumer protection is
critical in building an inclusive financial system as well as public confidence in the system.
6.10
The Reserve Bank in collaboration with the banking sector, microfinance sector, mobile
network operators and other key stakeholders, will continue to play critical roles in promoting
financial inclusion, self-sufficiency and economic development particularly among the low
income groups.
6.11
The Reserve Bank will continue with its efforts to raise consumer awareness on the
regulatory expectations regarding the activities of microfinance institutions, in addition to
taking appropriate supervisory action on non-complying institutions.
6.12
The Reserve Bank will also continue to train its staff as well as the players in banking sector
in order to enhance capacity particularly in risk management, corporate governance, stress
testing, among other identified needs.
55
APPENDICES
APPENDIX 1: OPERATIONS AND ACTIVITIES
FUNCTION OF BANK SUPERVISION DIVISION
1. In terms of Section 6 of the Reserve Bank Act [Chapter 22:15], the role of the Reserve
Bank includes fostering the stability and proper functioning of the financial system as well as
supervision of banking institutions. On its part, the Bank Supervision division endeavors
to promote financial sector stability through a number of operations and activities. The vision
and objectives of the division are outlines below.
Vision of Bank Supervision Division
2. To become an effective, efficient and dependable regulatory and supervisory authority for
the financial sector, supportive of economic development in Zimbabwe.
Mission of Bank Supervision Division
3. To promote and maintain the safety and soundness of the financial system through proactive
and rigorous regulation and supervision, in line with international best practice.
Objectives of Bank Supervision Division
4. The objectives of the Division are to:

enhance and maintain the safety and soundness of the financial system through effective
risk-based supervision;

periodically review regulatory and supervisory policies and procedures in line with
international best practice and changes in the macroeconomic environment;

promote public confidence in the financial system by ensuring a consistent, objective and
transparent regulatory and supervision process;

minimise moral hazard and supervisory forbearance through taking prompt supervisory
56
action against weak and troubled financial institutions in order to protect the integrity of the
financial system;

promote sound corporate governance practices and adoption of adequate risk
management systems;

foster a culture of strict compliance with laws, rules, regulations, policies, procedures,
guidelines and international best practice;

build supervisory capacity through structured training and development programmes to
enhance the skills base; and

to promote financial inclusion and consumer protection.
Organization of the Bank Supervision Division (BSD)
5. In a bid to fulfill its mandate to foster and maintain financial stability, BSD is organized into
six (6) departments, aided by a Legal Counsel function. The operational departments of the
division are illustrated below.
57
Director/Bank
Supervision
Chief Legal Advisor
Chief Bank Examiner(2)
Licensing and Supervision of
Banks
Chief Bank Examiner
Licensing &Supervision
of Microfinance
Institutions
Chief Bank Examiner
Financial Modelling & Basel II
Implementation
58
Chief Bank Examiner
Problem Bank
Resolution & Market
Stabilisation
Chief Bank Examiner
Policy Research,
Compliance & MIS
APPENDIX 2: MAJOR SUPERVISORY TOOLS & METHODOLOGIES
1.
In pursuance of its responsibility to promote and maintain the safety,
soundness, and integrity of the banking system, the Reserve Bank employs
various supervisory techniques, which are continuously refined to take
cognisance of international best practices. The methodologies include riskbased supervision, consolidated supervision, macro-prudential and
financial stability analysis and early warning systems. A brief explanation of
some of the techniques and approaches is provided below.
Risk-Based Supervision…
2.
Risk-based supervision is a structured supervisory process designed to identify
key risk factors through qualitative and quantitative assessment of an institution’s
risk profile, assess the adequacy of the risk management policies and practices
that are used to mitigate risk; and focus supervisory resources (including
examination time) based on the risk characteristics of the institutions.
3.
This approach requires a strong understanding of the institution and focuses on
validating management’s ability to identify, measure, monitor and control risks.
Consolidated Supervision…
4.
The consolidated supervision approach evaluates the strength of individual
banking institutions and the entire banking group, taking cognizance of the whole
spectrum of risks that affect an institution, whether these risks are carried in the
books of the regulated entity or related parties.
5.
Consolidated supervision promotes the overall evaluation, both qualitatively and
quantitatively, of the strength of a banking group to which a banking institution
belongs, in order to understand the relationship among the entities and to assess
the potential impact of other entities in the group on the operations of the banking
institution.
6.
Banking and non-banking activities conducted by a financial conglomerate and
its subsidiaries and affiliates, both domestic and foreign, are borne in mind in
determining the conglomerate and its related entities’ level of compliance with
59
prudential regulatory requirements.
Macro-Prudential and Financial Stability Analysis…
7.
Macro-prudential surveillance facilitates a holistic view of structural imbalances,
interactions and vulnerabilities within the banking system at both national and
global level. The analysis encompasses a surveillance of financial markets to
assess the likelihood of economic shocks; analysis of macro-prudential linkages
with particular focus on the extent to which shifts in macro-economic and real
sector developments affect financial soundness.
8.
Financial stability analysis provides a framework for the assessment of the
condition of the financial system as a whole, identification of the potential
downside risks to the financial system, analysis of alternate means of promoting
and maintaining financial system stability and the surveying of policy
developments designed to improve financial stability. Macro-prudential analysis,
macro-stress testing and scenario analysis are the bedrock on which financial
stability analysis hinges.
9.
Macro-stress testing and scenario analysis which are essentially risk and
vulnerability assessments are conducted on a continuous basis. The analyses
explore susceptibilities to both endogenous and exogenous events which have
a low probability of occurrence, but have a high potential for a costly impact
should they materialize.
Core Deliverables of BSD
10.
BSD’s underlying philosophy revolves around the concept that banking
institutions should be free to operate according to market forces and should be
entitled to set terms and conditions for their operations in a competitive
environment. However, supervisory rules should be set to manage banking
practices in order to protect depositors, other creditors and contribute towards a
sound and stable financial system.
11.
To ensure financial sector stability BSD undertakes the following activities;
licensing and de-licensing of banking institutions, off-site surveillance and
60
on-site supervision.
Licensing and de-licensing of banking institutions…
12.
In line with international best practice as espoused in the Basel Core Principles
for Effective Banking Supervision, the licensing and de-licensing function of
banking institutions, asset management companies and microfinance institutions
is vested in the Reserve Bank of Zimbabwe.
13.
The licensing framework considers the ownership structures; capitalization levels
of the proposed institution in relation to the class of banking; the fitness and
probity of members of the board and senior management, strategic and
operational plans; internal controls; and risk management among others.
Off-site Surveillance…
14.
Off-site surveillance, designed to complement on-site examinations and facilitate
ongoing assessment of banks in between examinations, entails periodic analysis
of the financial condition and performance of individual institutions and the entire
banking sector.
15.
This periodic analysis is based on the quantitative and qualitative information
furnished by reporting institutions in the form of standardized statutory returns.
16.
Off-site analysis, used as an early warning supervisory tool, involves regular,
periodic and at times ad-hoc data collection, preliminary analysis and validation,
detailed analysis and prudential meetings with the specific banking institution.
17.
In line with the developments in the region, the Reserve Bank has adopted the
SADC/ESAP Information Technology Harmonization Project, the Banking
Supervision Application (BSA), which automates data collection, data validation
and supervisory processes and workflows.
18.
Apart from prudential returns, other sources of information which include the
financial
institutions’
internal
management
reports,
published
financial
information and prudential meetings between the financial institutions, external
auditors and the Reserve Bank, provide an invaluable input to off-site
surveillance.
19.
In addition, the Reserve Bank conducts stress tests as part of the early warning
61
systems to determine the vulnerability of individual banks as well as the entire
banking system to various shock scenarios.
On-site Examinations…
20.
As an international best practice of continuous supervision, BSD conducts onsite examination of financial institutions under its purview. This involves actual
visits to banking institutions to evaluate their safety and soundness.
21.
The coverage of on-site examinations ranges from an investigation of specific
areas to a comprehensive review of an institution's operations with focus placed
on assessing management’s ability to identify, measure, monitor and control
risks emanating from banking business.
22.
On-site examinations are structured to provide a comprehensive evaluation and
assessment of a range of supervisory issues including:
i. compliance with laws, regulations and the institution’s own internal policies
and procedures;
ii. corporate governance and competence of management;
iii. adequacy of the institution’s risk management systems and internal control
procedures;
iv. adequacy of accounting and management information systems; and
v. maintenance of proper books of accounts and other records.
23.
The frequency of on-site examinations is determined by the institution’s risk
profile as depicted by the results of the off-site assessment and significant
developments which have a bearing on the financial condition of an institution.
62
APPENDIX 3: REGISTERED & OPERATING BANKING INSTITUTIONS AS AT 31
DECEMBER 2014
Banking Institution
Address & Website
2013 ($m)
2014 ($m)
Annual Growth (%)
Total Assets
Agribank
15th Floor, Hurudza House
14-16 Nelson Mandela Avenue
Harare
Tel: 774429 or 773704/5 or
774554 Fax 774554
www.agribank.co.zw
133.75
123.67
-7.54%
Barclays Bank
3 Anchor House
1st Street/Jason Moyo Avenue
Harare
Phone: 758280/99 or 758324
www.africa.barclays.com
359.65
322.13
-10.83%
BancABC
1 Endevour Crescent
Mt. Pleasant Business Park
Harare
Phone: 701636/52 / 739089
Fax 727330
www.bancabc.com
633.13
590.99
-6.66%
CBZ Bank Limited
3rd Floor, Union House
60 Kwame Nkrumah Avenue
Harare
Phone: 749714 or 748050/79 /
759110-6 Fax 758077
www.cbz.co.zw
1584.18
1665.98
5.16%
Ecobank
Sam Levy’s Office Park
Block A, Piers Road Borrowdale
Harare
Phone:851642/7 or 706036/7 or
701350/3 or 703011/2/4 / 851642
Fax: 794993
www.ecobank.com
154.04
190.70
23.80%
FBC Bank Limited
FBC Centre
Nelson Mandela Avenue
Harare
Phone:704462/704481/772705
Fax 704995
www.fbc.co.zw
329.53
391.81
18.90%
63
Banking Institution
Address & Website
2013 ($m)
2014 ($m)
Annual Growth (%)
Total Assets
AfrAsia Bank Zimbabwe
Limited
12th Floor, Karigamombe Centre
53 Samora Machel Avenue
Harare
120.20
75.87
-36.88%
(under liquidation)
Phone: 749400 or 758469/70/71
or 749407 or
091 235315: Fax 755201
www.afrasiabank.co.zw
MBCA Bank Limited
Old Mutual Centre
3rd Street/Jason Moyo
Harare
Tel: 701636/52 Fax 727330
www.mbca.co.zw
183.87
199.54
8.52%
Metbank Limited
Metropolitan House
3 Central Avenue
Harare
Phone: 706091/706128 (701970 Direct) Fax 733014
www.metbank.co.zw
176.89
157.47
-10.98%
NMB Bank Limited
4th Floor, Unity Court
Kwame Nkrumah Avenue
HARARE 759651/9 or 754933/5
or 709122/68 or 709124/09
www.nmbz.co.zw
268.49
296.41
10.40%
Stanbic Bank Zimbabwe
Limited
Stanbic Centre
Samora Machel Avenue
Harare
491.15
650.89
32.52%
Phone: 759471
Fax 772126
www.stanbicbank.co.zw
Standard Chartered Bank
Zimbabwe Limited
2nd Floor, Old Mutual Centre
Cnr. Third Street/Jason Moyo
Avenue
Harare
Phone: 253801-7 or 252289
Fax 252288
www.stanchart.co.zw
511.65
515.64
0.78%
Steward Bank Limited
6th Floor, 101 Kwame Nkrumah
Avenue
Harare
Tel:79146/791444-8Fax 791460
www.stewardbank.co.zw
124.01
213.04
-71.79%
64
Banking Institution
Address & Website
2013 ($m)
2014 ($m)
Annual Growth (%)
Total Assets
ZB Bank Limited
Tetrad Investment Bank
Central African Building
Society
CBZ Building Society
Zimbank House
Cnr.1st Street/Speke Avenue
Harare
Phone: 751168/75 or
78662590/2576
www.zb.co.zw
1st Floor, Building No. 5
Arundel Office Park
Mt. Pleasant
Harare
Phone: 338401-6
www.tetrad.co.zw
281.03
320.69
14.11%
116.62
64.51
-44.68%
Northridge Park
Northend Close
Borrowdale
Harare
Phone: 883823/59
Fax 883804
www.cabs.co.zw
Beverley Place
3 Selous Avenue
Harare
Phone: 792631/5 / 705001 Fax
705999
www.cbz.co.zw
624.17
856.81
37.27%
181.62
223.21
22.90%
FBC Building Society
5th Floor, FBC Centre
Nelson Mandela Avenue
Harare
Phone: 783203-9
www.fbc.co.zw
78.48
109.30
39.27%
ZB Building Society
6th Floor, Finsure House
Cnr. Kwame Nkrumah / Sam
Nujoma
Harare
Phone: 252978, 252926, 253031,
758275
www.zb.co.zw
36.76
45.54
23.88%
POSB
6th Floor, Causeway Building
Cnr. Third Street/Central Avenue
Harare
Phone:
729700-9;737911-9;
735081-8 or 791134
Fax: 749012
www.posb.co.zw
91.20
105.15
15.30%
65
APPENDIX 4: STATISTICAL TABLES
A: STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014
COMMERCIAL BANKS
AFRASIA
AGRIBANK
BARCLAYS
BANCABC
CBZ BANK
ECOBANK
FBC BANK
METBANK
MBCA BANK
NMB BANK
STANBIC
STANDARD
CHARTERED
BANK
STEWARD
BANK
ZB BANK
TOTAL
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
300,904
6,143,061
30,776,740
14,582,592
31,595,539
5,383,550
24,069,654
252,204
20,805,633
12,039,513
59,861,336
55,151,462
4,961,590
39,615,518
305,539,296
3,354,258
3,637,497
52,631,337
31,194,346
26,522,329
15,457,176
63,194,156
38,461
31,542,725
11,408,222
121,300,073
87,085,825
16,699,524
21,551,369
485,617,298
69,473
414,938
92,476
8,053,186
73,278,592
636,067
17,812,837
8,524,215
15,042,149
27,500,000
0
2,287
0
22,359,161
173,785,382
0
0
0
0
0
0
0
0
0
0
0
0
0
8,402,201
8,402,201
BALANCES WITH
FOREIGN BANKS
140,978
41,740
4,869,459
17,505,711
11,269,824
1,827,653
5,587,483
619
3,308,718
3,876,013
80,263,089
7,637,611
3,749,318
10,195,487
150,273,703
SECURITIES AND
INVESTMENTS
3,128,988
1,642,336
26,335,069
14,844,777
250,178,075
7,407,068
35,874,956
2,675,029
16,980,635
3,874,525
28,447,509
16,162,339
3,903,304
30,779,105
442,233,715
LOANS & ADVANCES
35,024,994
83,062,867
126,895,354
352,420,177
910,327,467
126,371,980
205,397,409
52,897,816
95,830,123
217,463,319
234,420,097
200,007,471
107,396,702
122,275,208
2,869,790,984
FOREIGN CLAIMS
0
0
0
0
36,428,604
0
0
0
0
0
5,670
0
0
3,750,000
40,184,274
REPOSSESSED ASSETS
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
FIXED ASSETS
9,526,422
21,789,121
25,633,098
40,614,992
53,046,773
4,481,738
16,380,580
89,060,338
3,409,323
14,914,732
27,713,704
36,343,696
11,523,385
17,465,324
371,903,226
OTHER ASSETS
24,324,803
3,322,482
6,615,835
15,903,179
122,096,842
1,194,612
16,598,660
1,795,855
8,187,478
5,334,110
7,087,781
7,247,820
24,583,631
16,563,304
260,856,392
TOTAL ON-BALANCE
SHEET ASSETS
75,870,820
120,054,042
273,849,368
495,118,960
1,514,744,045
162,759,844
384,915,736
155,244,537
195,106,784
296,410,434
559,099,259
409,638,511
172,817,454
292,956,678
5,108,586,471
OFF-BALANCE SHEET
ASSETS
0
3,592,684
48,285,423
95,875,304
151,240,600
27,942,954
6,898,941
2,225,351
4,428,274
0
91,794,351
105,999,235
40,225,000
27,734,218
606,242,334
75,870,820
123,646,726
322,134,791
590,994,264
1,665,984,645
190,702,797
391,814,677
157,469,888
199,535,058
296,410,434
650,893,609
515,637,746
213,042,454
320,690,896
5,714,828,805
TOTAL DEPOSITS
40,785,784
49,073,247
205,347,440
285,863,973
933,360,359
96,633,205
184,114,442
91,028,657
112,573,349
173,699,761
446,784,779
288,308,019
94,967,818
210,948,962
3,213,489,796
DEMAND DEPOSITS
4,705,947
19,442,257
183,387,038
85,841,800
401,551,228
59,545,589
101,604,656
50,121,671
66,211,575
87,297,434
431,618,852
236,165,345
50,076,542
29,003,661
1,806,573,596
SAVINGS DEPOSITS
22,712,625
5,586,846
13,441,954
20,922,145
40,714,286
2,504,677
0
0
7,479,164
6,340,666
11,689,368
39,174,036
6,605,047
83,155,257
260,326,070
TIME/FIXED DEPOSITS
13,367,211
24,044,145
8,518,448
179,100,029
349,248,487
34,582,939
20,227,537
40,906,986
38,882,610
80,061,661
3,476,558
750,699
38,286,230
98,790,044
930,243,584
DOMESTIC NOTES AND
COIN
BALANCES WITH
CENTRAL BANK
BALANCES WITH
DOMESTIC BANKS
ASSETS IN TRANSIT
TOTAL ASSETS
EQUITY AND LIABILITIES
66
COMMERCIAL BANKS
AFRASIA
AGRIBANK
BARCLAYS
BANCABC
CBZ BANK
ECOBANK
FBC BANK
METBANK
MBCA BANK
NMB BANK
STANBIC
STANDARD
CHARTERED
BANK
STEWARD
BANK
ZB BANK
TOTAL
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
FOREIGN CURRENCY
DEPOSITS
0
0
0
0
141,846,358
0
2004131.51
0
0
0
0
12217939
0
0
156,068,428
NCDs
0
0
0
0
0
0
60278118.12
0
0
0
0
0
0
0
60278118.12
BALANCES WITH OTHER
BANKS
98,213
4,459,830
180,665
73,202,063
202,023,619
14,543,316
80,015,130
0
20,013,850
29,430,000
2,705,652
0
0
28,622,609
455,294,947
LIABILITIES IN TRANSIT
0
0
0
0
0
0
0
0
0
0
0
0
0
620,867
620,867
FOREIGN LIABILITIES
12,187,456
34,924,745
378,855
47,446,871
233,430,191
0
75,042,998
16,921,834
6,049,234
30,247,541
0
6,239,352
0
2,133,668
465,002,746
SECURITIES AND OTHER
LIABILITIES
2,009,493
0
0
0
0
0
0
0
0
1407964.49
0
0
8,788,300
10,729,752
22,935,509
CAPITAL AND
RESERVES
11,367,794
19,190,804
49,284,522
71,859,176
122,999,958
43,212,389
33,747,971
41,036,379
37,055,862
43,851,277
81,974,951
72,669,883
64,729,269
32,036,879
725,017,113
OTHER LIABILITIES
9,422,080
12,405,417
18,657,887
16,746,877
22,929,918
8,370,934
11,995,195
6,257,667
19,414,489
17,773,890
27,633,877
42,421,257
4,332,067
7,863,941
226,225,495
TOTAL ON-BALANCE
LIABILITIES
75,870,820
120,054,043
273,849,368
495,118,960
1,514,744,045
162,759,844
384,915,736
155,244,537
195,106,784
296,410,434
559,099,259
409,638,512
172,817,454
292,956,678
5,108,586,472
OFF-BALANCE SHEET
LIABILITIES
0
3,592,684
48,285,423
95,875,304
151,240,600
27,942,954
6,898,941
2,225,351
4,428,274
0
91,794,351
105,999,235
40,225,000
27,734,218
606,242,334
75,870,820
123,646,727
322,134,791
590,994,264
1,665,984,645
190,702,797
391,814,677
157,469,888
199,535,058
296,410,434
650,893,609
515,637,746
213,042,454
320,690,896
5,714,828,806
TOTAL EQUITY AND
LIABILITIES
67
A: STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014
MERCHANT
BANK
BUILDING SOCIETIES
SAVINGS BANK
POSB
GRAND TOTAL
TETRAD
CBZ BS
CABS
FBC BS
ZB BS
USD
USD
USD
USD
USD
USD
USD
DOMESTIC NOTES AND COIN
641,480
3,864,100
41,319,810
1,062,594
872,896
9,513,151
362,813,328
BALANCES WITH CENTRAL BANK
570,741
0
33,652,549
203,223
0
4,392,829
524,436,640
BALANCES WITH DOMESTIC BANKS
149,486
5,841,591
3,474,278
48,586,708
1,227,357
309,749
233,374,551
ASSETS IN TRANSIT
0
0
0
0
0
0
8,402,201
BALANCES WITH FOREIGN BANKS
0
0
7,005,831
0
0
0
157,279,534
SECURITIES AND INVESTMENTS
1,968,262
0
167,653,271
0
14,598,262
13,240,113
639,693,623
LOANS & ADVANCES
24,964,515
165,084,862
446,877,575
50,119,987
19,501,843
56,304,164
3,632,643,931
0
0
0
0
0
0
40,184,274
REPOSSESSED ASSETS
5,682,080
0
120,000
238,537
0
0
6,040,617
FIXED ASSETS
24,757,013
35,746,331
89,971,767
4,610,795
7,684,302
7,720,695
542,394,129
OTHER ASSETS
5,678,207
12,669,019
66,733,844
4,482,671
1,651,542
13,672,736
365,744,412
TOTAL ON-BALANCE SHEET ASSETS
64,411,785
223,205,903
856,808,925
109,304,516
45,536,203
105,153,437
6,513,007,239
100,000
0
0
0
0
0
606,342,334
64,511,785
223,205,903
856,808,925
109,304,516
45,536,203
105,153,437
7,119,349,573
TOTAL DEPOSITS
70,080,632
37,862,819
598,814,266
38,270,784
22,458,891
84,304,552
4,065,281,740
DEMAND DEPOSITS
39,140,687
12,049,524
186,689,528
0
0
62,243,941
2,106,697,275
SAVINGS DEPOSITS
0
20,790,963
0
6,920,467
10,234,007
6,974,844
305,246,351
30,939,945
5,022,331
412,124,738
4,399,171
10,796,884
2,285,340
1,395,811,992
0
0
0
0
0
0
156,068,428
FOREIGN CLAIMS
OFF-BALANCE SHEET ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
TIME/FIXED DEPOSITS
FOREIGN CURRENCY DEPOSITS
68
MERCHANT
BANK
NCDs
BALANCES WITH OTHER BANKS
LIABILITIES IN TRANSIT
BUILDING SOCIETIES
TETRAD
CBZ BS
CABS
USD
USD
USD
USD
USD
0
0
0
26,951,146.05
1,428,000
3,459,098
0
42,000,000
30,959,978
2,788,061
0
0
0
FBC BS
SAVINGS BANK
0
ZB BS
0
POSB
USD
12,800,428.54
0
0
0
GRAND TOTAL
USD
101,457,692.7
534,502,084
620,867
FOREIGN LIABILITIES
0
6,297,096
49,925,214
4,296,351
0
SECURITIES AND OTHER LIABILITIES
0
0
0
0
0
2,540,803
25,476,312
-17,428,370
77,811,954
137,906,875
29,688,030
16,618,375
13,363,436
982,977,414
OTHER LIABILITIES
8,300,425
101,234,034
28,162,570
6,089,373
3,670,875
4,944,645
378,627,416
TOTAL ON-BALANCE LIABILITIES
64,411,785
223,205,903
856,808,925
109,304,516
45,536,203
105,153,437
6,513,007,240
OFF-BALANCE SHEET LIABILITIES
100,000
0
0
0
0
0
606,342,334
64,511,785
223,205,903
856,808,925
109,304,516
45,536,203
105,153,437
7,119,349,574
CAPITAL AND RESERVES
TOTAL EQUITY AND LIABILITIES
69
525,521,407
B: STATEMENT OF COMPREHENSIVE INCOME AS AT 31 DECEMBER 2014
COMMERCIAL BANKS
COMPOSITION OF INCOME STATEMENTS
(31 DECEMBER 2014)
AFRASIA
USD
AGRIBANK
Banc ABC
BARCLAYS
CBZ BANK
ECOBANK
USD
USD
USD
USD
USD
FBC BANK
METBANK
USD
USD
MBCA
BANK
NMB
BANK
USD
USD
STANDARD
CHARTERED
BANK
USD
STANBIC
USD
STEWARD
BANK
USD
ZB BANK
TOTAL
USD
USD
Interest Income
12,786,503
12,347,425
82,776,522
13,291,588
170,824,599
16,141,337
40,145,269
18,725,067
18,234,654
28,961,363
39,425,082
25,887,692
5,991,259
28,829,750
514,368,110
Interest Income from Loans, Advances &
Leases
12,071,555
12,311,373
77,002,877
12,071,729
145,962,827
14,600,328
38,600,457
14,266,656
16,077,047
21,003,662
35,580,367
24,135,179
5,660,677
27,582,864
456,927,597
Interest Income on Balances with Banks
100,144
0
1,811,336
538,106
8,073,409
1,294,774
25,588
0
1,063, 159
1,908,075
1,322,784
65,737
330,582
191,320
16,725,013
Interest Income on Investments & Securities
614,805
36,052
3,962,309
681,753
16,788,364
246,235
1,519,224
4,458,411
1,094,448
6,049,626
2,521,931
1,686,776
0
1,055,567
40,715,500
Interest Expense
4,954,688
4,995,409
33,572,797
836,529
100,812,451
4,024,768
22,829,800
5,839,533
2,873,876
12,645,545
848,636
1,598,397
815,855
13,968,490
210,616,775
Interest Expense on Deposit Accounts
3,395,969
3,052,732
23,229,141
826,665
78,706,108
3,301,146
12,751,339
5,839,533
2,969,451
8,349,541
848,636
1,598,397
815,855
12,951,582
158,636,097
173,254.57
0
0
0
0
0
0
0
-1,841,032
0
0
0
0
0
-1,667,777
1,001
0
6,454,190
9,864
0
14,444
10,078,461
0
459,569
1612126
0
0
0
480,386
19,110,042
Other Interest Expenses
1,384,463
1,942,677
3,889,465
0
22,106,343
709,178
0
0
1,285,888
2,683,878
0
0
0
536,522.15
34,538,414
Net Interest Income
7,831,815
7,352,016
49,203,724
12,455,059
70,012,148
12,116,569
17,315,469
12,885,534
15,360,778
16,315,818
38,576,446
24,289,295
5,175,404
14,861,260
303,751,335
Total Provisions For Current Period
3,960,471
2,187,835
34,531,360
529,643
16,749,894
4,164,469
3,163,920
2,287,238
1,699,922
5,460,683
6,739,405
1,623,813
-1,979,852
4,048,022
85,166,823
Specific Provisions
5,556,071
1,496,491
34,241,548
248,140
5,193,237
4,164,469
2,518,569
2,971,580
1,355,512
5,280,811
4,840,394
1,623,813
-1,477,538
3,995,777
72,008,873
General Provisions
-1,595,600
691,344
289,811
281,503
11,556,657
0
645,352
-684,342
344,410
179,872
1,899,011
0
-502,314
52,245
13,157,949
Net Interest after Provisions
3,871,344
5,164,181
14,672,365
11,925,416
53,262,254
7,952,100
14,151,549
10,598,296
13,660,856
10,855,135
31,837,041
22,665,482
7,155,256
10,813,238
218,584,513
Non - Interest Income
6,919,654
13,082,398
19,623,233
33,238,391
44,851,050
11,947,086
15,539,830
1,140,377
11,135,974
18,944,971
45,868,154
42,556,789
18,102,757
29,982,516
312,933,180
Foreign Exchange
1,036,576
0
2,872,506
3,173,134
2,525,856
700,255
1,069,549
0
2189189
0
15,599,123
4,679,652
223,737
727,282
34,796,859
Fees and Commission
6,123,648
12,876,885
20,028,825
27,207,077
30,405,563
11,284,611
19,741,160
1,177,096
8,946,785
17,536,439
30,269,031
37,769,167
17,095,591
28,370,199
268,832,077
Interest Expense on Central Bank Loans
Interest on Interbank Loans
70
COMMERCIAL BANKS
COMPOSITION OF INCOME STATEMENTS
(31 DECEMBER 2014)
AFRASIA
USD
Other Non-Interest Income
AGRIBANK
Banc ABC
BARCLAYS
CBZ BANK
ECOBANK
USD
USD
USD
USD
USD
FBC BANK
METBANK
USD
USD
MBCA
BANK
NMB
BANK
USD
STANDARD
CHARTERED
BANK
USD
STANBIC
USD
USD
STEWARD
BANK
USD
ZB BANK
USD
TOTAL
USD
-240,569
205,512
-3,278,098
2,858,180
11,919,632
-37,780
-5,270, 880
-36,719
0
1,408,532
0
107,970
783,428
885,036
9,304,244
Non - Interest Expenses
31,509,792
22,506,628
41,196,609
37,028,216
79,521,496
15,613,209
27,513,914
18,034,470
17,627,975
27,797,085
50,468,136
54,523,820
23,692,872
41,016,097
488,050,320
Salaries and Employee Benefits
16,396,791
11,796,518
17,350,680
20,295,846
49,026,937
6,335,858
10,447,204
11,272,614
10,211,682
12,854,858
24,168,750
32,760,846
13,613,190
17,984,504
254,516,279
2,366,961
1,843,900
2,641,619
3,524,727
0
1,776,969
1,270,169
928,571
2,055,345
1,837,882
2,479,593
4,972,152
1,758,474
4,452,893
31,909,254
Other Non-Interest Expenses
12,746,040
8,866,210
21,204,311
13,207,643
30,494,559
7,500,382
15,796,541
5,833,285
5,360,948
13,104,345
23,819,793
16,790,823
8,321,208
18,578,700
201,624,788
Net Non - Interest Income
-24,590,138
-9,424,231
21,573,376
-3,789,825
-34,670,446
-3,666,123
-11,974,085
-16,894,093
-6,492,001
-8,852,114
-4,599,982
-11,967,031
-5,590,115
-11,033,581
-175,117,141
Income (Loss) before Taxation
-20,718,794
-4,260,050
-6,901,011
8,135,591
18,591,807
4,285,977
2,177,465
-6,295,797
7,168,855
2,003,021
27,237,059
10,698,451
1,565,141
-220,343
43,467,372
-5,335,086
0
-1,275,593
1,544,217
3,682,523
1,067,947
1,356,759
-1,621,168
1,811,062
599,985
6,528,157
3,611,437
-6,753,706
-1,565,266
3,651,267
-15,383,708
-4,260,050
-5,625,418
6,591,374
14,909,285
3,218,030
820,706
-4,674,629
5,357,793
1,403,036
20,708,902
7,087,014
8,318,846
1,344,923
39,816,105
Extraordinary Items
0
0
0
0
0
0
0
0
0
0
0
0
0
6,363,077
6,363,078
Net Income / (Loss)
-15,383,708
-4,260,050
-5,625,418
6,591,374
14,909,285
3,218,030
820,706
-4,674,629
5,357,793
1,403,036
20,708,902
7,087,014
8,318,846
-5,018,154
33,453,027
Occupancy - Net of Rental
Taxation
Net Income / (Loss) after Taxation
71
B: STATEMENT OF COMPREHENSIVE INCOME AS AT 31 DECEMBER 2014
COMPOSITION OF INCOME STATEMENTS
(31 DECEMBER 2014)
MERCHANT
BANKS
BUILDING SOCIETIES
TETRAD
CBZ BS
CABS
SAVINGS
BANK
FBC BS
ZB BS
TOTAL
GRAND
TOTAL
POSB
Interest Income
1,876,153
24,942,100
81,673,515
11,847,226
3,411,745
121,874,586
10,833,538
648,952,388
Interest Income from Loans Advances & Leases
1,876,153
24,927,866
68,923,824
8,040,220
2,600,677
104,492,587
8,902,872
572,199,209
Interest Income on Balances with Banks
0
14,234
0
3,807,006
10,318
3,831,558
0
2,055,6571.21
Interest Income on Investments & Securities
0
0
12,749,691
0
800,750
13,550,441
1,930,667
56,196,608
Interest Expense
4,774,049
7,716,281
37,276,611
6,049,608
537,138
51,579,638
3,373,069
270,343,531
Interest Expense on Deposit Accounts
3,998,408
407,244
34,135,050
2,942,146
537,138
38,021,578
3,181,193
203,837,275
0
0
0
0
0
0
0
-1,667,777
775,642
301,122
0
2,478,342
0
2,779,464
0
22,665,147
0
7,007,915
3,141,561
629,120
0
10,778,596
191,876
45,508,885
Net Interest Income
-2,897,896
17,225,819
44,396,904
5,797,618
2,874,607
70,294,948
7,460,470
378,608,858
Total Provisions For Current Period
7,644,098
1,022,238
6,067,743
884,292
248,529
8,222,802
3,078,475
104,112,197
Specific Provisions
7,506,772
726,192
-1,474,999
735,915
0
-12,893
2,980,700
82,483,452
General Provisions
137,326
296,046
7,542,742
148,377
248,529
8,235,694.17
97,775
21,628,745
-10,541,993
16,203,581
38,329,161
4,913,326
2,626,078
62,072,146
4,381,995
274,496,660
-2,923,197
9,789,114
36,996,743
6,245,647
4,940,055
57,971,559
19,648,576
387,630,117
16,164
68,441
0
0
0
68,441
79,912
34,961,376
1,863
7,399,958
32,748,990
5,181,698
4,823,942
50,154,588
19,595,952
338,584,480
Other Non-Interest Income
-2,941,224
2,320,715
4,247,753
1,063,949
116,113
7,748,530
-27,289
14,084,262
Non - Interest Expenses
14,103,301
12,087,301
50,201,571
6,560,576
6,393,698
75,243,146
21,458,017
598,854,785
4,088,498
1,210,892
17,946,655
4,033,983
2,875,549
26,067,080
10,060,659
294,732,515
-819,611
0
900,609
246,903
-221,689
925,822.41
1,464,573
33,480,038
10,834,415
10,876,409
31,354,307
2,279,690
3,739,838
48,250,244
9,932,785
270,642,232
Interest Expense on Central Bank Loans
Interest on Interbank Loans
Other Interest Expenses
Net Interest after Provisions
Non - Interest Income
Foreign Exchange
Fees and Commission
Salaries and Employee Benefits
Occupancy - Net of Rental
Other Non-Interest Expenses
72
COMPOSITION OF INCOME STATEMENTS
(31 DECEMBER 2014)
MERCHANT
BANKS
BUILDING SOCIETIES
TETRAD
CBZ BS
CABS
SAVINGS
BANK
FBC BS
ZB BS
TOTAL
GRAND
TOTAL
POSB
Net Non - Interest Income
-17,026,498
-2,298,186
-13,204,828
-314,929
-1,453,643
-17,271,587
-1,809,442
-211,224,667
Income (Loss) before Taxation
-27,568,492
13,905,395
25,124,333
4,598,397
1,172,435
44,800,560
2,572,553
63,271,993
-70,706
0
0
0
0
0
0
3,580,562
-27,497,786
13,905,395
25,124,333
4,598,397
1,172,435
44,800,560
2,572,553
59,691,431
Extraordinary Items
0
0
0
0
1,115,717
1,115,717
1,367,768
8,846,562
Net Income / (Loss)
-27,497,786
13,905,395
25,124,333
4,598,397
56,718
43,684,843
1,204,785
50,844,869
Taxation
Net Income / (Loss) after Taxation
73