ZB targets profitability in 2015

Published: 07 June 2015

ZB Financial Holdings (ZB), one of the big banking institutions with a strong asset base in the country, is aiming a return to profitability this year through reduced overheads and product innovation.

ZB chief executive, Ron Mutandagayi told analysts on Thursday that the creation of short-term value and setting of a platform for sustained growth was the strategic philosophy for the group as the operating environment becomes increasingly challenging.

"This requires an aggressive review of the cost base on the background of tight interest margins and a shrinking revenue base in a financial market that lacks product depth. Likewise, the search for new products, distribution channels and markets assumed heightened importance with encouraging short-term success," he said.

Mutandagayi noted that ZB, which registered a loss of $9,8 million in the full year to December 2014 due to a staff rationalisation exercise, discontinued operations and loan impairment, was reviewing its business operations to enhance profitability.

"To this end, ZB Bank has emerged as a market leader in the deployment of an Agency Banking business model," he said adding that by end of last year more than 1 200 agents had been registered by the bank to provide limited banking services to customers.

"Leveraging on the above, and its wide branch network, ZB Bank has also been the market leader in vending for prepaid power, a new revenue line that made a substantial contribution to revenues in 2014," said Mutandagayi.

The ZB boss also noted that technology continue to play a significant role in the financial services group's service delivery adding that a further investment of $3 million in customer facing technologies was made last year.

"During 2014, a paperless approach to banking hall activities was adopted. Besides cost reduction, this has improved queue management in the branches," he said.

Through its building society unit, the group has escalated its efforts in housing delivery. A new development of cluster homes was undertaken in Hatfield and the houses are expected be sold during the first quarter of 2015.

"Numerous other projects are in the planning and mobilisation stages," said Mutandagayi.

In the period under review, the group's net interest income decreased by nine percent from $21,6 million to $19,6 million while the allowances for loan impairments increased by 344 percent to $7,7 million from $1,7 million registered in 2013.

In aggregate, net earnings for carrying credit risk reduced by 40 percent.

"Driving the above activity, the underlying funding deposits increased by 12 percent from $218,6 million to $243.8 million whilst mortgages and advances were restricted to only a nine percent increase from $131,7 million to $143,9 million," Mutandagayi said.
- dailynews

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