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Stanbic posts 572% growth in HY2023 profit

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BUSINESS REPORTER

 

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Leading financial services provider, Stanbic Bank, reported a profit of ZWL$373bn for the six months to June 30, 2023, reflecting a  572% rise  from  ZWL$56bn achieved in the prior comparative period.

Gregory Sebborn, the chairman of Stanbic Bank, attributed the increase in profit for the period under review  largely to the rise in the volume of transactions denominated in foreign currencies as business operations continued to shift from local to foreign currency, combined with the improved tobacco crop.

 

“In addition, new lending assets were written during the period in both local and foreign currency on the back of elevated demand for working capital by customers,” said Sebborn.

He said Stanbic Bank ended the six months period to 30 June 2023 with a qualifying core capital of ZWL$552bn, equivalent to US$96.2m and against a minimum capital requirement of the ZWL equivalent of US$30m.

In a detailed overview of the results, Stanbic CEO, Solomon Nyanhongo, said the bank’s net interest income closed the period at ZWL$135bn, surpassing prior period income of ZWL$61bn by 122%.

Nyanhongo said this growth was largely underpinned by the uplift in the bank’s average lending book which grew from ZWL$73bn  in June 2022 to ZWL$941bn due to heightened demand for foreign currency funding by customers avoiding the high interest rates on local currency facilities, coupled with increased dollarisation of the economy.

“The Bank recorded growth in fee and commission income which ended the period at ZWL$130bn up from ZWL$47bn in the comparative period.

This growth was largely reinforced by the increased volumes of foreign currency transactions which were now being processed on our various service channels as business operations were shifting from local currency to foreign currency,” said Nyanhongo.

He said acquisition of new customers during the period, combined with improved customer transactability and increased utilisation of digital solutions, also contributed to the growth in fee and commission income.

Nyanhongo said a net release of ZWL$11bn was recorded in credit impairments during the first half of the year, improving from a net raise of ZWL$6bn in the prior period.

“The release in expected credit loss allowances was largely driven by the improvement in the quality of the Bank’s lending book following the February 2023 interest rate reduction on local currency lending from 200% to 150%. Total operating expenses increased by 135% from ZWL$69bn in the comparative period to ZWL$163bn largely because of the impact of the continued weakening of the ZWL currency against the USD on the bank’s foreign denominated expenses which have increased substantially in local currency terms,” said Nyanhongo.

Stanbic’s net lending book grew from ZWL$489bn in December 2022 to ZWL$1.4 trillion largely spurred by the growing demand for foreign currency loans which saw new lending assets being written as the institution continued to support its customers in their funding requirements.

Nyanhongo noted that the stable operating environment which had prevailed in the last quarter of 2022 persisted into the first quarter of 2023 characterised by a slowdown in inflation and moderate currency depreciation.

He, however, noted that this conducive environment was short-lived as ZWL prices of goods and services rose markedly in the second quarter of the year, coupled with a rapid deprecation of the ZWL: USD exchange rate.

Sebborn said the Standard Bank Group subsidiary paid keen attention to Sustainable Corporate Social Responsibility opportunities as it pursues business in various industries. He said this is in line with the bank’s commitment to drive the growth in Africa and Zimbabwe.

“The Bank has established partnerships through its Corporate Social Investment policy in various provinces in Zimbabwe, supporting these communities in the aspects of health, education and sanitation,” said Sebborn.

Nyanhongo added that, for the 8th year running, Stanbic Bank donated sunscreen lotion, antibacterial soap, antiseptic liquid, lip balm and sunhats worth ZWL$39m  to the Albino Charity Organization of Zimbabwe.

“The bank is committed to supporting education and has made significant strides in spreading educational bursaries around the country.  Engagements have begun with several tertiary and primary institutions to onboard students on bursaries to replicate our partnership with Africa University. We are currently assisting five students at Africa University, five students at University of Zimbabwe, one student at St Giles Medical School as well as one student at Mufakose2 High School,” said Nyanhongo.

He said the strength of Stanbic’s financial outcome continues to be driven by the unique contributions of the resilient staff members.

“Once again, we proved our steadfastness in the face of an increasingly fluid operating environment as we strive to remain relevant in our chosen market, serving our clients better. We have set ambitious targets for ourselves, and I remain confident that our Leadership Culture journey, our future skills curriculum and the continued reinforcement of our risk and conduct strategic value driver, will propel us into a prosperous second half of the year,” he said.

Nyanhongo also paid tribute to Stanbic’s customers and stakeholders for their untiring support throughout the period.

He said transforming client experience remains one of Stanbic Bank’s strategic priorities. To that end, the institution’s client engagement drive has seen its teams directing their energies towards obtaining critical client insights into how the Bank can provide lasting financial solutions to its customers.

“Partnering our customers for growth entails being proactive in providing financial and advisory support that will result in our customers growing and running sustainable businesses. Stanbic Bank continues to capacitate its customers with the information and tools that they need to facilitate trade,” he said.

Nyanhongo said through the Africa- China import solution, the Bank succeeded in bridging language barriers and created value for customers by reducing the number of middlemen between original equipment manufacturers and importers.

The Bank’s Africa China Trade Solutions team partnered with the Zimtrade to host businesses attending the Zim- China Business Forum. This partnership has helped local businesses showcase their products and services in new export markets in China.

“There is a huge opportunity in citrus and nuts where the Bank and Zimtrade have also managed to open trade links for local producers,” said Nyanhongo.

 

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