Foreign currency denominated transactions spur Sta...

Foreign currency denominated transactions spur Stanbic growth

Audrey Galawu

Stanbic Bank has reported an inflation adjusted profit after tax of ZWL$373 billion for the quarter ended June 30, 2023 compared to ZWL$56 billion recorded in the prior period.

Stanbic Bank Chairman, Gregory Sebborn attributed the growth in profit largely to the increase in foreign currency denominated transaction volumes 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,” Sebborn said.

He said bank ended the six months period with a qualifying core capital of ZWL$552 billion, equivalent to US$96.2 million against a minimum capital requirement of the ZWL equivalent of US$30 million.

The bank’s net interest income closed the period at ZWL$135 billion, surpassing prior period income of ZWL$61 billion by 122%.

Stanbic Chief Executive Solomon Nyanhongo said this growth was largely underpinned by the uplift in the bank’s average lending book which grew from ZWL$73 billion in June 2022 to ZWL$941 billion 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 ZWL130 billion up from ZWL$47 billion 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.

“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.

He also said a net release of ZWL$11 billion was recorded in credit impairments during the first half of the year, improving from a net raise of ZWL$6 billion 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$69 billion in the comparative period to ZWL$163 billion 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,” Nyanhongo added.

Stanbic’s net lending book also grew from ZWL$489 billion 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.