Agribank close to securing a strategic partner

Agribank close to securing a strategic partner
Published: 06 September 2018
Agribank recorded a profit after tax of $4,1 million for the half year to June 30, 2018 compared to $2,2 million recorded last year.

THE Agriculture Development Bank of Zimbabwe (Agribank) says it is close to securing a strategic partner to help it reach the minimum capital requirements of $100 million by 2020.

A strategic partner and fresh capital injection would also enable the financial institution to have a strong balance sheet that allows it to execute its mandate of supporting agriculture, the bulwark of Zimbabwe's economy.

Thomas Nherera, the bank's acting chairman, said the near and medium term prospects of the financial institution were encouraging as the transaction to secure a strategic partner was imminent.

"The bank is making progress in respect of securing a strategic partner, targeting $100 million capitalisation," he said.

Government once engaged independent advisors for the restructuring of Agribank through a private placement of 49 percent equity to a strategic partner. Agribank, owned 100 percent by the government, at one time considered an initial public offering on the Zimbabwe Stock Exchange to raise funds to recapitalise.

Nherera said the country's economic growth was anchored on the agriculture sector and the bank was well positioned to expand financing of this sector to support production and productivity.

"The bank is expanding support to the agriculture sector, underpinning overall growth of the economy and operating profitability. Bank profitability reflects both business growth and sustained cost containment. Business continuity and viability of the bank has been measurably enhanced through capitalisation and organic growth," he said.

Agribank recorded a profit after tax of $4,1 million for the half year to June 30, 2018 compared to $2,2 million recorded last year, representing a year on year growth of 90 percent on the back of significant growth in productive lending especially to the agricultural sector as well as growth in non-funded income.

Non- funded income at $7,1 million, grew by 81 percent from $3,9 million during the period under review.

Agribank's chief executive Sam Malaba said the bank's growth in non-funded income was due to significant growth in customer accounts as well as transactions particularly through the electronic banking channels.

"The performance of net-interest income at $11,7 million for the half year ended June 30 also contributed to the growth in profit after tax. The bank recorded a reduction of 39 percent in interest expenses from $4,8 million for the half year ended June 30 to close the half year ended June 30 2018 at $2,9 million," said Malaba.

He said the reduction in interest expense was a result of paying off $40 million Aftrades facility and replacing it with cheaper deposits.

Net operating income was $18,8 million representing a growth of 11 percent compared $17 million last year.

"This strategy is on growing and maintaining a sustainable quality loan book, with special focus on agriculture and enhancing non-funded e-channels related income," Malaba said.

Total operating expenses grew by 11 percent from $11,5 million for the half year to June 30 last year to $12,8 million this year. The growth in operating expenses was in line with business growth initiatives undertaken during the period under review.

Despite the growth in operating expenses both the total cost to income ratio and the costs income ratio remained at 68 percent and 31 percent respectively in comparison to the half year ended June 30 last year

"The bank is on course to achieve a full year staff cost to income ratio of 30 percent or below in compliance with expected benchmark for state owned enterprises.


- fingaz
Tags: Agribank,

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