ZB surprises the market, increase earnings by 40%

ZB surprises the market, increase earnings by 40%
Published: 10 August 2017
ZBFH reported a better than expected H1 17 performance highlighted by a 39.9% increase in attributable earnings to $7.9m, for eps of US 4.49cents.

The performance was driven by increased transactional volumes, reduced cost of funds, dividend accruals on investments as well as cost containment. The 13.2% growth in NII was on the back of a 24.2% drop in interest expense to $4.2m as wholesale funding declined to 34% from 54%, for the prior period. Fees, commission and other income grew driven by 7% increase in the number of accounts to 193,895, +1,500% jump in investment income and a +1,000% spike in e-banking transactions.

Net insurance income benefited from a 5% reinsurance technical result as claims reduced and a 24% growth in net life assurance income on improved premium collection. Efficiencies improved with the group's CIR reducing to 69% from 74% as operating expenditure was contained increasing by 9.6% year on year. Cost pressures were mainly from admin (+15.0% to $5.1m), staff cost (+15.0% to $11.6m), computer and IT (+15.0% to $1.4m) as well as amortisation (+5.0% to $1.5m). No interim dividend was declared.

The banking subsidiary profit increased by 31.5% year on year to $7.1m, life assurance rose 77.3% to $0.4m, reinsurance had a modest growth of 17.7% to $0.6m and other units $0.8m versus a loss of $0.1m.

The reduction in the group's total assets was on account of reduction in cash balances (-23.2% from year-end to $63.1m) due to the tight liquidity conditions as well as the 5.6% dip in deposits. The group maintained its strategy of preserving capital by investing in sovereign paper as well as other higher yielding assets.

The amount of TBs from secondary market amounted to $71.8m with discounts of approximately 21% earned while primary market TBs were $7.1% yielding approximately 8.5%. NPLs amounting to $2.8m were taken by ZAMCO in exchange for TBs, bringing the cumulative figure to $23.1m.

In absolute terms, nonperforming loans (NPLs) declined by 36.4% from year-end to $17.3m while the NPL ratio improved to 13.6% from 22.6%. The reduction in NPL can be attributed to recoveries and reclassification of cured debts. The liquidity ratio averaged 72% down from 75% while CAR improved to 22% from 20%.
- Business Daily
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