Embed Size (px)
Citation preview
2011 ANNUAL REPORT
TABLE OF CONTENTS
ii. Governor’s Foreword .............................................................................. 5
Iii. Deputy Governor’s Remarks .................................................................. 7
Iv. Senior Division Chief’s Preview ............................................................. 9
1 Chapter One: Overview ................................................................................ 11
1. Macro-Economic Developments .......................................................... 11
Chapter Two: Major Developments And Activities In The Banking Sector18
2.1 Key Developments In The Banking Sector .......................................... 18
2.2 Financial Inclusion ................................................................................ 22
2.3 Developments In The Microfinance Sector ......................................... 22
2.4 Legal Developments .............................................................................. 23
2.5 Prompt Corrective Action ..................................................................... 23
2.6 International, Regional And Domestic Co-Operation ......................... 24
Chapter Three: Status And Performance Of The Banking Sector ................ 25
3.1 Highlights Of Banking Sector Performance ........................................ 25
3.2 Balance Sheet Structure ....................................................................... 25
3.3 Performance Of The Banking Sector ................................................... 29
3.5 Sectoral Analysis ................................................................................... 37
Chapter Four: Challenges In The Banking Sector And Lessons Learnt ..... 54
4.1 Introduction ............................................................................................ 54
4.2 Banking Sector Challenges .................................................................. 55
4.3 Failed Banking Institutions ................................................................... 58
4.4 Lessons Learnt ...................................................................................... 60
Appendices ....................................................................................................... 65
3
Vision of Bank Licensing, Supervision & Surveillance Division
To become an effective, efficient and dependable regulatory and supervisory authority of the
financial sector, supportive of economic development in Zimbabwe.
Mission of Bank Licensing, Supervision & Surveillance Division
To promote and maintain the safety and soundness of the financial system through
proactive and rigorous regulation and supervision in line with international best practice.
Objectives of Bank Licensing, Supervision & Surveillance Division
The objectives of the Division are to:
enhance and maintain the safety and soundness of the financial system through
effective risk-based supervision;
periodically review regulatory and supervisory regulations, policies and
procedures in line with international best practice and the macroeconomic
environment;
promote public confidence in the financial system by ensuring a consistent,
objective and transparent regulatory and supervision process;
minimise moral hazard and supervisory forbearance through taking prompt
supervisory action against weak and troubled financial institutions in order to
protect the integrity of the financial system;
promote sound corporate governance practices and adoption of adequate risk
management systems;
foster a culture of strict compliance with laws, rules regulations, policies,
procedures, guidelines and international best practice; and
building supervisory capacity through structured training and development
programmes to enhance the skills base.
4
I. PURPOSE OF THE REPORT
The purpose of this annual report is to provide an analysis of the condition and
performance of the banking sector in Zimbabwe for the year ended 31 December
2011. This report presents an overview of the supervisory operations and activities
during the period under review. The report also provides an update on major
developments in the banking sector since inception of the multiple currency
system in February 2009.
5
II. GOVERNOR’S FOREWORD
1. The Zimbabwean banking sector continued on a recovery path, during 2011,
prompted by the multi-currency regime, which stabilised the economy, dissipated
inflation and ushered in renewed confidence in the banking sector. The new
environment translated into improved financial intermediation, as evidenced by
the growth in loans advanced to various sectors of the economy
2. Notwithstanding the significant progress in the economic turnaround, the banking
sector faced numerous challenges in the operating environment, which
constrained efforts towards attainment of financial stability.
3. The operating environment was characterised by transitory deposits, absence of
an active inter-bank market, lack of an effective lender of last resort function and
market illiquidity. Market illiquidity, which was largely indicative of subdued
export earnings and limited access to external lines of credit, starved productive
sectors of the economy of much needed working capital and retooling.
4. Increasing exposure to liquidity risk was evident in the last quarter of 2011, when
the sector faced challenges in facilitating cash and electronic payments
prompted by increased demand and increased volume.
5. Against this background, the envisaged recapitalisation of the Reserve Bank by
the Ministry of Finance in order to revive the lender-of-last resort function is most
welcome as this will go a long way in alleviating the liquidity constraints and
revive the inter-bank market.
6. The issue of banking sector capitalisation came to the fore in the interests of
maintaining financial stability in the absence of a meaningful lender-of-last resort
function.
7. During the year under review, the Reserve Bank witnessed the resurgence of
malpractices in the sector, including corporate governance violations and abuse
of depositors’ funds, a development that posed significant threat to public
confidence and financial sector stability.
8. In this regard, the Reserve Bank introduced a number of enhancements to its
supervisory activities aimed at ensuring effective supervision, foster and maintain
financial stability and provide assurance to all stakeholders on the soundness of
the financial sector.
6
9. The effects of the Global Financial Crisis and the Eurozone Crisis on the world
economy highlighted a number of supervisory shortcomings relating to
supervision of complex financial products, supervisory co-operation and the need
for robust capital and liquidity standards.
10. To this end, the Reserve Bank continues to work with banking institutions
towards full implementation of Basel II and its enhancements contained in Basel
III. The Reserve Bank will also refine its supervisory methodologies and
techniques, including reviewing minimum capital requirements and financial
sector legislation and guidelines, as well as heighten efforts towards
implementation of a broad based financial stability thrust in financial sector
supervision, in line with international best practice and lessons learnt from the
Global Financial Crisis and Eurozone Crisis.
11. Once again, I acknowledge all our stakeholders, whose support has contributed
to the fulfilment of the Central Bank’s mandate of promoting financial stability.
Dr. G. Gono
Governor
7
III. DEPUTY GOVERNOR’S REMARKS
1. During the period under review, the Reserve Bank, through Bank Licensing
Supervision and Surveillance Division (BLSS), carried out its supervisory
mandate with focus on promoting and maintaining the safety and soundness of
the financial system, through proactive regulation, in line with international best
practice.
2. The banking sector was generally safe and sound. However, one institution was
placed under curatorship in June 2011, following a determination of corporate
governance malpractices and gross abuse of depositors’ funds.
3. During the year, banking institutions focused on strengthening their capital
positions in order to underwrite more meaningful business, improve profitability
and grow their market shares.
4. In this regard, and in the in the interests of maintaining financial stability, the
Reserve Bank has enhanced the Troubled and Insolvent Banks Policy to provide
guidance on the resolution of problem banking institutions.
5. In view of the challenging operating environment being faced by banking
institutions, the Reserve Bank instituted a number of measures to enhance
regulation of the sector and promote financial stability.
6. The measures include among others, the review of corporate governance
guidelines and disclosure requirements for banking institutions, as well as
proposed amendments to the current legislation to ensure that they move in
tandem with local and international developments in the financial services sector.
7. With regards to financial inclusion, the Reserve Bank welcomed the increased
focus on mobile banking products by banking institutions in collaboration with
mobile network operators. Further, the Reserve Bank is working closely with the
Ministry of Finance in drafting a Microfinance Bill, which seeks to address
challenges being faced by the microfinance sector such as tenure of licences,
consumer protection issues and transparent pricing in line with international
developments in the microfinance sector.
8. The Reserve Bank spearheaded the setting up of a Multi-disciplinary Financial
Stability Committee incorporating other financial sector regulators namely
Insurance and Pensions Commission (IPEC), Securities Commission of
9
IV. SENIOR DIVISION CHIEF’S PREVIEW
1. Notwithstanding numerous challenges associated with the new operating
environment, the banking sector was able to play a meaningful role in the
recovery of the economy through its financial intermediation role.
2. The Reserve Bank continued to closely monitor the general performance of the
banking sector since inception of the multi-currency system in order to ensure that
the sector remained strong and stable. Banking institutions implemented various
re-capitalisation initiatives, which included rights offers, acquisitions and
consolidations.
3. The Reserve Bank also issued guidance to the market on the implementation of
Basel II, in line with international developments. In this regard, most banking
institutions made significant progress in their Basel II initiatives and the Reserve
Bank will continue to engage banks in order to facilitate smooth implementation of
their plans.
4. The Reserve Bank witnessed a renewed interest by foreign investors in the local
banking sector culminating in the acquisition of significant stakes in local banks.
The Reserve Bank welcomes this development, which symbolises renewed
confidence in the sector and the country at large, and will promote access to
much-needed lines of credit.
5. The number of operating banking institutions increased from 25 to 26 following
the re-entry of Royal Bank Zimbabwe Limited in February 2011. Royal Bank was
re-licensed in September 2010 together with Trust Bank and Barbican Bank,
following the unbundling of ZABG Bank. Barbican Bank is, however, yet to
commence operations.
6. While most banking institutions made efforts to comply with the regulatory
minimum capital requirements, as at 31 December 2011, five out of twenty six
banking institutions were still to comply. All asset management companies were in
compliance with the minimum capital requirements.
7. One (1) banking institution was placed under curatorship in 2011, following
determination that the institution was operating in an unsafe and unsound
11
1 CHAPTER ONE: OVERVIEW
1. MACRO-ECONOMIC DEVELOPMENTS
1.1. Global Developments
1.1.1. Global economic growth slowed down from 5.1% in 2010 to 4% in 2011, as a
result of natural disasters that hit Japan, as well as the Euro zone sovereign debt
crisis.
1.1.2. The earthquake and tsunami that hit Japan in 2011 affected supply chains in the
automobile, telecommunication and consumer electronic industry. Additionally,
the recurrent fiscal deficits and rising sovereign debt levels affected the recovery
of the US economy.
1.1.3. The sovereign debt crisis in the Euro zone and aggressive fiscal consolidation
measures instituted to ensure long-term fiscal and debt sustainability in some
major economies, tight financing conditions and low confidence levels combined
to hamstring growth in the Euro area, a development which accentuated a slow
down in global demand.
1.1.4. Notwithstanding these negative global developments, economic activity in
emerging market economies remained strong, underpinned by increased
domestic demand and increased external trade among rapidly growing Asian
countries such as China and India.
1.1.5. Despite moderation in output growth, economic activity in emerging market
economies remained elevated. The decline in commodity prices and the slow-
down in global growth had a mitigatory effect on global inflationary pressures.
1.1.6. Zimbabwe remains susceptible to the adverse external macroeconomic
environment, which has potential of dampening commodity prices, depressing
diaspora remittances, investment and donor capital flows.
12
1.2. Domestic Developments
Economic Rebound…
1.2.1 The economy registered positive growth rates of 5.7%, 9.6% and 9.4% in 2009,
2010 and 2011, respectively, largely driven by the agriculture and mining sectors.
A relatively stable macroeconomic environment, ushered in by the multi-currency
regime, set the stage for an economic rebound. Figure 1 below shows the trends
in GDP growth over the period 2009 to 2012.
Figure 1: Real GDP Growth Rate (%)
Source: ZIMSTAT, Ministry of Finance and RBZ
* Projection
Inflation Developments…
1.2.1. Annual inflation increased from 3.2% at the beginning of the year to 4.9% in
December 2011. The major drivers of inflation in 2011 were housing and rental
costs, alcohol and food prices which increased by 0.5% between August 2011
and September 2011. The diagram below indicates inflation developments in
2011.
-14.8
5.7
9.6 9.4
5.6
-20
-15
-10
-5
0
5
10
15
2008 2009 2010 2011 2012*
13
Figure 2: Inflation Developments
Source: ZIMSTAT
Sectoral Contribution to GDP…
1.2.2 Following the adoption of a multicurrency regime in February 2009, the
Zimbabwean economy has experienced strong growth and inflation has stabilised
to single digit levels of less than 5%. The economy grew by 6.3% in 2009, 9.6% in
2010 and 10.6% in 2011.
1.2.3 This positive growth trajectory has mainly been spurred by strong recovery in the
agricultural and mining sector. Recovery in the manufacturing sector has been
sluggish due to long term capital constraints, against the backdrop of the need to
replace obsolete plant and machinery.
Agriculture…
1.2.4 Agricultural output increased by 21% and 33.9% in 2009 and 2010, respectively.
The sector grew by 7.4% in 2011 spurred by increases in the production of maize
and tobacco. The favorable 2010/11 agricultural season and improved availability
of inputs on the local market also enhanced the performance of the sector.
Support extended to farmers under the contract farming arrangements enhanced
tobacco and cotton output.
1.03%
0.52% 0.75%
0.10% 0.10% 0.20% 0.26% 0.12%
0.90%
0.08%
0.50%
0.21%
3.53%
3.09% 2.70%
2.70% 2.50%
2.90% 3.26% 3.49%
4.31%
4.18%
4.22% 4.90%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Jan-1
1
Feb-1
1
Mar-1
1
Ap
r-11
May-1
1
Jun
-11
Jul-1
1
Au
g-11
Sep-1
1
Oct-1
1
No
v-11
Dec-1
1
Month-on month inflation Annual Inflation
14
Mining…
1.2.5 The mining sector grew by 10.2% in 2009, 13.2% in 2010 and 25.8% in 2011
benefiting from increased capacity utilization and favorable international minerals
prices. There was also an improvement in power supply as some mining concerns
were ring fenced by the utility provider.
Manufacturing…
1.2.6 The manufacturing sector grew by 4.2% in 2011, down from 20% in 2010.
Capacity utilization has been on an upward trend since the inception of the multi-
currency system, rising from about 10% in 2009 to about 57% in 2011.
1.2.7 Manufacturing sector performance, however, remained constrained by the lack of
long term finance, tight liquidity conditions in the domestic economy, frequent
power outages, use of antiquated plant and machinery, rising utility charges and
low demand. In addition, the influx of cheap imports reduced the competitiveness
of locally produced goods, thereby, threatening the viability of the sector.
Outlook for 2012…
1.2.8 Projected growth in the economy for 2012 has been revised downwards from the
initial 9.4% to 5.6%, following the poor 2011/12 agricultural season. The projected
growth for 2012 will be driven by mining which is expected to grow by 16.6% in
2012.
1.2.9 Downside risks emanating from the slowdown in global economic growth, as a
result of the sovereign debt crisis in the Euro- zone area remains a threat to
economic growth prospects in 2012.
1.2.10 The banking sector remains under threat from potential increase in non-
performing loans emanating from the sluggish recovery of the key economic
sector such as agriculture, mining and manufacturing due to long term capital
constraints, obsolete plant and machinery, and depressed aggregate demand.
15
Architecture of The Banking Sector
1.2.2. During the year 2011, the number of operating banking institutions increased from
25 to twenty six (26), following the re-entry of Royal Bank on to the market.
Barbican Bank and Time Bank which were relicensed in 2010 are, however, yet to
commence operations.
1.2.3. The banking sector comprised 17 commercial banks (excluding Barbican Bank &
Time Bank), four (4) merchant banks and four (4) building societies and one (1)
savings bank. Other financial institutions under the purview of the Reserve Bank
included 16 asset management companies and 146 microfinance institutions.
1.2.4. The table below shows the architecture of the banking sector as at 31 December
2011.
Table 1: Architecture of the Banking Sector
1.2.5. As at 31 December 2011, 20 out of 25 operating banking institutions (excluding
POSB which does not have a minimum prescribed capital) were in compliance
with the prescribed minimum capital requirements.
Type of Institution Number
Commercial Banks 17
Merchant Banks 4
Building Societies 4
Savings Bank 1
Total 26
Microfinance Institutions 146
16
1.3. Ownership Structure
1.3.1. As at 31 December 2011, the financial sector ownership structure was spread
among Government, foreigners and local individuals and corporates. Government
had significant shareholding in 4 banking institutions with total assets of $416.96
million representing 8.76% of the total banking sector assets while 8 banks with
significant foreign shareholding had assets worth $2,105.68 million representing
44.24% of total banking sector assets.
1.3.2. The remainder of 47.02% of total banking sector assets worth $2,240.91 million
was held by 14 locally owned banks. The table below indicates banking sector
ownership structure as at 31 December 2011.
Figure 3: Ownership Structure of Banks
Weak Banks…
1.3.3. Notwithstanding the above challenges, the banking sector remained generally
safe and sound. Some banking institutions faced challenges in meeting the
stipulated minimum capital requirements, which in turn impacted on their capacity
to effectively perform their intermediary role and generate meaningful business.
1.3.4. Weak and troubled banks were of low systemic importance as they had a
combined market share of less than 5% in terms of total assets, deposits and
loans as depicted in the table below:
Foreign Owned Banks 44.22%
Loccal Private Owned 47.02%
Local Government Owned 8.76%
17
Table 2: Market Share of Strong and Weak Bank
Institutions
Market Share of
Assets
Market Share of
Deposits
Market Share of
Loans
Strong Banks 95.86% 97.33% 96.16%
Weak & Troubled Banks 4.14% 2.67% 3.84%
1.3.5. Banking institutions are required to be adequately capitalized, have sound
corporate governance structures and practices, strong risk management practices
and internal controls; robust management information systems and accounting
systems.
18
CHAPTER TWO: MAJOR DEVELOPMENTS AND ACTIVITIES IN THE BANKING SECTOR
2.1 KEY DEVELOPMENTS IN THE BANKING SECTOR
2.1.1 The new operating environment ushered by the multi-currency system, while
addressing some prior period challenges particularly inflation, presented its own
challenges. Liquidity constraints, absence of a functional lender of last resort
facility and an inactive interbank market were major bottlenecks for the banking
sector throughout the review period.
2.1.2 In response to the evolving business environment, significant developments were
recorded in the banking sector including consolidations through mergers and
acquisitions, disinvestments, and upgrading of licences.
2.1.3 Below is a summary of the key developments in the banking sector during the
period January 2009 to December 2011.
Mergers, Acquisitions & De-mergers…
2.1.4 The following are the major highlights of mergers, acquisitions and de-mergers
that were consummated in the banking sector during the period under review:
CFX – Interfin Banking Corporation
2.1.5 In November 2010, Interfin Holdings Limited acquired 51% shareholding in CFX
Financial Services Limited (CFX FS), the holding company of CFX Bank, a
registered commercial bank, as part of recapitalization, diversification and growth
strategies. Interfin’s strategic thrust was to diversify from merchant banking to
commercial banking.
Discount Company of Zimbabwe (DCZ)
2.1.6 DCZ, a subsidiary of Kingdom Financial Holdings Limited (KFHL), merged its
operations with its sister company, MicroKing, a registered microfinance institution
and surrendered its operating licence in the same year.
Premier Banking Corporation (PBC)
2.1.7 In 2010, Ecobank Transnational Incorporated acquired 70% shareholding in
Premier Finance Group (PFG), the bank’s holding company. Following this
19
transaction, Premier Banking Corporation (PBC) was adequately capitalized. The
bank subsequently changed its name to Ecobank Zimbabwe Limited on 7
February 2011.
TN Financial Holdings Limited
2.1.8 TN Financial Holdings Limited (TNFH) entered into a reverse takeover agreement
with TEDCO Holdings Limited, which resulted in the latter acquiring 69.7%
shareholding in the former. A new holding company, TN Holdings Limited was
formed and listed on the Zimbabwe Stock Exchange on 4 January 2010.
De-merger of Kingdom Financial Holdings from Meikles Africa Limited
2.1.9 Following the protracted legal wrangles among the shareholders of Kingdom
Meikles Africa Ltd (KMAL), the shareholders resolved to de-merge Kingdom
Financial Holdings (KFHL) from Meikles Africa Limited (MAL) in October 2010.
KFHL had merged with Meikles Africa in 2008.
2.1.10 Consequent to the demerger, Kingdom Bank Limited became under-capitalized
following the withdrawal of $22 million capital from the bank by Meikles Africa
Limited.
2.1.11 In 2011, the bank raised capital through a rights issue and disposal of 35%
shareholding to AfrAsia Bank Limited of Mauritius for a consideration of $9.52
million as an initiative to meet minimum regulatory capital requirements.
Unbundling of ZABG
2.1.12 Following a protracted legal battle at the instance of the shareholders of Barbican
Bank Limited, Royal Bank Zimbabwe Limited and Trust Banking Corporation
Limited, the Reserve Bank reached an out-of-court settlement with the
shareholders of the three banks in July 2010.
2.1.13 The agreement culminated in the re-registration of the three institutions by the
Reserve Bank on 1 September 2010 and return of assets to their original owners.
Consequently, Barbican Bank Limited, Royal Bank Zimbabwe Limited, Trust Bank
Corporation Limited and ZABG were issued individual licences by the Registrar of
Banks.
20
2.1.14 Trust Banking Corporation and Royal Bank commenced operations on 13
December 2010 and 21 February 2011 respectively, following pre-opening
inspections and requisite authorizations by the Reserve Bank.
2.1.15 Barbican Bank, however, failed to resume operations and was given a special
dispensation of up to 31 July 2012 to commence operations and meet minimum
capital requirements.
Consolidations and Disposals…
2.1.16 The following were the major highlights of consolidations in the banking sector.
CBZ Bank Holdings Limited
2.1.17 CBZ Holdings Limited consolidated the operations of its subsidiaries, CBZ Building
Society and CBZ Bank Limited in June 2010 with the society becoming a division
of the bank.
2.1.18 The consolidation was motivated by the need to cut costs through sharing
resources and eliminating duplication in business processes, in particular ICT
platforms.
2.1.19 The following were the major highlights of disposals in the banking sector:
MBCA Capital Management
2.1.20 MBCA Holdings disposed MBCA Capital Management, its asset management arm,
in September 2010 to a consortium of local investors who subsequently changed
the name to Platinum Investments Managers.
Conversion of Banking Licenses…
2.1.21 The hyperinflationary environment prior to the introduction of the multi-currency
system in February 2009 precipitated a host of challenges for the banking sector,
which in turn rendered some classes of banking business such as discount houses
and finance houses unviable.
2.1.22 Four institutions namely: Premier Banking Corporation, African Banking
Corporation Zimbabwe Limited (BancABC), Interfin Merchant Bank Limited and
Genesis Investment Bank Limited converted their merchant banking licences to
commercial banking licences.
21
2.1.23 Tetrad Discount House Limited converted its licence to a merchant banking
licence. Following pre-opening inspections by the Reserve Bank, Tetrad
Investment Bank, BancABC and Interfin Bank commenced operations under their
new banking licences on 4 August 2009, 1 December 2009 and 5 April 2011,
respectively.
2.1.24 A pre-opening inspection conducted in March 2010 by the Reserve Bank
determined that Genesis Investment Bank was not ready to commence
commercial banking operations.
2.1.25 As at 31 December 2011, Ecobank which acquired Premier Banking Corporation,
was still putting in place the necessary administrative and infrastructural
arrangements to facilitate commencement of commercial banking business.
Cancellation of Licences…
2.1.26 Legend Asset Management, NDH Bank Limited and Highveld Discount House
voluntarily surrendered their licences citing viability challenges. Subsequently,
Legend Asset Management and Highveld Discount House operating licences were
cancelled in 2009, while NDH Bank licence was cancelled in 2010.
Curatorships
2.1.27 One banking institution, ReNaissance Merchant Bank (RMB), a subsidiary of
ReNaissance Financial Holdings Limited (RFHL), was placed under the
management of a Curator, on 2 June 2011 for an initial period of six months
following a determination by the Reserve Bank that the bank was unsound.
2.1.28 The curatorship period was extended to 2 March 2012 to enable the Curator to
finalise recapitalization initiatives which were aimed at resuscitating the bank.
New Licences
2.1.29 During the period under review, major licensing activities conducted by the
Reserve Bank were for microfinance institutions, in line with the provisions of the
Moneylending and Rates of Interest Act [Chapter 14:14]. A total of 122
microfinance licences, including renewals, were issued during the year 2011
bringing the number of licensed operating microfinance institutions to 146.
22
2.2 FINANCIAL INCLUSION
2.2.1 Pursuant to the calls by the Reserve Bank for banking institution to formulate
strategies to reach out to the unbanked sections of the population, a number of
banking institutions have come up with innovative ways of bringing the unbanked
into mainstream banking.
2.2.2 These initiatives include the use of ATMs; branchless banking; mobile banking;
introduction of less stringent account opening procedures for deserving
disadvantaged members of society; opening of new branches and use of agencies
in previously unbanked areas; and use of technology, such as payment cards or
mobile phones.
2.2.3 Banking institutions have upgraded their core banking systems to enable them to
introduce electronic, internet and mobile banking, enhancing services such as
account balance enquiries, bill payments and money transfers.
2.2.4 Pursuant to the above, banking institutions have partnered with mobile operators
in the provision of banking and financial services through a mobile device such as
a mobile phone or Personal Digital Assistant (PDA) taking advantage of the mobile
phone penetration rate of 72% as at 31 December 2011.
2.2.5 Notwithstanding the efforts to improve access to finance, the relatively low degrees
of financial literacy for most of the economically active poor and lack of adequate
infrastructure in the unbanked rural communities continued to be major setbacks to
access to financial services.
2.3 DEVELOPMENTS IN THE MICROFINANCE SECTOR
2.3.1 Despite the growth in the number of players in the sector, the sector faces a
number of challenges including insufficient funding, inadequate IT infrastructure
and absence of a Credit Reference Bureau which has resulted in multiple
borrowings.
2.3.2 As part of the initiatives to improve the availability of funding to the sector, the
Zimbabwe Association of Microfinance Institutions (ZAMFI), spearheaded the
establishment of a microfinance wholesale fund in 2011. The fund is expected to
provide a source of affordable wholesale funding for the Microfinance Sector.
23
2.4 LEGAL DEVELOPMENTS
2.4.1 The Banking Act [Chapter 24:20] was amended in 2009, through Finance Act No.
3 of 2009, to provide for the registration and supervision of microfinance banks by
the Reserve Bank.
2.4.2 In 2011, the Building Societies Act [Chapter 24:02] was amended through the
General Laws Amendment No. 5 0f 2011 to bring the building societies’ financial
year-end to 31 December of every year, from 30 June in order to synchronize with
financial year-end of other banking institutions.
2.4.3 The definition of regulatory minimum capital in banking institutions was amended
to refer to capital that represents permanent commitment by shareholders, in line
with international standards, which is also in conformity with the Basel III
requirement which places emphasis on equity capital.
Microfinance Bill…
2.4.4 As at 31 December 2011, the Ministry of Finance, in consultation with the Reserve
Bank and other microfinance stakeholders, were in the process of drafting a
Microfinance Bill. The proposed bill seeks to address the deficiencies arising from
the Moneylending and Rates of Interest Act [Chapter 14:14].
Deposit Protection Corporation Act [Chapter 24: 29]…
2.4.5 In July 2011, amendments were effected to the Banking Act [Chapter 24:20]
through the promulgation of the Deposit Protection Corporation Act [Chapter
24:29]. The Deposit Protection Corporation (DPC) Act provides, among other
things, for the appointment of DPC as curator or liquidator of a banking institution.
2.5 PROMPT CORRECTIVE ACTION
2.5.1 Reserve Bank in liaison with IMF, revised the Troubled and Insolvent Bank
Resolution Policy in June 2011 to include Prompt Corrective Action Programs
(PCA’s) which will be initiated for all banks which exhibit financial or operational
weaknesses, unsafe and unsound practices, non-compliance with applicable laws
and regulations, or lack of adherence to prudent standards of operation.
24
2.6 INTERNATIONAL, REGIONAL AND DOMESTIC CO-OPERATION
Co-operation with Local Supervisors…
2.6.1 The financial sector supervisory agencies namely; Insurance and Pension
Commission (IPEC), Deposit Protection Board (DPB), the Securities Exchange
Commission (SEC) and the Reserve Bank signed a Memorandum of
Understanding to enhance co-operation and co-ordination of supervisory activities.
COMESA Framework for Financial Stability Assessment…
2.6.2 The Reserve Bank and other financial sector regulators namely; IPEC, SEC, and
DPB established a Multi-disciplinary Financial Stability Committee (MDFSC) on 31
January 2011.
2.6.3 The MDFSC meets on a quarterly basis, with adhoc meetings being held
whenever necessary to discuss urgent financial stability matters.
2.6.4 The Committee focuses on policy issues with technical issues being delegated to
sub-committees, namely; Technical Committee for Financial Stability and
Supervisory and Regulatory Co-operation Sub-committee).
2.6.5 The terms of reference of the committee are:
a) facilitate early identification of sources of risk (to stability) and of potential
vulnerabilities that could threaten financial stability;
b) promote rigorous, accurate and systematic assessment of the present degree
of financial stability as well as the outlook ahead;
c) evaluate the ability of the financial system to absorb shocks should risks
identified materialize;
d) recommend appropriate policy responses for identified risks;
e) promote adoption of preventive and timely remedial policies which foster
financial system stability;
f) prepare financial stability reports; and
g) harmonise legislative and regulatory frameworks.
25
CHAPTER THREE: STATUS AND PERFORMANCE OF THE BANKING SECTOR
3.1 HIGHLIGHTS OF BANKING SECTOR PERFORMANCE
3.1.1 Total banking sector assets increased by 28.56% from $3.6 billion as at 31
December 2010 to $4.7 billion at the end of 2011. The growth in assets was largely
attributed to growth in loans, which in turn were funded through growth in the banking
sector deposits base.
3.1.2 The banking sector witnessed a growth of 29.21% in total liabilities from $3.67 billion
as at 31 December 2010 to $4.76 billion as at 31 December 2011. However, demand
deposits continued to dominate the deposit base of most banking institutions, an
indication of transitory and volatile of the liabilities to the public.
3.1.3 The growth in banking sector deposits translated into an increase of 60.06% in total
loans and advances from $1.43 billion as at 31 December 2010 to $2.29 billion as at
31 December 2011. As a result, the level of intermediation improved as evidence by
the increase in the loans to deposit ratio from 65.01% as at 31 December 2010 to
81.79% by the end of December 2011.
3.1.4 In addition, there was an improvement in the asset quality of the banking sector as
reflected by a decline in the ratio of adversely classified loans to total loans from
10.95% in December 2010 to 7.55% as at 31 December 2011.
3.1.5 The banking sector remained profitable during the year ended 31 December 2011 as
reflected by the increase in total profit after tax from $37.95 million recorded as at 31
December 2010 to $86.01 million as at 31 December 2011.
3.2 BALANCE SHEET STRUCTURE
Composition of Assets…
3.2.1 Total banking sector assets increased by 28.56% over the year from $3.6 billion as at
31 December 2010 to $4.7 billion at the end of 2011. The growth in assets was
largely attributed to growth in loans spurred by growth in the banking sector deposits
base.
3.2.2 As at 31 December 2011, five banking institutions controlled 51.34% of total banking
assets.
26
3.2.3 The figure below depicts the trend in banking sector total assets from December 2009
to December 2011.
Figure 4: Growth of Total Banking Sector Assets
3.2.4 The composition of assets for the period under review is highlighted in the table
below:
Table 3: Composition of assets
ASSETS Dec-09 Dec-10 Dec-11
US$ % US$ % US$ %
Domestic Notes And Coin 176,285,348 8.06% 237,950,205 6.45% 279,028,625 5.86%
Balances With Central Bank 229,452,872 10.50% 298,785,242 8.10% 383,528,155 8.05%
Balances With Domestic
Banking Institutions 19,844,778 0.91% 102,735,289 2.79% 128,401,363 2.70%
Assets In Transit 539,688 0.02% 1,372,732 0.04% 13,536,702 0.28%
Balances With Foreign
Institutions 414,135,417 18.95% 438,828,204 11.90% 357,340,816 7.50%
Securities And Investments 69,554,373 3.18% 123,453,717 3.35% 203,088,287 4.26%
Loans And Advances 668,978,709 30.61% 1,622,671,363 44.01% 2,547,594,316
53.48
%
Foreign Claims 17,136,075 0.78% 15,823,044 0.43% 50,939,166 1.07%
-
2,000
4,000
6,000
2009 2010 2011
2,186
3,687
4,740
Mill
ion
s
Total Assets
27
ASSETS Dec-09 Dec-10 Dec-11
US$ % US$ % US$ %
Fixed Assets 342,560,465 15.67% 364,727,692 9.89% 454,129,962 9.3%
Other Assets 38,541,961 1.76% 118,012,208 3.20% 125,206,690 2.63%
Off-Balance Sheet Items 208,804,836 9.55% 362,378,296 9.83% 220,754,640 4.63%
Total Assets 2,185,834,520 3,686,737,992 4,763,548,724
3.2.5 As at 31 December 2011, on-balance sheet assets amounted to $4.52 billion
compared to $3.32 billion recorded in 2010, representing a 36.65% growth.
However, off-balance sheet assets decreased by $141.63 million from $362.38
million in 2010 to $220.75 million in 2011.
3.2.6 Despite a 64.51% increase in investments and securities over the year, funds placed
in investment and securities remained depressed due to an illiquid money market
and absence of marketable securities in 2011. The bulk of investments and securities
were placed in bankers acceptances.
Composition of liabilities...
3.2.7 Total liabilities increased from $3.67 billion as at 31 December 2010 to $4.76 billion
as at 31 December 2011, representing a growth rate of 29.21%.
3.2.8 The composition of liabilities in the banking sector is reflected in the table below:
Table 4: Composition of liabilities
LIABILITIES
Dec - 09
Dec - 10
Dec - 11
US$ % US$ % US$ %
Demand Deposits 706,577,280.51 32.33%
1,277,489,360.87 34.65%
1,818,142,861.47 38.17%
Savings Deposits 373,442,195.45 17.08%
194,438,956.45 5.27%
260,639,392.01 5.47%
Time Deposits/Fixed Deposits 166,924,653.29 7.64%
641,912,017.92 17.41%
842,884,981.35 17.69%
28
Foreign Currency Deposits 86,028,379.19 3.94%
129,299,353.82 3.51%
62,559,919.42 1.31%
Negotiable Certificates of Deposit 25,709,078.04 1.18%
64,297,238.38 1.74%
63,576,009.18 1.33%
Balances With Other Banking Institutions 20,095,863.94 0.92%
129,032,124.48 3.50%
161,998,441.83 3.40%
Liabilities in Transit 2,337,018.61 0.11%
115,245.30 0.00%
1,470,800.66 0.03%
Foreign Liabilities 63,894,730.65 2.92%
221,168,761.42 6.00%
304,599,477.41 6.39%
Securities and other Funding Liabilities 3,831,631.71 0.18%
3,293,723.03 0.09%
53,596,260.83 1.13%
Capital and Reserves 384,568,102.53 17.59%
465,210,935.84 12.62%
568,420,384.46 11.93%
Other Liabilities 143,600,686.66 6.57%
195,670,619.75 5.31%
399,280,521.80 8.38%
Off-Balance Sheet Items - Liabilities 208,824,900.57 9.55%
364,809,655.76 9.90%
226,379,673.05 4.75%
Total Equity and Liabilities 2,185,834,521.14
3,686,737,993.03
4,763,548,723.47
3.2.9 Demand deposits constituted the greater portion of the deposit base confirming the
transitory nature and volatility of the deposit base. The proportion of demand deposits
to total deposits and savings deposits to total deposits increased marginally from
55.36% to 59.65%, while savings deposits share in total deposits increased to 8.55%
in 2011 from 8.43% in 2010. However, the percentage of time deposits decreased
marginally from 27.82% as at 31 December 2010 to 27.66% over the period under
review.
3.2.10 Retail deposits remained volatile in 2011 as the economy continued to rely heavily on
cash transactions coupled with a low disposable household income base.
29
Table 5: Percentage of total deposits
Dec-09 Dec-10 Dec-11
Demand Deposits 52.00% 55.36% 59.65%
Savings Deposits 27.49% 8.43% 8.55%
Time Deposits/Fixed Deposits 12.29% 27.82% 27.66%
Foreign Currency Deposits 6.33% 5.60% 2.05%
Negotiable Certificates Of Deposit 1.89% 2.79% 2.09%
3.3 PERFORMANCE OF THE BANKING SECTOR
Capitalisation…
3.3.1 Following the introduction of the multi-currency regime in February 2009, total net
capital base in the banking industry increased by 33.89% from $832.21 million as at
31 December 2009 to $511.62 million as at 31 December 2011. The increase was
largely attributed to growth in retained earnings and capital injections by the
shareholders in a bid to to comply with minimum capital requirements.
3.3.2 Growth in core capital and shareholders’ equity during the period 2009 to 2011 is
shown in the figure below:
Figure 5: Banking Sector Capitalisation Levels – 2009- 2011
3.3.3 Tier 1 capital constituted 95.69%, 84.70% and 83.15% of the banking industry’s net
capital base as at 31 December 2009, 31 December 2010 and 31 December 2011,
respectively.
0
200
400
600
31-Dec-09 31-Dec-10 31-Dec-11
366 388 425
382 458
512
Core Capital ($ million) Net Capital Base ($ million)
30
3.3.4 The banking industry’s ratio of equity capital to total assets as well as the Capital
Adequacy Ratios (CARs) declined between 2009 to 2011 as shown in the figure
below:
Figure 6: Capital Ratios – 2009 to 2011
3.3.5 During 2009, the level of financial intermediation was low as reflected by subdued
levels of loans to deposit ratios. As loans and advances increased, banking
institutions’ risk weighted assets also increased, leading to the lower equity/
assets and CAR of 8.98% and 16.23% respectively as at 31 December 2011.
3.3.6 As at 31 December 2011, 20 out of 25 banking institutions (excluding Barbican
Bank and POSB) were in compliance with the prescribed minimum capital
requirements while 23 out of the 25 banking institutions had CARs and tier 1
ratios that were in compliance with regulatory minima of 10% and 5%
respectively.
Bank Lending and Asset Quality…
3.3.7 Total loans and advances increased significantly over the past two years reflecting
improving financial intermediation as depicted in the figure below.
0
5
10
15
20
25
30
Dec 09 Dec 10 Dec 11
16.73 19.12
8.98
27.26 27.34
16.23 Equity/Assets (%)
Capital Adequacy Ratio (%)
31
Figure 7: Growth in Loans and Advances
3.3.8 Total loans and advances in the banking sector were low at $0.69 million as at 31
December 2009 as a result of limited funding as the economy was beginning to
emerge from challenges of the general economic decline. During 2010 and 2011,
economic activity improved significantly and total loans more than doubled from
$0.69 billion as at 31 December 2009 to $1.65 billion as at 31 December 2010 and
further increased to $2.76 billion as at 31 December 2011.
3.3.9 The growth in loans during the two year period 2010 to 2011 was largely driven by
gradual increase in deposits.
3.3.10 Against the background of expanded credit and growth in the deposit base, the loans
to deposit ratio increased from 50.99% as at 31 December 2009 to 65.01% as at 31
December 2010. The ratio further increased to 81.79% by the end of December
2011.
3.3.11 The trend in the loan to deposit ratio during the year ended 31 December 2011 is as
indicated below:
0.69
1.65
2.76
0 0.5 1 1.5 2 2.5 3
Dec 09
Dec 10
Dec 11
Total Loans ($ billions)
32
Figure 8: Loans to Deposit Ratio
33% 37%
52% 49% 53% 54%61% 66%65% 67% 71%74%
78% 79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Loans/Deposits Ratio
Loans/Deposits Ratio
3.3.12 Banking sector credit has largely been short-term due to the transitory nature of
deposits coupled with the attendant liquidity shortages in the sector.
3.3.13 The figure below shows the sectoral distribution of credit as at 31 December 2011.
Figure 9: Sectoral Distribution of Credit as at 31 December 2011
3.3.14 Bank credit has been directed mostly towards the manufacturing, agriculture,
services and distribution sectors as well as consumer loans. The mining and
33
construction sectors that should also be significant pillars for Zimbabwe’s economic
development have commanded relatively lower market share of loans.
3.3.15 Although the asset quality of the banking sector deteriorated in 2010 as reflected by
the increase in the ratio of adversely classified loans to total loans from 1.80% in
December 2009, to 10.95% in December 2010, the ratio improved to 7.55% as at 31
December 2011.
3.3.16 The value of total gross loans and corresponding adversely classified loans to total
loans ratios of the banking sector for the period from June 2009 to December 2011 is
shown in the figure below:
Figure 10: Total Gross Loans and ACLs
3.4 Profitability…
3.4.1 The banking sector was generally profitable during the year ended 31 December
2011, with 20 out of 26 banking institutions recording net profit after tax.
3.4.2 Total profit after tax in the banking sector was $86.01 million for period ending 31
December 2011, an improvement from $37.95 million recorded for period ending 31
December 2010. The industry average profit after tax improved by 109.86% from
$1.52 million in 2010 to $3.19 million in 2011.
3.4.3 The banking industry’s total operating income as at 31 December 2011 was $646.74
million which comprised net interest income amounting to $282.70 million and non-
interest income of $364.05 million. Non-interest income comprised 56.29% of total
income as at 31 December 2011, indicating high reliance on fees and commissions.
0.28 0.69 1.13
1.63 2.22
2.72
0.00%
1.80%
5.68%
10.95%
6.17%
7.55%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
0
0.5
1
1.5
2
2.5
3
Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11
$ b
illio
ns
Loans & Advances ($ billions) ACL/TL (%)
34
3.4.4 The proportion of net interest income to total income has, however been increasing
as shown in the figure below:
Figure 11: Composition of Total Income
3.4.5 The increased lending activities have resulted in the proportion of net interest income
increasing compared to the preceding year.
3.4.6 The major expenses comprised salaries and employment benefits, which amounted
to $227.76 million as at 31 December 2011, up from $176.51 million as at 31
December 2010. The figure below shows the composition of operating expenses
Figure 12: Composition of Operating Expenses
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec 09 Dec 10 Dec 11
35.87 123.9
282.7
195.52 299.93
364.05
Net Interest Income Non-Interest Income
0% 20% 40% 60% 80% 100%
Dec 09
Dec 10
Dec 11
96.38
176.51
227.76
11.28
17.65
64.61
110.78
174.28
239.06
Salaries & Emploment Benefits Provisions for Loans Losses Other
35
3.4.7 The deterioration in asset quality resulted in higher provisioning requirements which
in turn impacted negatively on the profitability of the banking sector. Specific
provisions as a proportion of total loans were as shown in the figure below:
Figure 13: Specific Provisions to Total Loans Ratio
3.4.8 The increase in provisions in tandem with deteriorating loan books had a negative
impact on the profitability for the banking sector.
3.4.9 However, profitability indicators for the banking sector as measured by Net Interest
Margin (NIM), Return on Assets (ROA) and Return on Equity (ROE) were trending
upwards during the period 2009 to 2011 as shown in the figure below:
Figure 14: Profitability Indicators
3.4.10 Overall NIM for the banks was 8.21% in 2011, up from 5.75% in the previous year.
The increase in NIM is partly attributed to the increase in the proportion of assets that
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Dec 09 Dec 10 Dec 11
0.65 0.72
1.5
Specific Provisions/Total loans (%)
3.29
5.75
8.21
0.6 1.5
2.43 2.47
7.83
15.13
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
01-Jan-09 01-Jan-10 01-Jan-11
ROA (%)
ROE (%)
36
are composed of loans and advances, which loans typically attract higher interest
rates as compared to other interest earning assets.
3.4.11 The industry profitability improved since 2009 and banking institutions retained most
of their earnings, with few institutions declaring marginal dividends. Retained
earnings provided organic growth to the industry and boosted capitalisation levels,
which in turn improved banking institutions’ capacity to underwrite more business.
Liquidity and Funds Management…
3.4.12 On the backdrop of growing depositor confidence and increasing economic activity,
total banking sector deposits exhibited an upward trend over the period December
2009 to December 2011 as indicated below.
Figure 15: Total Deposits – 2009 to 2011
3.4.13 Short term deposits (demand, savings and under 30-day deposits), constituted
93.88% of the total banking sector deposits for period ending 31 December 2011.
3.4.14 Net lending rates quoted by banks remained relatively high, largely due to persistent
liquidity shortages, high credit demand, limited lines of credit and the absence of an
active money market.
3.4.15 As at end of December 2011, nominal lending rates ranged between 8% and 32%
with most banks quoting lending rates above 20%. Deposit rates, however, ranged
between 0.15% and 17%.
0 500 1000 1500 2000 2500 3000 3500
Dec 09
Dece 10
Dec 11
1,364
2,568
3,376
Total Deposits ($ millions)
Total Deposits ($ millions)
37
3.4.16 Despite high lending rates charged by banks, demand deposits, which constitute the
bulk of the deposits, continue to attract low interest rates and high transaction
charges. This negative development continues to militate against efforts geared at
promoting a savings culture among the banking public.
3.5 SECTORAL ANALYSIS
Commercial Banks
3.5.1 There were seventeen (17) commercial banks operating in the sub-sector as at 31
December 2011 up from sixteen (16) that were operating as at 31 December 2010.
The increase in commercial banks follows the re-licensing of Royal Bank of
Zimbabwe Limited which commenced operations on 17 February 2011.
Total Assets…
3.5.2 Total assets in this sub-sector increased by 25.57% from $3.14 billion for period
ending 31 December 2010 to $3.94 billion as at 31 December 2011. The growth in
total assets was mainly due to a considerable growth in loans that grew by more than
$400 million during the period under review.
3.5.3 The commercial banking sub-sector contributed 82.68% of total banking sector
assets as at 31 December 2011. The figure below shows a comparison of
commercial banking sub-sector assets to total banking sector assets over the period
2009 to 2011.
Figure 16: Commercial Bank Asset Base
Total Liabilities…
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
2009 2010 2011
1,854.37
3,137
3,939 331.46
550
825
$ Millions
Other Banks Commercial Banks
38
3.5.4 Total liabilities for the commercial banking sub-sector grew by 8.88% on the back of
growth in total deposits of $740.37 million as at 31 December 2011, representing
32.09% growth over the period 31 December 2010 to 31 December 2011.
3.5.5 Retail deposits comprising demand and savings deposits, accounted for the bulk of
commercial banking deposits, contributing 72% as at 31 December 2011. The figure
below indicates the distribution of deposits in the commercial banking sector as at 31
December 2011.
Figure 17: Commercial Bank Deposits
3.5.6 The loans to deposit ratio for the sub-sector increased from 76.95% for period ending
31 December 2010 to 87.96% for period ending 31 December 2011 indicating
significant improvement in the level of financial intermediation.
Capital Adequacy…
3.5.7 The figure below indicates the progression of net capital base for the commercial
banking sector over the period 2009 to 2011.
Demand Deposits 66%
Savings Deposits 6%
Fixed Deposits 24%
Foreign Currency
Deposits 2%
Negotiable Certificates of
Deposit 2%
Demand Deposits Savings Deposits
Fixed Deposits Foreign Currency Deposits
Negotiable Certificates of Deposit
39
Fig 18: Net Capital Base for the Commercial Banking Sector
Asset Quality…
3.5.8 Total loans and advances increased by 60.06%, from $1.43 billion as at 31
December 2010 to $2.29 billion as at 31 December 2011. The increase in total loans
was mainly attributed to increased underwriting capacity as a result of increasing
deposits within the sub-sector.
3.5.9 The commercial banking sub-sector maintained its dominance in terms of loans and
advances as loans by commercial banks constituted 82.89% of total loans as at 31
December 2011.
3.5.10 The figure below indicates the contribution of the commercial banking sub-sector to
banking industry loans for the period 2009 to 2011.
0.00
100.00
200.00
300.00
400.00
500.00
2009 2010 2011
239.29
330.58
415.60
$ Millions
40
Figure 19: Commercial Bank Loans
3.5.11 Asset quality deteriorated in the commercial banking sub-sector in 2011 as
evidenced by the increase in the ratio of adversely classified loans to total loans from
4.58% as at 31 December 2010 to 5.89% as at 31 December 2011.
Earnings…
3.5.12 The commercial banking sector remained profitable during the year ended 31
December 2011 as indicated by net earnings of $75.75 million. The sector recorded
return on asset and return on equity ratios of 2.70% and 17.58% for the year ended
31 December 2011. However, profitability was under threat from credit losses
emanating from rising non-performing loans.
3.5.13 Net interest margin increased from 6.24% in 2010 to 7.21% in 2011. The increase is
attributable to increased volume of business and interest bearing assets during the
year ended 31 December 2011.
3.5.14 Cost to income ratio improved from 103.40% in 2010 to 92.97% in 2011.
3.5.15 The figure below indicates a comparison of key profitability indicators for the period
2009 to 2011.
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
2009 2010 2011
588.46
1,429.77
2,288.50
104.38
223.48
472.46
$ Millions
Commercial Banks Other Banks
41
Figure 20: Commercial Banks Key Earnings Indicators - 2009 to 2011
3.5.16 The commercial banking sub-sector derived the bulk of its income from interest
income and fees & commissions which contributed 55.86% and 28.54%, respectively,
to total income for the year ended 31 December 2011.
3.5.17 The income mix for the sector indicates the commercial banking sector’s ability to
generate sustainable income from its core business of financial intermediation.
3.5.18 The income mix is indicated in the figure below:
Figure 21: Income Mix for the Commercial Banking Sector
55.86%
10.89%
28.54%
4.70%
Interest Income Income from Foreign Exchange Dealing
Fees and Commission Other Non Interest Income
ROA ROE NIM Cost to Income
Dec-09 0.45% 1.86% 3.39% 95.53%
Dec-10 -0.89% -8.32% 6.24% 103.40%
Dec-11 2.70% 17.58% 7.21% 92.97%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
Dec-09
Dec-10
Dec-11
42
3.5.19 The cost structure for commercial banks was skewed towards salaries and
employment benefits which accounted for 32.78% of total commercial banking sector
costs for the year ended 31 December 2011, against interest expenses which
accounted for 23.29%.
Liquidity and Funds Management…
3.5.20 There has been a remarkable growth in commercial banks’ deposits since inception
of the multiple currency system in February 2009. Commercial banks’ deposits grew
by 112.48%, from $1.22 billion for period ending 31 December 2009 to $2.60 billion
for year ending 31 December 2011.
3.5.21 The increase in commercial bank deposits is mainly attributed to increased
confidence in the banking sector and increased economic activity. The growth trend
in commercial bank deposits is shown in Figure 13.20 below.
Figure 22: Commercial Bank Deposits
3.5.22 As at 31 December 2013, six (6) banking institutions out of the 17 commercial
banking institutions were not in compliance with the prudential liquidity ratio. The
decline in liquidity ratio was largely attributed to increased lending.
1,224.44
2,022.24
2,601.72
0.00 1,000.00 2,000.00 3,000.00
2009
2010
2011
Millions
Total Deposits
43
Merchant Banks
3.5.23 Four (4) merchant banks were operating as at 31 December 2011, the same number
from the previous year ended 31 December 2010.
3.5.24 Out of the four merchant banks, Genesis Investment Bank and Renaissance
Merchant Bank were facing chronic challenges characterized by insolvency, poor
asset quality and persistent liquidity constraints.
3.5.25 Renaissance Merchant Bank was placed under curatorship in June 2011, following
an investigation by Reserve Bank which unearthed gross mismanagement of the
institution.
Total Assets…
3.5.26 Merchant banks had total assets of $249.47 million as at 31 December 2011 up from
$221.24 million as at 31 December 2010, indicating a growth of 12.76% during the
period.
3.5.27 The sector’s asset mix mainly comprised loans and advances (45 %) and off balance
sheet items (17 %). The figure below indicates the assets mix for merchant banks as
at 31 December 2011.
Figure 23: Asset Mix for Merchant Banks
1%
5%
5%
6%
7%
45%
8%
6%
17%
DOMESTIC NOTES AND COIN BALANCES WITH CENTRAL BANK
BALANCES WITH DOMESTIC BANKS BALANCES WITH FOREIGN INSTITUTIONS
SECURITIES AND INVESTMENTS LOANS & ADVANCES,
FIXED ASSETS OTHER ASSETS
OFF-BALANCE SHEET ITEMS
44
Capital Adequacy…
3.5.28 The merchant banking sector was inadequately capitalised with negative tier 1 and
capital adequacy ratios of 8.73% and 6.24%, respectively, as at 31 December 2011.
3.5.29 Two (2) out four (4) merchant banks were insolvent with negative core capital levels.
Asset Quality…
3.5.30 Loans and advances for the sector amounted to $146.55 million as at 31 December
2011, an increase of 32.54% from $110.57 million recorded as at 31 December 2010.
3.5.31 There was a significant deterioration in the asset quality in the sector as evidenced
by the increase in the ratio of adversely classified loans to total loans from 21.72% as
at 31 December 2010 to 43.59% as at 31 December 2011. The figure below shows a
comparison of the adversely classified loans to total loans ratio per merchant bank
sub-sector.
Figure 24: Comparison of ACL to Total Loans Ratio by Sector
1.93%
4.55%
7.89%
1.82%
21.72%
43.59%
13.62% 14.40% 14.05%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
31-Dec-09 31-Dec-10 31-Dec-11
Ad
vers
ly C
lassif
ied
Lo
an
s t
o T
ota
l L
oan
s
Commercial Banks
Merchant Banks
Building Societies
POSB
45
3.1.1 The increase in the ratio was attributed to asset quality challenges at Genesis
Investment Bank and Renaissance Merchant Bank which had adversely classified loans
to total loans ratios of 88.93% and 83.64%, respectively, as at 31 December 2011.
Earnings…
3.1.2 The viability challenges faced by the merchant banking sector, characterised by
undercapitalisation, poor asset quality and low business underwriting capacity,
culminated in losses by the sub-sector.
3.1.3 Merchant banks recorded a combined loss of $24.28 million for the year ended 31
December 2011, down from a loss of $10.85 million recorded during 2010. Three out of
four merchant bank recorded losses during the period.
3.1.4 Average return on asset and return on equity ratios improved from negative 17.86% and
60.20% recorded in 2010 to negative 10.07% and 42.99% recorded for 2011,
respectively. The figure below indicates the sector’s key profitability indicators for the
period 2009 to 2011.
Figure 25: Profitability Indicators for Merchant Banks - 2009 to 2011
3.1.5 Net interest margin increased from to 3.31% as at 31 December 2010 to 7.93% as at 31
December 2011. This was as a result of increased volumes in interest bearing assets
over the year.
3.1.6 The sector derived the bulk of its income mainly from loans and advances as depicted
in the figure below:
-70.00%
-60.00%
-50.00%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
ROA ROE NIM -1.68% -5.68%
1.67%
-17.86%
-60.20%
3.31%
-10.07%
-42.99%
7.93%
2009
2010
2011
46
Figure 26: Income distribution for Merchant Banks
3.1.7 The sector’s poor profitability performance was mainly attributed to high provisioning
requirements of $19.50 million for the year ended 31 December 2011, which accounted
for 37.40% of total costs. The figure below indicates a breakdown of the cost structure
for the merchant banks sub-sector for the year ended 31 December 2011.
Figure 27: Merchant Banks’ Cost Structure
Liquidity and Funds Management…
3.1.8 Notwithstanding a prudential liquidity ratio of 52.05%, which was above the regulatory
minimum of 25% for period ending 31 December 2011, the merchant banking sector
faced liquidity constraints as two (2) out of four (4) institutions failed to honour
obligations as they fell due.
3.1.9 The sector had negative liquidity gaps in all time bands for period ending 31 December
80%
2%
18%
0%
Interest Income Foreign Exchange Dealing Fees and Commission Other Non Interest Income
37%
19%
17%
27%
Total Provisions Interest Expense Salaries and Employement Costs Administration Costs
47
2011 as some of the merchant banks failed to honour maturing obligations.
3.1.10 Merchant bank deposits grew by 15.45%, from $103.86 million as at 31 December 2010
to $119.91 million as at 31 December 2011. The sub-sector’s deposit mix was inclined
towards fixed deposits which constituted 53.81% of the total merchant bank deposits.
Building Societies
3.1.11 There were four (4) building societies operating in 2011. The sector accounted for
10.72% of total assets, 11.19% of total loans and 9% of total deposits.
Total Assets…
3.1.12 Total sub-sector assets grew by 82.88% in 2011, from $280.18 million to $510.54
million as at 31 December 2011. The growth in total assets was largely attributed to
growth in loans and advances which grew by $196.06 million over the year.
3.1.13 The figure below indicates the growth trends in total assets and total loans for the sector
for the period 2009 to 2011.
Figure 28: Building Societies Loans and Assets
0.00
100.00
200.00
300.00
400.00
500.00
600.00
2009 2010 2011
28.01
89
285
141.60
280
511
Millions
Total loans Total Assets
48
Capital Adequacy…
3.1.14 The building societies’ sub-sector was adequately capitalised with average tier 1 and
capital adequacy ratios of 29.12% and 35.11% as at 31 December 2011, respectively.
3.1.15 Building societies experienced an increase in core capital largely attributed to an
increase in retained earnings. The sub-sector had combined core capital of $64.64
million as at 31 December 2011 up from $58.14 million as at 31 December 2010.
Asset Quality…
3.1.16 Total loans for the sector grew by 220.40%, from $88.96 million for period 31 December
2010 to $285.02 million for period 31 December 2011. There was a marginal decrease
in the ratio of adversely classified loans from 3.08% as at 31 December 2010 to 1.56%
as at 31 December 2011.
3.1.17 There was an increase in mortgage lending by the sector in light of the increase in term
deposits and the general increase in deposit maturities during the period under review.
However, mortgage facilities remained low with facilities of $83.99 million out of total
loans of $285.02 million as at 31 December 2011 up from $36.18 million in 2010.
Earnings…
3.1.18 The building societies’ sub-sector was profitable with combined earnings of $30.47
million for the year ended 31 December 2011, up from $5.72 million recorded for the
year ended 31 December 2010. Further, all building societies were profitable in 2011.
3.1.19 Building societies earned the bulk of their income from fees and commissions and
interest income from loans and advances which contributed 40.80% and 38.33% to total
income, respectively. The sub-sector’s income mix for the year ended 31 December
2011 is shown in the figure below:
49
Figure 29: Building Societies Income Mix
3.1.20 Average return on assets and return on equity ratios increased from 4.14% and 2.39%
for the year ended 31 December 2010 to 7.22% and 22.24% for the year ended 31
December 2011, respectively.
Liquidity and Funds Management…
3.1.21 Building societies’ deposits increased from $143.38 million as at 31 December 2010 to
$273.36 million as at 31 December 2011.
3.1.22 Building societies recorded an average prudential liquidity ratio of 39.55% down from
61.39% as at 31 December 2010. The sub-sector had negative liquidity gaps in all time
bands as at 31 December 2011.
3.1.23 The transitory nature of deposits impacted negatively on the sub-sector’s ability to offer
its core longer term mortgage facilities.
Asset Management Companies
3.1.24 The asset management sector comprised 16 operating institutions as at 31 December
2011, the same number that was operating in 2010.
3.1.25 Notwithstanding the improvement in the economic activity following the introduction of
the multi-currency regime in February 2009, the economy continues to experience
liquidity challenges which have manifested themselves through high proportions of
transitory deposits, minimal investments by individuals and shortage of alternative
38.33%
11.19%
40.80%
9.68%
Interest Income from Loans Interest Income on Investments and Securities
Fees and Commission Other Income
50
investments on the market. This has drastically reduced the potential pool of investors
for asset managers, impacting on the level of funds under management and
consequently the level of management fees earned.
Capital …
3.1.26 As at 31 December 2011, all asset management companies were compliant with the
minimum paid-up equity capital requirement of $500,000.00, with an average capital
base for this sector increasing from $859,826.36 as at 31 December 2010 to $1.04
million as at 31 December 2011.
3.1.27 The increase in the capital levels over the year 2011 was largely driven by sustained
positive retained earnings in the year as shown in the figure below.
Figure 30: Relationship between Capital and Retained Earnings
Funds under Management…
3.1.28 Notwithstanding the liquidity shortages and a poor performance by the Zimbabwean
Stock Exchange which reduced the pool of investors for asset management companies,
there was a marginal increase in total funds under management during the year under
review, from $1.54 billion as at 31 December 2010 to $1.59 billion as at 31 December
2011.
3.1.29 The increase in funds under management was attributed to the bullish stock market
conditions that prevailed in 2011. Money market funds grew by 37.90% from $188.24
6.49
8.24
10.15
11.31
12
11.02
11.31
12.41
Total Capital, 13.34
13.38
14.07
13.76
1.21
2.62 2.2
1.42 1.66 0.62 0.87
1.77
Retained Earnings, 2.6
2.39
2.57 2.37
0
2
4
6
8
10
12
14
16
Mar-09 Jun-09 Sep-09
Dec-09
Mar-10 Jun-10 Sep-10
Dec-10
Mar-11 Jun-11 Sep-11
Dec-11
$ m
illi
on
s
51
million as at 31 December 2010 to $259.61 million as at 31 December 2011 whilst
quoted equities decreased by 8.55% from 845.89 million as at 31 December 2010 to
$773.55 million as at 31 December 2011.
3.1.30 The figure below illustrates the composition and trend in funds under management for
the sector over the year.
Figure 31: Distribution of Total Funds under Management
Earnings and Profitability…
3.1.31 Asset managers recorded an increase in aggregate earnings of 235.77%, from
$819,109.17 for the year ended 31 December 2010 to $2.75 million for the year ended
31 December 2011.
3.1.32 Return on assets and return on equity ratios improved from 5.06% and 6.77% for the
year ended 31 December 2010 to 11.21% and 15.75%, respectively, for the year ended
31 December 2011.
3.1.33 The improvement in profitability was mainly attributed to increases in management fees
and income from investments and securities which increased from $6.34 million and
$319,285.75 in 2010 to $9.11 million and $1.08 million in 2011, respectively.
3.1.34 Management fees constituted 74.30% of total income in 2011, down from 91.07%
recorded in 2010.
3.1.35 Operating costs increased by $1.51 million in 2011 on the back of increases in salaries
775.7
1
1245.6
2
1334.9
1
1318.3
4
1424.2
8
1366.1
5
1414.1
2
1541.2
7
1608.4
1
1664.5
2
1626.7
8
1587.9
4
422.0
1
908.3
9
943.3
2
914.0
1
903.4
8
735.0
7
768.0
8
845.8
9
882.1
6
913.2
8
849.6
773.5
5
-10%
0%
10%
20%
30%
40%
50%
60%
70%
0
200
400
600
800
1000
1200
1400
1600
1800
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Perc
en
tag
e C
han
ges
$ m
illi
on
s
Money Markert Total Equities
52
and employment benefit costs and other expenses which increased by $662,029.46 and
$4,713,609.86 in 2011, respectively. The figure below indicates the composition of the
sector’s operating profit for the period March 2009 to December 2011.
Figure 32: Composition of AMCs Operating Profit
Microfinance Sector
3.1.36 The microfinance sector continued to play its critical role of eradicating poverty and
financial exclusion.
3.1.37 However, the Reserve Bank continued to receive numerous complaints from members
of the public against some microfinance institutions with respect to unethical and
undesirable business practices.
3.1.38 These include inadequate disclosure of business conditions, over deduction in respect
of loan repayments, charging exploitative lending and penalty rates and abusive debt
collection practices, including disposal of pledged collateral without following due legal
procedures.
3.1.39 In light of the above, the Reserve Bank continued to engage the microfinance
institutions and to call upon them to observe internationally agreed Core Client
Protection Principles (CCPP) for microfinance and to comply with laws and regulations
when conducting microfinance business. Non-compliance invites regulatory sanctions
-15
-10
-5
0
5
10
15
Mill
ions
Management Fees Income from Investments & Securities
Other Income Salaries and Employee Benefits
Other Costs Other Administration Expenses
Operating Profit
53
which may include cancelation of operating licences.
3.1.40 During the year the Reserve Bank stepped up its dispute resolution efforts by engaging
the concerned institutions and educating microfinance borrowers on some of their rights
and obligations as borrowers.
54
CHAPTER FOUR: CHALLENGES IN THE BANKING SECTOR AND LESSONS LEARNT
4.1 Introduction
4.1.1 This chapter seeks to highlight the macro and micro level challenges in the
operating environment, banking sector developments and lessons drawn from
these experiences. The combined effects of macroeconomic challenges and
sector specific structural constraints, internal governance deficiencies and
attendant legal constraints had significant bearing on the banking sector
performance.
4.1.2 Prior to the multicurrency regime, the economy was characterized by
hyperinflation, acute foreign exchange shortages, limited foreign lines of credit,
erratic energy and fuel supplies, and the attendant basic commodities shortages,
which in turn, impacted negatively on corporate viability and ability of the
corporate sector to retool. This development militated against the corporate
sector’s competitive positioning on the export market.
4.1.3 The consequences of the harsh macroeconomic environment on the banking
sector which included, capital erosion and disintermediation, culminated in an a
number of bank failures and rendered some classes of banking business such as
discount houses and finance houses, unviable.
4.1.4 The adoption of the multicurrency regime created a foundation for economic
stability and growth for the period 2009 to 2011. However, this development also
ushered in a whole array of new challenges for both the banking sector and the
corporate sector, which included, among others, recapitalization challenges,
illiquid market conditions, and lack of long-term funding critical for capital
expenditure.
4.1.5 Reliance on ageing and obsolete equipment, compounded by incessant power
outages and lack of long term funding further undermined the competitiveness of
the industry and the recovery projectory which had been ushered in by the multi-
currency regime.
4.1.6 While infrastructure rehabilitation was a priority for government and formed one of
the pillars for the 2011 budget, lack of liquidity militated against its execution.
Market illiquidity, in the absence of a viable lender-of-last facility continued to
constrain ability of the banking sector to effectively spur industry growth and
55
viability, thereby worsening Zimbabwe’s infrastructure deficit.
4.1.7 The short-term loans offered by the banking sector were used to fund capital
expenditure, which ordinarily is funded by long term funds, resulting in high levels
of non-performing loans as corporates failed to service their loans.
4.1.8 The trade and exchange control liberalization in the background of subdued
export earnings, negligible foreign direct investment, and limited access to
offshore lines of credit compounded the harsh operating environment for the
industry.
4.1.9 While adoption of the cash budgeting system by Government in a bid to manage
precarious national debt levels was plausible, the absence of a functional money
market and short term Treasury Bills impacted negatively on money market depth
and interbank trading.
4.2 Banking Sector Challenges
4.2.1 Notwithstanding the gains of the multicurrency regime, (with inflation reduced to
5.9% as at December 2011), the efficacy of the multiple currency system was
adversely affected by the following challenges:
a) volatile and low deposits;
b) high levels of non-performing loans;
c) market illiquidity due to absence of the lender of last resort facility and low
interbank activity;
d) limited external facilities; and
e) working capital challenges.
Volatility of Deposits…
4.2.2 Following the adoption of the multiple currency system, the banking sector
mobilized deposits which were largely transitory and volatile in nature, mainly
driven by salaries. On average, short term deposits constituted 91.2% of the total
deposits during the period 2009 – 2011, and this hindered banking institutions
from lending long term.
4.2.3 In the absence of alternative sources of funding, the corporate sector
56
inappropriately used expensive short term funding for capital expenditure
resulting in high levels of non-performing loans in the banking sector.
High level of non-performing loans…
4.2.4 The challenges of ushered in by the multi-currency regime, in the backdrop of
tight domestic liquidity conditions, inadequate working capital and declining
corporate performance created a bedrock for increased non-performing loans in
the banking sector since 2009.
4.2.5 The problem was compounded by high lending rates charged by banks against
a backdrop of low corporate profit margins and viability challenges, which in turn
militated against the corporate sector’s ability to service their loans.
4.2.6 The adversely classified loans to total loans ratio for the banking sub-sectors
were as follows:
Table 4: Adversely Classified Loans to Total Loans Ratio Banking Sub-sector
31 December 2009 31 December 2010 31 December 2011
Commercial Banks
1.82% 4.58% 5.89%
Merchant Banks
1.33% 21.72% 43.59%
Building Societies
0.00% 3.08% 1.47%
Working Capital Erosion…
4.2.7 Banking institutions’ working capital was eroded during the hyperinflationary
period prior to the introduction of the multicurrency regime. Coupled with scarcity
of foreign lines of credit, low and transitory deposits and limited fresh capital
injections, most banking institutions faced working capital challenges.
3.5.32 Following chronic hyperinflation and the decimation of balance sheets, the capital
of almost all banking institutions were depleted to zero in conventional accounting
terms.
3.5.33 Faced with zero balances in dollar terms, and in the absence of fresh liquid
57
capital, the major source of equity capital became fixed asset revaluation
reserves. However, this form of capitalisation did not result in liquid capital
injection in the banking sector.
3.5.34 Illiquid capital culminated in a number of challenges for banking institutions
including lack working capital to meet operating costs and inadequate capacity to
underwrite new and meaningful business. This coupled with a thin funding base,
constrained earnings performance, particularly for smaller banks.
3.5.35 In the absence of adequate working capital, some banking institutions failed to
align their level of operations to capital resulting in abuse of depositors’ funds to
meet bloated operating costs, in particular, staff costs.
3.5.36 Adequate capitalization remains one of the key success factors in the banking
sector. There is correlation between capital and profitability, lending rates, bank
charges, shareholders commitment, liquidity, competitiveness, quality of
management and discipline, credit extension capabilities, and infrastructure
enhancement, among other factors. In particular, strong capitalisation enables
banking institutions to play a meaningful intermediation role for the development
of the economy.
Market illiquidity…
4.2.8 Following the adoption of the multi- currency regime, the sector faced liquidity
challenges emanating from absence of money market trading instruments such
as treasury bills, inactive interbank market and absence of lender of last resort
facility.
4.2.9 Although there were other forms of trading instruments such as bankers’
acceptances available on the money market, these were not being readily
accepted as collateral on the inter-bank market due to the high perceived
counterparty risk.
4.2.10 While a few banking institutions secured some foreign lines of credit, access to
the same credit lines was limited due to failure to meet pre-disbursement
conditions. Failure to access credit lines compounded the liquidity challenges in
the economy.
4.2.11 In addition, the absence of long-term external funding also restricted the ability of
banking institutions to extend long-term funding such as mortgage financing and
58
capital expenditure funding for industry.
4.2.12 Low inflows of international capital and weak export performance further
constrained market liquidity.
4.2.13 In the circumstances, most banks cautiously managed their own liquidity
positions and some adopted a conservative approach to lending.
4.3 Failed Banking Institutions
4.3.1 During the period 2009 to 2011, a number of bank failures were largely attributed
to poor corporate governance and risk management practices, high levels of
insider loans, involvement in speculative non-core banking activities, and
inadequate capitalization. These developments had a debilitating impact on the
banking sector, with negative implications on economic growth.
4.3.2 A brief synopsis of developments at the banking institutions that failed between
2009 and 2011 is highlighted hereunder:
ReNaissance Merchant Bank…
4.3.3 The failure of ReNaissance Merchant Bank can be traced total collapse of
corporate governance structures with major shareholders at holding company
level directing the day-to-day operations of the bank. The demise of the bank
was largely attributed to the following deficiencies:
a) Domineering founding members who exercised unfettered powers over the
operations of the bank;
b) Non-separation of ownership and management;
c) Poor board and senior management oversight as significant transactions with
negative impact on the bank were processed at the instigation of senior
executives;
d) Abuse of group structures with bank funds being deliberately diverted to meet
personal expenses of the founding members;
e) Gross violation of prudential lending limits through insider loans perpetrated
through unfunded call accounts;
f) Deliberately orchestrated elaborate schemes designed to siphon depositors’
funds; and
59
g) Persistent losses attributed to high levels of non-performing loans,
undercapitalization and failure to underwrite meaningful business.
Genesis Investment Bank…
4.3.4 Genesis Investment Bank had a long history of poor performance and failure to
underwrite meaningful business. The bank’s challenges are summarized as
follows:
a) Chronic capitalization challenges extending to periods prior to the adoption of
the multi-currency regime;
b) Persistent liquidity challenges which threatened the bank’s solvency;
c) Liquidity management strategies that were more reactive than proactive;
d) Imprudent lending practices; and
e) Poor board and senior management oversight.
NDH Bank…
4.3.5 The origins of NDH were fragile from inception, as bank opened its doors to the
public with inadequate capital and without key management staff and ICT
infrastructure.
4.3.6 The challenges faced by NDH are summarized as follows:
a) chronic capitalisation challenges in the backdrop of inadequate
shareholder support;
b) persistent looses and chronic liquidity challenges which threatened the
solvency of the institution;
c) absence of board and senior management oversight; and
d) imprudent lending practices which left the bank exposed to three failed
institutions.
60
4.4 Lessons Learnt
Importance of Adequate Capital…
4.4.1 The role of capital is to act as a buffer against future, unidentified, and relatively
remote losses that a bank may incur. Banks with low equity capital and a high
variability of operating earnings have proven to be highly vulnerable to financial
distress.
4.4.2 In addition, banking institutions hold capital because it provides them with
financial flexibility. Banks which are strongly capitalized can take advantage of
growth opportunities. A banking sector with a strong capital base is better able to
supply credit to businesses, fund investment opportunities, and contribute
meaningfully to economic growth.
4.4.3 A healthy, well capitalized and functioning banking sector is essential to the
economic well-being and recovery of economy. Inadequately capitalized banks
are ill-disposed in terms of providing credit to the small to medium enterprises
which are key to economic recovery.
4.4.4 Financial literature is also replete with empirical evidence on the pivotal role that
adequately capitalized banking institutions play in economic turnaround
processes through efficient financial intermediation.
4.4.5 Strong capitalization is a key pillar of success for banking institutions as it
enables them to play a meaningful intermediation role for the development of the
economy. In this regard, the Reserve Bank, through the risk-based supervision,
continued to monitor and to require all banks to comply with stipulated minimum
capital requirements and to align their capital levels to their respective risk
profiles.
4.4.6 Inadequately capitalized banks play an insignificant role in the economy in terms
of financial intermediation and funding the productive sector The banks that
failed were inadequately capitalized and were playing an insignificant role in
financial intermediation.
61
Importance of Consolidated Supervision…
4.4.7 The opaque group shareholding structures camouflaged the true identity of the
beneficiary shareholders, and militated against adoption of sound risk
management and good corporate governance practices. The developments at
troubled banks highlighted the need to fully implement and to strengthen
consolidated supervision.
4.4.8 The challenges arising from these group structures highlighted the need to
enhance the regulatory framework for banking institutions to incorporate the
supervision and regulation of bank holding companies.
4.4.9 Developments at the failed institutions underscored the need to amend the
Banking Act to ensure that the Reserve Bank is empowered to take appropriate
supervisory action against bank holding companies and their associates and to
hold directors liable for abuse of depositors’ funds.
4.4.10 In this regard, the Reserve Bank has proposed amendments to the Banking Act to
give legal effect to all guidelines and standards issued to the banking sector
.
Sound Risk Management Framework…
4.4.11 The bank failures experienced in the post 2009 era, highlighted the pitfalls of the
silo approach to management of banking risks. The experiences highlighted the
inter-linkages between risks such as credit and liquidity.
4.4.12 The adoption of Enterprise-wide Risk Management as an approach to managing
risks in banking institutions has become imperative to the sound management of
banking risks. In this regard, the Reserve Bank is enhancing the Risk
Management guideline to incorporate the concept of ERM to strengthen the
ability of banking institutions to effectively measure, monitor and control risks.
4.4.13 The Reserve Bank will continue to issue guidance to the market in this manner to
ensure that risk management systems remain relevant to the operating
environment at all times.
62
Importance of Strong Corporate Governance …
4.4.14 In two of the failed banking institutions, serious defects in corporate governance
were at the root of business failure, in particular the lack of separation between
ownership and management which resulted in breakdown in sound corporate
governance practices.
4.4.15 In all the failed banks, poor or inadequate board oversight fuelled the demise of
the institution. Corporate governance shortcomings in the failed banking
institutions underscored the need for banks and banking groups to adopt robust
corporate governance policies, and practices commensurate with their
institution’s risk profile.
4.4.16 In an effort to foster a robust legal framework, the Reserve Bank proposed
amendments to the Banking Act to ensure effectiveness and alignment to
international best practice.
Supervisory Co-operation…
4.4.17 The proliferation of financial conglomerates, incorporating regulated and non-
regulated entities, resulted in heightened risk exposures for banking institutions
within such groups emanating from activities of associate companies. Such
structures also present an opportunity for regulatory arbitrage which poses a
threat to financial sector stability.
4.4.18 This was clearly witnessed in the failures of banking institutions such as
Renaissance where exposure to associates, such as stock-broking firms,
crystallized in the banking subsidiary as increased exposure to credit risk.
4.4.19 The experiences of failures emanating from such group structures brought to the
fore the need for supervisory co-operation and collaboration among domestic
regulators as well as with other foreign supervisors where Zimbabwean financial
institutions may have their presence.
4.4.20 The ‘silo’ disposition of the regulators in the domestic financial sector is clearly
no longer in sync with current developments. Such co-operation consisting of
information sharing and joint examination of regulated entities where necessary
places supervisors in a better position to deal with threats to financial sector
stability in a timely manner.
63
4.4.21 In this regard, the Reserve Bank has signed Memoranda of Understanding
(MoU) with other domestic regulators to foster the spirit of co-operation in the
supervision of the financial services sector.
4.4.22 Furthermore, the establishment of the Multidisciplinary Financial Stability
Committee in 2011 was geared to further strengthen co-operation among
regulators.
Capacity Building…
4.4.23 The skills gap that was created in the banking sector and the country at large as
a result of the “brain drain” during the hyperinflationary period left banking
institutions ill-equipped to move forward in the multicurrency regime economy.
4.4.24 Skills deficiencies manifested themselves in key areas such as strategic
planning, enterprise-wide risk management, liquidity risk management and credit
risk management, which impacted on the financial performance of banking
institutions.
4.4.25 Pursuant to capacity building initiatives, the Reserve Bank conducted training
and workshops for executive and non-executive directors of banking institutions
on an array of topics ranging from corporate governance to Basel II
implementation.
4.4.26 In line with dynamic nature of the banking sector and international best practice,
banks should always invest time and resources in upgrading their skills.
Importance of Credit Information Sharing…
4.4.27 The period under review has experienced an increase in the level of non-
performing loans emanating from poor earnings performance on the part of the
borrower and multiple borrowings by the same borrowers. Absence of credible
credit information has left most of the banking institutions exposed to the same
non-performing borrowers.
4.4.28 In view of the importance of sharing such important information, the banking
sector initiated negotiations with potential providers of Credit Reference Bureau
facilities with the view to establish a credit reference bureau.
64
Legal /Regulatory Framework Gaps…
4.4.29 In the absence of clear provisions for decisive action on errant banking
associates and shareholders, some of the failed institutions took advantage of
these regulatory gaps to create opaque holding structures, trusts, nominee
companies etc and such other non transparent structures to siphon depositors’
funds and carry out non-permissible activities.
4.4.30 Further, some of the founding members and shareholders who blatantly violated
international corporate governance practices challenged the Reserve Bank’s
reference to violating provisions of guidelines citing that these had no force of
law.
4.4.31 Cognizant of the above challenges and in a bid to ensure protection of
depositors’ funds, the Reserve Bank, in conjunction with the Ministry of Finance
embarked on legislative reforms intended to deal decisively with errant
shareholders, associates and directors. The reforms are also aimed at giving
guidelines and standards issued by the Reserve Bank, the effect of law to
prevent future challenges from errant bank owners or directors.
4.4.32 The Reserve Bank is also enhancing the Troubled and Insolvent Banks Policy to
ensure timely and effective responses to banking problems underpinned by fair,
consistent, transparent, and cost of effective problem resolution.
Contingency Planning and Systemic Crisis Management…
4.4.33 During the global financial crisis, 2007-2008, governments in the developed
countries embarked on massive bailouts to their banking sectors in order to
ensure financial stability. An important lesson from these experiences is that
regulatory authorities must always be adequately resourced and prepared to deal
with troubled banking institutions.
65
APPENDICES
APPENDIX 1 : OPERATIONS AND ACTIVITIES
FUNCTION OF BLSS
1. The Reserve Bank of Zimbabwe, in terms of Section 6 of the Reserve Bank Act
[Chapter 22:15], is mandated to foster the stability and proper function of the
Zimbabwean Financial System as well as supervision of banking institutions,
among others.
Organization of the Bank Licensing, Supervision and Surveillance Division
(BLSS)
2. In a bid to fulfill its mandate to foster and maintain financial stability, BLSS is
organized into six (6) departments, aided by a Legal Counsel function.
3. The operational departments of the division are illustrated below.
66
Director/Bank Licensing, Supervsion & Surveillance
Chief Bank Examiner
Bank Licensing and Supervision of Banks
Chief Bank Examiner
Licensing &Supervision of Microfinance
Institutions
Chief Bank Examiner
Financial Modelling and Basel II Implementation
Chief Bank Examiner
Problem Bank Resolution and Market
Stabilisation
Chief Bank Examiner\
Policy Research, Compliance and MIS
Chief Bank Examiner
Asset Management Companies
Chief Legal Advisor
67
APPENDIX 2: MAJOR SUPERVISORY TOOLS & METHODOLOGIES
1. In an effort to effectively fulfill the responsibility to promote and maintain the
safety, soundness, and integrity of the banking system, the Reserve Bank
employs various supervisory techniques, which are continuously refined to take
cognisance of international best practices. The methodologies include risk-
based supervision, consolidated supervision, macro-prudential and
financial stability analysis and early warning systems.
Risk-Based Supervision…
2. Risk-based supervision is a structured supervisory process designed to identify
key risk factors through qualitative and quantitative assessment of an institution’s
risk profile, assess the adequacy of the risk management policies and practices
that are used to mitigate risk; and focus supervisory resources (including
examination time) based on the risk characteristics of the institutions.
3. This approach requires a strong understanding of the institution and focuses on
validating management’s ability to identify, measure, monitor and control risks.
Consolidated Supervision…
4. The consolidated supervision approach evaluates the strength of individual
banking institutions and the entire banking group, taking cognizance of the whole
spectrum of risks that affect an institution, whether these risks are carried in the
books of the regulated entity or related parties.
5. Consolidated supervision promotes the overall evaluation, both qualitatively and
quantitatively, of the strength of a banking group to which a banking institution
belongs, in order to understand the relationship among the entities and to assess
the potential impact of other entities in the group on the operations of the banking
institution.
6. Banking and non-banking activities conducted by a financial conglomerate and
68
its subsidiaries and affiliates, both domestic and foreign, are borne in mind in
determining the conglomerate and its related entities’ level of compliance with
prudential regulatory requirements.
Macro-Prudential and Financial Stability Analysis…
7. Macro-prudential surveillance facilitates a holistic view of structural imbalances,
interactions and vulnerabilities within the banking system at both national and
global level. The analysis encompasses a surveillance of financial markets to
assess the likelihood of economic shocks; analysis of macro-prudential linkages
with particular focus on the extent to which shifts in financial soundness affect
macro-economic and real sector developments. Information from macro-
prudential analysis provides an input into the assessment of the banking sector.
8. Financial stability analysis provides a framework for the assessment of the
condition of the financial system as a whole, identification of the potential
downside risks to the financial system, analysis of alternate means of promoting
and maintaining financial system stability and the surveying of policy
developments designed to improve financial stability. Macro-prudential analysis,
macro-stress testing and scenario analysis are the bedrock on which financial
stability analysis hinges.
9. Macro-stress testing and scenario analysis which are essentially risk and
vulnerability assessments are conducted on a continuous basis. The analyses
explore susceptibilities to both endogenous and exogenous events which have a
low probability of occurrence, but have a high potential for a costly impact should
they materialize.
Core Deliverables of BLSS
10. BLSS’ underlying philosophy revolves around the concept that banking
institutions should be free to operate according to market forces and should be
entitled to set terms and conditions for their operations in a competitive
environment. However, supervisory rules should be set to manage banking
practices in order to protect depositors, other creditors and contribute towards a
69
sound and stable financial system.
11. To ensure financial sector stability BLSS undertakes the following activities;
licensing and de-licensing of banking institutions, off-site surveillance and
on-site supervision.
Licensing and de-licensing of banking institutions…
12. In line with international best practice as espoused in the Basel Core Principles
for Effective Banking Supervision, the licensing and de-licensing function of
banking institutions, asset management companies and microfinance institutions
is vested in the Reserve Bank of Zimbabwe.
13. The licensing framework considers the ownership structures; capitalization levels
of the proposed institution in relation to the class of banking; the fitness and
probity of members of the board and senior management, strategic and
operational plans; internal controls; and risk management among others.
Off-site Surveillance…
14. Off-site surveillance, designed to complement on-site examinations and facilitate
ongoing assessment of banks in between examinations, entails periodic analysis
of the financial condition and performance of individual institutions and the entire
banking sector.
15. This periodic analysis is based on the quantitative and qualitative information
furnished by reporting institutions in the form of standardized statutory returns.
16. Off-site analysis, used as an early warning supervisory tool, involves regular,
periodic and at times ad-hoc data collection, preliminary analysis and validation,
detailed analysis and prudential meetings with the specific banking institution.
17. In line with the developments in the region, the Reserve Bank has adopted the
SADC/ESAP Information Technology Harmonization Project, the Banking
Supervision Application (BSA), which automates data collection, data validation
and supervisory processes and workflows.
18. Apart from prudential returns, other sources of information which include the
70
financial institutions’ internal management reports, published financial information
and prudential meetings between the financial institutions, external auditors and
the Reserve Bank, provide an invaluable input to off-site surveillance.
19. In addition, the Reserve Bank conducts stress tests as part of the early warning
systems to determine the vulnerability of individual banks as well as the entire
banking system to various shock scenarios.
On-site Examinations…
20. As an international best practice of continuous supervision, BLSS conducts on-
site examination of financial institutions under its purview. This involves actual
visits to banking institutions to evaluate their safety and soundness.
21. The coverage of on-site examinations ranges from an investigation of specific
areas to a comprehensive review of an institution's operations with focus placed
on assessing management’s ability to identify, measure, monitor and control risks
emanating from banking business.
22. On-site examinations are structured to provide a comprehensive evaluation and
assessment of a range of supervisory issues including:
i. compliance with laws, regulations and the institution’s own internal policies
and procedures;
ii. corporate governance and competence of management;
iii. adequacy of the institution’s risk management systems and internal control
procedures;
iv. adequacy of accounting and management information systems; and
v. maintenance of proper books of accounts and other records.
23. The frequency of on-site examinations is determined by the institution’s risk
profile as depicted by the results of the off-site assessment and significant
developments which have a bearing on the financial condition of an institution.
71
APPENDIX 3: BANKING SECTOR OWNERSHIP STRUCTURE
Bank Category Name of Institution Total Assets Total Assets
% of Total Assets (USD) (USD)
Foreign Owned Banks
Standard Chartered Bank 387,777,680
2,105,677,760 44.22%
Stanbic Bank 361,483,511
CABS 336,275,331
Barclays Bank 281,596,325
MBCA Bank 181,627,590
BancABC 378,118,583
Metropolitan Bank 107,471,677
Ecobank 71,327,063
Local Private Owned Banks
CBZ Bank 993,399,771
2,239,026,144 47.02%
Interfin Bank 212,931,453
FBC Bank 196,117,694
NMB Bank 168,198,365
Kingdom Bank 150,521,537
TN Bank 113,349,876
CBZ Building Society 108,653,256
Renaissance Merchant Bank 101,064,797
Tetrad Investment Bank 73,670,282
Trust Banking Corporation 39,424,860
FBC Building Society 32,845,162
ZB Building Society 32,768,503
Royal Bank 12,673,507
Genesis Investment Bank 3,407,080
Local Government Owned
ZB Bank 234,687,194
416,960,892 8.76% Agribank 99,868,960
POSB 64,987,856
ZABG 17,416,882
72
APPENDIX 4 - STATISTICAL TABLES
TABLE 1A COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS 2011 COMMERCIAL BANKS
ABC AGRIBANK BARCLAYS CBZ FBC IBC INTERFIN KINGDOM
METROPOLIT
AN
ASSETS USD USD USD USD USD USD USD USD USD
DOMESTIC NOTES AND COIN
9,701,350 2.57%
3,416,669 3.42%
34,051,513 12.09%
37,445,088 3.77%
12,306,923 6.28%
123,053 6.53%
956,375 0.45%
7,057,017 4.69%
5,171,791 4.81%
BALANCES WITH CENTRAL BANK
15,431,602 4.08%
2,302,925 2.31%
36,822,336 13.08%
107,766,664 10.85%
20,516,458 10.46%
- 0.00%
1,468,034 0.69%
8,031,764 5.34%
20,156,274 18.75%
BALANCES WITH DOMESTIC BANKING
INSTITUTIONS
35,316,810 9.34%
- 0.00%
9,371 0.00%
41,719,125 4.20%
120,299 0.06%
- 0.00%
1,238,720 0.58% - 0.00%
- 0.00%
ASSETS IN TRANSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00% - 0.00%
- 0.00%
BALANCES WITH FOREIGN INSTITUTIONS
691,005 0.18%
545,889 0.55%
87,045,146 30.91%
18,720,501 1.88%
13,816,691 7.05%
- 0.00%
- 0.00%
1,556,952 1.03%
1,818,811 1.69%
SECURITIES AND INVESTMENTS
- 0.00%
1,730,015 1.73%
1,629,134 0.58%
5,050,000 0.51%
1,510,109 0.77%
26,227 1.39%
74,568,806 35.02% - 0.00%
- 0.00%
LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES
278,143,623 73.56%
72,645,813 72.74%
60,562,536 21.51%
678,619,596 68.31%
113,284,437 57.76%
547,166 29.04%
78,468,627 36.85%
97,790,659 64.97%
55,882,519 52.00%
FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE)
- 0.00%
- 0.00%
- 0.00%
31,855,724 3.21%
- 0.00%
- 0.00%
- 0.00%
17,285,209 11.48%
- 0.00%
REPOSSESSED PROPERTIES / ASSETS
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00% - 0.00%
- 0.00%
FIXED ASSETS
30,248,914 8.00%
17,683,370 17.71%
36,140,534 12.83%
44,530,190 4.48%
15,339,901 7.82%
1,181,856 62.73%
9,509,074 4.47%
10,724,222 7.12%
21,124,208 19.66%
BSD - BS OTHER ASSETS
8,585,279 2.27%
1,544,279 1.55%
5,949,118 2.11%
19,244,532 1.94%
11,260,329 5.74%
5,625 0.30%
6,858,036 3.22%
8,075,713 5.37%
1,158,277 1.08%
TOTAL ON-BALANCE SHEET ASSETS
378,118,583 100.00%
99,868,960 100.00%
262,209,688 93.12%
984,951,420 99.15%
188,155,145 95.94%
1,883,927 100.00%
173,067,670 81.28%
150,521,537 100.00%
105,311,880 97.99%
OFF-BALANCE SHEET ITEMS
- 0.00%
- 0.00%
19,386,637 6.88%
8,448,351 0.85%
7,962,549 4.06%
- 0.00%
39,863,783 18.72% - 0.00%
2,159,797 2.01%
TOTAL ASSETS
378,118,583 100.00%
99,868,960 100.00%
281,596,325 100.00%
993,399,771 100.00%
196,117,694 100.00%
1,883,927 100.00%
212,931,453 100.00%
150,521,537 100.00%
107,471,677 100.00%
EQUITY AND LIABILITIES
TOTAL DEPOSITS
321,031,840
27,855,160
211,945,751
654,836,537
79,144,667
298,013
96,040,626
104,277,629
73,542,565
DEMAND DEPOSITS
126,075,072 33.34%
21,015,567 21.04%
204,779,793 72.72%
481,739,910 48.49%
58,242,168 29.70%
298,013 15.82%
37,154,473 17.45%
17,397,049 11.56%
32,988,284 30.69%
SAVINGS DEPOSITS
1,769,625 0.47%
- 0.00%
7,165,958 2.54%
13,189 0.00%
- 0.00%
- 0.00%
- 0.00%
53,063,462 35.25%
- 0.00%
TIME DEPOSITS/FIXED DEPOSITS
193,187,143 51.09%
6,839,593 6.85%
- 0.00%
141,164,306 14.21%
- 0.00%
- 0.00%
58,886,152 27.65%
33,817,118 22.47%
40,554,281 37.73%
FOREIGN CURRENCY DEPOSITS
- 0.00%
- 0.00%
- 0.00%
31,919,132 3.21%
3,598,796 1.84%
- 0.00%
- 0.00% - 0.00%
- 0.00%
NEGOTIABLE CERTIFICATES OF DEPOSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
17,303,703 8.82%
- 0.00%
- 0.00% - 0.00%
- 0.00%
BALANCES WITH OTHER BANKING INSTITUTIONS
- 0.00%
3,066,197 3.07%
17,105 0.01%
22,943,700 2.31%
52,481,259 26.76%
- 0.00%
8,051,730 3.78%
4,977,397 3.31%
- 0.00%
LIABILITIES IN TRANSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00% - 0.00%
- 0.00%
FOREIGN LIABILITIES
15,295,329 4.05%
30,791,652 30.83%
194,203 0.07%
75,000,000 7.55%
19,888,932 10.14%
- 0.00%
31,959,620 15.01%
23,908,668 15.88%
5,000,000 4.65%
SECURITIES AND OTHER FUNDING
LIABILITIES
- 0.00%
- 0.00%
- 0.00%
46,883,080 4.72%
- 0.00%
- 0.00%
- 0.00% - 0.00%
- 0.00%
CAPITAL AND RESERVES
36,206,587 9.58%
17,903,763 17.93%
33,374,247 11.85%
80,467,362 8.10%
27,565,928 14.06%
871,153 46.24%
19,669,006 9.24%
13,285,713 8.83%
21,027,938 19.57%
OTHER LIABILITIES
5,584,828 1.48%
20,252,188 20.28%
16,678,382 5.92%
104,820,742 10.55%
9,074,357 4.63%
714,761 37.94%
17,346,688 8.15%
4,072,130 2.71%
5,741,377 5.34%
TOTAL ON-BALANCE LIABILITIES
378,118,583 100.00%
99,868,960 100.00%
262,209,688 93.12%
984,951,420 99.15%
188,155,145 95.94%
1,883,927 100.00%
173,067,670 81.28%
150,521,537 100.00%
105,311,880 97.99%
OFF-BALANCE SHEET ITEMS - LIABILITIES
- 0.00%
- 0.00%
19,386,637 6.88%
8,448,351 0.85%
7,962,549 4.06%
- 0.00%
39,863,783 18.72% - 0.00%
2,159,797 2.01%
TOTAL EQUITY AND LIABILITIES
378,118,583 100.00%
99,868,960 100.00%
281,596,325 100.00%
993,399,771 100.00%
196,117,694 100.00%
1,883,927 100.00%
212,931,453 100.00%
150,521,537 100.00%
107,471,677 100.00%
73
APPENDIX 5 - STATISTICAL TABLES
TABLE 1B COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS 2011
COMMERCIAL BANKS MBCA BANK NMB BANK ROYAL STANBIC STANCHART TN BANK TRUST ZABG ZB BANK
TOTAL (AVERAGE)
ASSETS USD USD USD USD USD USD USD USD USD USD
DOMESTIC NOTES AND COIN
12,294,640 6.77%
9,601,301 5.71%
215,448 1.70%
32,537,572 9.00%
63,017,938 16.25%
4,110,038 3.63%
893,308 2.27%
741,469 4.26%
22,483,664 9.58% 256,125,157 6.50%
BALANCES WITH CENTRAL BANK
35,288,581 19.43%
15,487,004 9.21%
14,513 0.11%
45,212,391 12.51%
39,203,434 10.11%
1,356,540 1.20%
24,962 0.06%
3,546,740 20.36%
13,763,833 5.86% 366,394,055 9.30%
BALANCES WITH DOMESTIC BANKING INSTITUTIONS
8,000,000 4.40%
6,780,009 4.03%
2,128 0.02%
115,606 0.03%
2,780 0.00%
55,889 0.05%
- 0.00%
43,504 0.25%
8,816,138 3.76% 102,220,378 2.60%
ASSETS IN TRANSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
1,159,779 0.30%
- 0.00%
- 0.00%
- 0.00%
12,376,923 5.27% 13,536,702 0.34%
BALANCES WITH FOREIGN INSTITUTIONS
31,543,411 17.37%
5,581,125 3.32%
95,398 0.75%
99,028,227 27.39%
69,191,000 17.84%
372,777 0.33%
8,693 0.02%
39,898 0.23%
12,713,884 5.42% 342,769,409 8.70%
SECURITIES AND INVESTMENTS
358,475 0.20%
2,117,583 1.26%
- 0.00%
54,319 0.02%
10,942,204 2.82%
2,314,274 2.04%
- 0.00%
1,404,914 8.07%
2,732,114 1.16% 104,438,174 2.65%
LOANS, ADVANCES, BANKERS
ACCEPTANCES AND LEASES
82,429,355 45.38%
117,263,542 69.72%
1,266,459 9.99%
152,664,892 42.23%
119,234,392 30.75%
76,633,708 67.61%
22,734,197 57.66%
5,909,604 33.93%
96,537,455
41.13
% 2,110,618,578 53.59%
FOREIGN CLAIMS (INCLUDING BILLS OF
EXCHANGE)
185,798 0.10%
- 0.00%
- 0.00%
5,385 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
1,607,050 0.68% 50,939,166 1.29%
REPOSSESSED PROPERTIES / ASSETS
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00% - 0.00%
FIXED ASSETS
3,536,537 1.95%
9,256,987 5.50%
10,571,578 83.41%
24,837,564 6.87%
22,781,633 5.87%
17,549,839 15.48%
11,031,623 27.98%
2,556,329 14.68%
34,948,296 14.89
% 323,552,655 8.22%
BSD - BS OTHER ASSETS
3,872,493 2.13%
2,110,814 1.25%
507,983 4.01%
3,018,756 0.84%
2,013,255 0.52%
10,956,812 9.67%
3,137,880 7.96%
822,934 4.72%
1,274,979 0.54% 90,397,093 2.30%
TOTAL ON-BALANCE SHEET ASSETS
177,509,290 97.73%
168,198,365 100.00%
12,673,507 100.00%
357,474,712 98.89%
327,546,415 84.47%
113,349,876 100.00%
37,830,662 95.96%
15,065,393 86.50%
207,254,336
88.31
% 3,760,991,366 95.49%
OFF-BALANCE SHEET ITEMS
4,118,300 2.27%
- 0.00%
- 0.00%
4,008,798 1.11%
60,231,265 15.53%
- 0.00%
1,594,198 4.04%
2,351,489 13.50%
27,432,858
11.69
% 177,558,026 4.51%
TOTAL ASSETS
181,627,590 100.00%
168,198,365 100.00%
12,673,507 100.00%
361,483,511 100.00%
387,777,680 100.00%
113,349,876 100.00%
39,424,860 100.00%
17,416,882 100.00%
234,687,194 100.0
0% 3,938,549,393 100.00%
EQUITY AND LIABILITIES -
TOTAL DEPOSITS
104,648,062
106,239,746
4,174,836
309,872,893
252,186,319
76,351,807
23,694,321
14,029,329
141,546,990 2,601,717,091
DEMAND DEPOSITS
74,349,257 40.94%
63,086,091 37.51%
750,627 5.92%
305,462,643 84.50%
227,785,789 58.74%
42,104,073 37.15%
10,062,610 25.52%
12,054,292 69.21%
15,220,457 6.49% 1,730,566,169 43.94%
SAVINGS DEPOSITS
322,602 0.18%
3,004,795 1.79%
476,827 3.76%
1,089,525 0.30%
15,811,166 4.08%
3,073,643 2.71%
2,528,071 6.41%
- 0.00%
57,906,971
24.67
% 146,225,833 3.71%
TIME DEPOSITS/FIXED DEPOSITS
29,976,203 16.50%
8,910,353 5.30%
2,947,383 23.26%
3,320,725 0.92%
153,946 0.04%
31,174,090 27.50%
11,103,640 28.16%
1,578,071 9.06%
68,419,562 29.15
% 632,032,567 16.05%
FOREIGN CURRENCY DEPOSITS
- 0.00%
- 0.00%
- 0.00%
- 0.00%
7,793,069 2.01%
- 0.00%
- 0.00%
396,966 2.28%
- 0.00% 43,707,962 1.11%
NEGOTIABLE CERTIFICATES OF DEPOSIT
- 0.00%
31,238,507 18.57%
- 0.00%
- 0.00%
642,349 0.17%
- 0.00%
- 0.00%
- 0.00%
- 0.00% 49,184,559 1.25%
BALANCES WITH OTHER BANKING INSTITUTIONS
2,974,933 1.64%
13,670,000 8.13%
- 0.00%
0 0.00%
- 0.00%
5,956,174 5.25%
- 0.00%
2,942,208 16.89%
15,526,507 6.62% 132,607,211 3.37%
LIABILITIES IN TRANSIT
- 0.00%
- 0.00%
- 0.00%
160,010 0.04%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
1,310,790 0.56% 1,470,801 0.04%
FOREIGN LIABILITIES
36,688,726 20.20%
18,980,883 11.28%
- 0.00%
3,927,321 1.09%
1,056,212 0.27%
2,794,727 2.47%
3,231 0.01%
- 0.00%
1,701,352 0.72% 267,190,856 6.78%
SECURITIES AND OTHER FUNDING LIABILITIES
- 0.00%
- 0.00%
914,390 7.21%
- 0.00%
42,959 0.01%
- 0.00%
- 0.00%
- 0.00%
3,555,832 1.52% 51,396,261 1.30%
CAPITAL AND RESERVES
19,720,776 10.86%
20,561,807 12.22%
4,274,228 33.73%
32,204,216 8.91%
53,204,639 13.72%
15,412,125 13.60%
12,980,693 32.93%
(10,331,10
1) -59.32%
32,460,092
13.83
% 430,859,171 10.94%
OTHER LIABILITIES
13,476,794 7.42%
8,745,929 5.20%
3,310,052 26.12%
11,310,273 3.13%
21,056,286 5.43%
12,835,044 11.32%
1,152,417 2.92%
8,424,957 48.37%
11,152,772 4.75% 275,749,976 7.00%
TOTAL ON-BALANCE LIABILITIES
177,509,291 97.73%
168,198,365 100.00%
12,673,506 100.00%
357,474,712 98.89%
327,546,415 84.47%
113,349,877 100.00%
37,830,662 95.96%
15,065,393 86.50%
207,254,336 88.31
% 3,760,991,367 95.49%
OFF-BALANCE SHEET ITEMS - LIABILITIES
4,118,300 2.27%
- 0.00%
- 0.00%
4,008,798 1.11%
60,231,265 15.53%
- 0.00%
1,594,198 4.04%
2,351,489 13.50%
27,432,858
11.69% 177,558,026 4.51%
TOTAL EQUITY AND LIABILITIES
181,627,591 100.00%
168,198,365 100.00%
12,673,506 100.00%
361,483,511 100.00%
387,777,680 100.00%
113,349,877 100.00%
39,424,860 100.00%
17,416,882 100.00%
234,687,194 100.0
0% 3,938,549,393 100.00%
74
APPENDIX 6 - STATISTICAL TABLES
TABLE 1C COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS 2011
MERCHANT BANKS GENESIS PREMIER
RENAISSANCE TETRAD
TOTAL (AVERAGE)
ASSETS USD USD USD USD USD
DOMESTIC NOTES AND COIN
4,308 0.13%
1,599,057 2.24%
359,604 0.36%
715,447 0.97%
2,678,417 1.07%
BALANCES WITH CENTRAL BANK
205,395 6.03%
7,309,616 10.25%
3,816,829 3.78%
538,926 0.73%
11,870,766 4.76%
BALANCES WITH DOMESTIC BANKING INSTITUTIONS
1,812 0.05%
887,706 1.24%
65,402 0.06%
11,952,307 16.22%
12,907,227 5.17%
ASSETS IN TRANSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
BALANCES WITH FOREIGN INSTITUTIONS
1,358 0.04%
(48,413) -0.07%
14,462,987 14.31%
155,286 0.21%
14,571,218 5.84%
SECURITIES AND INVESTMENTS
- 0.00%
11,873,225 16.65%
5,704,144 5.64%
- 0.00%
17,577,368 7.05%
LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES
1,955,819 57.40%
28,586,859 40.08%
44,786,577 44.31%
36,851,189 50.02%
112,180,444 44.97%
FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE)
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
REPOSSESSED PROPERTIES / ASSETS
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
FIXED ASSETS
581,105 17.06%
4,159,742 5.83%
2,802,439 2.77%
11,834,600 16.06%
19,377,886 7.77%
BSD - BS OTHER ASSETS
657,283 19.29%
3,932,819 5.51%
1,688,052 1.67%
8,831,129 11.99%
15,109,281 6.06%
TOTAL ON-BALANCE SHEET ASSETS
3,407,080 100.00%
58,300,612 81.74%
73,686,034 72.91%
70,878,883 96.21%
206,272,608 82.68%
OFF-BALANCE SHEET ITEMS
- 0.00%
13,026,451 18.26%
27,378,763 27.09%
2,791,399 3.79%
43,196,614 17.32%
TOTAL ASSETS
3,407,080 100.00%
71,327,063 100.00%
101,064,797 100.00%
73,670,282 100.00%
249,469,222 100.00%
EQUITY AND LIABILITIES
TOTAL DEPOSITS
1,647,675
33,861,897
31,013,176
53,389,166
119,911,915
DEMAND DEPOSITS
- 0.00%
17,848,895 25.02%
12,161,219 12.03%
6,141,189 8.34%
36,151,303 14.49%
SAVINGS DEPOSITS
379,659 11.14%
- 0.00%
- 0.00%
- 0.00%
379,659 0.15%
TIME DEPOSITS/FIXED DEPOSITS
1,268,016 37.22%
16,013,002 22.45%
- 0.00%
47,247,978 64.13%
64,528,996 25.87%
FOREIGN CURRENCY DEPOSITS
- 0.00%
- 0.00%
18,851,957 18.65%
- 0.00%
18,851,957 7.56%
NEGOTIABLE CERTIFICATES OF DEPOSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
BALANCES WITH OTHER BANKING INSTITUTIONS
- 0.00%
4,563,212 6.40%
16,822,541 16.65%
- 0.00%
21,385,753 8.57%
LIABILITIES IN TRANSIT
- 0.00%
- 0.00%
- 0.00%
- 0.00%
- 0.00%
FOREIGN LIABILITIES
- 0.00%
- 0.00%
12,571,429 12.44%
- 0.00%
12,571,429 5.04%
SECURITIES AND OTHER FUNDING LIABILITIES
- 0.00%
2,200,000 3.08%
- 0.00%
- 0.00%
2,200,000 0.88%
CAPITAL AND RESERVES
(2,139,622) -62.80%
9,986,191 14.00%
(18,624,588) -18.43%
13,613,878 18.48%
2,835,860 1.14%
OTHER LIABILITIES
3,899,026 114.44%
7,689,311 10.78%
31,903,477 31.57%
3,875,839 5.26%
47,367,653 18.99%
TOTAL ON-BALANCE LIABILITIES
3,407,080 100.00%
58,300,612 81.74%
73,686,034 72.91%
70,878,883 96.21%
206,272,609 82.68%
OFF-BALANCE SHEET ITEMS - LIABILITIES
- 0.00%
13,026,451 18.26%
27,378,763 27.09%
2,791,399 3.79%
43,196,614 17.32%
TOTAL EQUITY AND LIABILITIES
3,407,080 100.00%
71,327,063 100.00%
101,064,797 100.00%
73,670,282 100.00%
249,469,222 100.00%
75
APPENDIX 7 - STATISTICAL TABLES
TABLE 1D COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS 2011
BUILDING SOCIETIES CBZ BS CABS FBC BS ZB BS
TOTAL
(AVERAGE) POSB GRAND TOTAL /
AVERAGE
ASSETS USD USD USD USD USD USD USD
DOMESTIC NOTES AND COIN 2,605,373 2.40% 12,827,490 3.81%
779,769 2.37%
858,394
2.62% 17,071,026 3.34%
3,154,027 4.85% 279,028,625 5.86%
BALANCES WITH CENTRAL BANK 203,552 0.19% 1,147,759 0.34%
42,548 0.13% - 0.00% 1,393,859 0.27%
3,869,475 5.95% 383,528,155 8.05%
BALANCES WITH DOMESTIC BANKING INSTITUTIONS 5,721,480 5.27% 3,198,714 0.95%
385,892 1.17%
2,397,993 7.32% 11,704,079 2.29%
1,569,679 2.42% 128,401,363 2.70%
ASSETS IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 13,536,702 0.28%
BALANCES WITH FOREIGN INSTITUTIONS - 0.00% 189 0.00% - 0.00% - 0.00% 189 0.00% - 0.00% 357,340,816 7.50%
SECURITIES AND INVESTMENTS - 0.00% 51,315,640 15.26%
9,368,022 28.52%
9,978,658
30.45% 70,662,320 13.84%
10,410,426 16.02% 203,088,287 4.26%
LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 60,834,647 55.99% 195,576,510 58.16%
15,084,997 45.93%
13,526,424 41.28% 285,022,578 55.83%
39,772,716 61.20% 2,547,594,316 53.48%
FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 50,939,166 1.07%
REPOSSESSED PROPERTIES / ASSETS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00%
FIXED ASSETS 33,273,237 30.62% 65,604,470 19.51%
3,709,673 11.29%
5,465,160
16.68% 108,052,540 21.16%
3,146,881 4.84% 454,129,962 9.53%
BSD - BS OTHER ASSETS 6,014,967 5.54% 6,604,560 1.96%
3,474,262 10.58%
541,873
1.65% 16,635,663 3.26%
3,064,654 4.72% 125,206,690 2.63%
TOTAL ON-BALANCE SHEET ASSETS 108,653,256 100.00% 336,275,331 100.00%
32,845,162 100.00%
32,768,503 100.00% 510,542,253 100.00%
64,987,856 100.00% 4,542,794,084 95.37%
OFF-BALANCE SHEET ITEMS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 220,754,640 4.63%
TOTAL ASSETS 108,653,256 100.00% 336,275,331 100.00%
32,845,162 100.00%
32,768,503 100.00% 510,542,253 100.00%
64,987,856 100.00% 4,763,548,724 100.00%
EQUITY AND LIABILITIES
TOTAL DEPOSITS 27,842,840 223,029,510
11,216,939
12,269,620
274,358,909
51,815,249 3,047,803,163
DEMAND DEPOSITS 8,039,039 7.40% - 0.00% - 0.00% - 0.00% 8,039,039 1.57%
43,386,351 66.76% 1,818,142,861 38.17%
SAVINGS DEPOSITS 14,034,370 12.92% 90,425,049 26.89%
3,581,873 10.91%
5,336,305
16.28% 113,377,597 22.21%
656,303 1.01% 260,639,392 5.47%
TIME DEPOSITS/FIXED DEPOSITS 5,769,431 5.31% 132,604,461 39.43% - 0.00%
6,933,315 21.16% 145,307,207 28.46%
1,016,211 1.56% 842,884,981 17.69%
FOREIGN CURRENCY DEPOSITS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 62,559,919 1.31%
NEGOTIABLE CERTIFICATES OF DEPOSIT - 0.00% - 0.00%
7,635,066 23.25% - 0.00% 7,635,066 1.50%
6,756,384 10.40% 63,576,009 1.33%
BALANCES WITH OTHER BANKING INSTITUTIONS - 0.00% 8,005,478 2.38% - 0.00% - 0.00% 8,005,478 1.57% - 0.00% 161,998,442 3.40%
LIABILITIES IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 1,470,801 0.03%
FOREIGN LIABILITIES - 0.00% 20,000,000 5.95%
4,837,193 14.73% - 0.00% 24,837,193 4.86% - 0.00% 304,599,477 6.39%
SECURITIES AND OTHER FUNDING LIABILITIES - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 53,596,261 1.13%
CAPITAL AND RESERVES 33,886,742 31.19% 60,863,052 18.10%
14,216,095 43.28%
14,672,568
44.78% 123,638,457 24.22%
11,086,897 17.06% 568,420,384 11.93%
OTHER LIABILITIES 46,923,674 43.19% 18,752,258 5.58%
2,574,935 7.84%
5,826,315
17.78% 74,077,183 14.51%
2,085,709 3.21% 399,280,522 8.38%
TOTAL ON-BALANCE LIABILITIES 108,653,255 100.00% 330,650,298 98.33%
32,845,162 100.00%
32,768,503
100.00% 504,917,219 98.90%
64,987,856 100.00% 4,537,169,050 95.25%
OFF-BALANCE SHEET ITEMS - LIABILITIES - 0.00% 5,625,033 1.67% - 0.00% - 0.00% 5,625,033 1.10% - 0.00% 226,379,673 4.75%
TOTAL EQUITY AND LIABILITIES 108,653,255 100.00% 336,275,331 100.00%
32,845,162 100.00%
32,768,503
100.00% 510,542,252 100.00%
64,987,856 100.00% 4,763,548,723 100.00%
76
APPENDIX 8 - STATISTICAL TABLES
TABLE 2A
COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME 2011
Commercial Banks ABC Bank AGRIBANK BARCLAYS CBZ FBC IBC INTERFIN KINGDOM METROPOLITAN MBCA BANK NMB BANK ROYAL BANK
STANBIC STANCHART TN Bank TRUST BANK
ZABG ZB BANK TOTAL
(AVERAGE)
Interest Income 42,504,858.69 9,806,666.00 7,055,881.00 103,935,938.61 25,768,397.30 105,041.28 27,791,568.46 27,022,860.82 13,089,947.00 10,772,781.80 20,121,944.68 92,579.63 25,888,887.51 14,720,442.61 15,795,935.20 5,327,002.69 1,059,910.29 25,377,092.62 376,237,736.19
BSD-Interest
Income from Loans Advances and Leases
28,271,284.44 8,940,714.00 4,346,018.00 101,785,431.97 18,690,418.16 105,041.28 9,728,654.67 23,392,067.39 9,934,793.00 10,734,622.80 14,212,573.68 92,579.63 24,243,023.98 14,720,442.61 15,794,804.67 5,327,002.69 934,842.40 24,452,426.48 315,706,741.86
ZW-Interest Income on Balnces with
Banking Institutions
5,578,445.40 865,952.00 2,709,863.00 1,338,075.05 145,773.59 .00 .00 50,792.03 .00 9,835.00 1,097,573.00 .00 739,196.85 .00 1,130.53 .00 8,199.95 924,666.14 13,469,502.54
BSD-Interest Income On
Investments ans Securities
8,655,128.85 .00 .00 812,431.59 6,932,205.55 .00 18,062,913.79 3,580,001.40 3,155,154.00 28,324.00 4,811,798.00 .00 906,666.67 .00 .00 .00 116,867.94 .00 47,061,491.79
Interest Expense 22,785,661.81 4,691,087.42 2,149,762.00 34,117,984.63 11,167,740.98 495.76 17,188,152.59 12,002,278.30 4,906,770.00 2,840,089.00 8,256,236.48 304,202.10 546,884.69 113,586.77 6,184,967.10 2,624,125.69 946,930.07 8,375,774.37 139,202,729.78
BSD-Interest
Expense On Deposit Accounts
22,785,661.81 3,870,500.73 2,149,762.00 23,838,136.81 1,982,431.89 495.76 15,076,917.37 8,140,821.83 4,906,770.00 638,892.00 5,497,348.89 236,348.39 546,884.69 113,586.77 6,184,967.10 2,624,125.69 946,930.07 6,566,786.13 106,107,367.94
BSD-Interest
Expense On Central Bank Loans
.00 .00 .00 .00 .00 .00 .00 .00 .00 556,845.00 .00 .00 .00 .00 .00 .00 .00 .00 556,845.00
BSD-Interest On
Local banks Loans - Interbank Loans
.00 .00 .00 2,452,407.45 4,562,622.06 .00 .00 .00 .00 .00 1,497,733.00 14,193.71 .00 .00 .00 .00 .00 1,305,655.16 9,832,611.38
BSD-Other Interest
Expenses .00 820,586.69 .00 7,827,440.37 4,622,687.03 .00 2,111,235.22 3,861,456.48 .00 1,644,352.00 1,261,154.59 53,660.00 .00 .00 .00 .00 .00 503,333.08 22,705,905.46
Net Interest Income 19,719,196.88 5,115,578.58 4,906,119.00 69,817,953.98 14,600,656.32 104,545.52 10,603,415.87 15,020,582.52 8,183,177.00 7,932,692.80 11,865,708.20 -211,622.48 25,342,002.81 14,606,855.84 9,610,968.10 2,702,877.00 112,980.22 17,001,318.25 237,035,006.42
Total Provisions For Current Period
3,709,715.18 371,215.00 410,283.00 10,391,725.66 3,290,631.12 .00 4,532,494.43 4,764,055.09 293,152.19 -219,036.00 2,363,712.00 27,745.35 4,242,767.37 1,523,649.82 2,137,024.92 .00 761,292.47 2,649,117.89 41,249,545.49
BSD-Specific Provisions
3,709,715.18 .00 4,728.00 2,209,402.86 1,414,971.38 .00 .00 5,642,379.20 23,891.17 639,647.00 252,763.00 .00 3,659,449.14 245,142.00 2,391,634.62 .00 68,196.67 2,494,244.30 22,756,164.52
BSD-General Provisions
.00 371,215.00 405,555.00 8,182,322.80 1,875,659.74 .00 4,532,494.43 -878,324.11 269,261.02 -858,683.00 2,110,949.00 27,745.35 583,318.23 1,278,507.82 -254,609.70 .00 693,095.79 154,873.59 18,493,380.98
Net Interest after
Provisions 16,009,481.70 4,744,363.58 4,495,836.00 59,426,228.32 11,310,025.20 104,545.52 6,070,921.44 10,256,527.42 7,890,024.81 8,151,728.80 9,501,996.20 -239,367.83 21,099,235.44 13,083,206.02 7,473,943.18 2,702,877.00 -648,312.25 14,352,200.36 195,785,460.93
Non - Interest Income
16,912,859.25 14,868,622.00 34,735,275.00 35,144,116.05 17,678,391.07 665,902.84 7,652,558.97 18,803,209.01 7,170,287.00 10,666,234.00 13,263,995.67 337,793.09 31,005,842.09 50,867,294.82 4,693,008.52 2,618,987.66 5,819,217.09 24,344,336.72 297,247,930.86
BSD-Foreign
Exchange 3,877,179.29 .00 2,991,406.00 2,442,869.64 1,016,384.73 .00 .00 2,773,836.12 .00 2,343,463.00 30,584.00 .00 19,207,472.95 37,555,685.92 362,532.43 .00 .00 765,896.34 73,367,310.42
BSD-Fees and Commission
11,802,695.78 13,962,562.00 23,491,835.00 21,330,038.02 16,662,006.34 128,130.98 7,653,796.29 15,599,330.06 6,927,531.00 8,322,771.00 11,930,246.67 337,793.09 11,798,369.15 6,995,534.97 4,456,680.96 2,499,702.09 6,245,722.07 22,077,609.21 192,222,354.68
BSD-Other Non Interest Income
1,232,984.18 906,060.00 8,252,034.00 11,371,208.39 .00 537,771.86 -1,237.32 430,042.83 242,756.00 .00 1,303,165.00 .00 .00 6,316,073.93 -126,204.87 119,285.57 -426,504.98 1,500,831.17 31,658,265.76
Non - Interest
Expenses 21,991,936.38 19,128,868.00 36,741,203.00 58,449,911.94 22,590,847.85 377,774.62 17,273,024.03 28,124,518.70 11,772,008.00 14,899,805.80 17,228,972.00 4,656,420.91 37,188,053.90 35,732,550.44 10,618,411.72 9,721,643.75 10,535,970.45 30,141,038.57 387,172,960.05
BSD-Salaries and Employee Benefits
10,693,813.62 11,473,442.00 23,541,298.00 33,576,507.28 9,954,602.40 65,755.51 7,459,714.55 8,309,767.44 7,150,559.00 8,559,272.00 7,672,634.00 2,244,896.03 17,315,341.71 21,942,908.36 3,510,203.47 3,801,038.15 4,967,100.99 13,684,369.07 195,923,223.58
BSD-Occupancy -
Net of Rental 1,699,721.70 1,767,254.00 2,460,146.00 .00 1,018,801.30 17,789.60 2,236,799.08 1,956,166.43 637,163.00 1,498,130.00 1,613,582.00 414,304.64 .00 5,280,905.73 611,935.66 1,417,441.74 1,806,577.79 2,665,382.92 27,102,101.59
BSD-Other Non Interest Expenses
9,598,401.06 5,888,172.00 10,739,759.00 24,873,404.66 11,617,444.15 294,229.51 7,576,510.40 17,858,584.83 3,984,286.00 4,842,403.80 7,942,756.00 1,997,220.24 19,872,712.19 8,508,736.35 6,496,272.59 4,503,163.86 3,762,291.67 13,791,286.58 164,147,634.88
Net Non - Interest Income
-5,079,077.13 -4,260,246.00 -2,005,928.00 -23,305,795.88 -4,912,456.78 288,128.22 -9,620,465.06 -9,321,309.69 -4,601,721.00 -4,233,571.80 -3,964,976.33 -
4,318,627.82 -6,182,211.80 15,134,744.38 -5,925,403.20
-
7,102,656.09 -4,716,753.36 -5,796,701.85 -89,925,029.19
Income (Loss) before Taxation
10,930,404.58 484,117.58 2,489,908.00 36,120,432.44 6,397,568.43 392,673.74 -3,549,543.62 935,217.73 3,288,303.81 3,918,157.00 5,537,019.87 -
4,557,995.65 14,917,023.64 28,217,950.40 1,548,539.98
-4,399,779.09
-5,365,065.60 8,555,498.51 105,860,431.73
BSD-Taxation 2,769,275.56 .00 683,484.00 8,356,765.72 1,647,373.87 23,544.00 -2,061,251.77 347,825.19 846,738.00 562,681.00 1,542,497.00 -570,148.00 5,639,948.58 7,004,392.40 83,748.00 -91,821.75 -93,550.73 3,350,010.64 30,041,511.72
Net Income / (Loss)
after Taxation 8,161,129.01 484,117.58 1,806,424.00 27,763,666.72 4,750,194.56 369,129.74 -1,488,291.85 587,392.54 2,441,565.81 3,355,476.00 3,994,522.87
-3,987,847.65
9,277,075.06 21,213,558.00 1,464,791.98 -
4,307,957.34 -5,271,514.87 5,205,487.87 75,818,920.02
BSD-Extraordinary Items
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 66,998.50 0.00 0.00 66,998.50
Net Income / (Loss) 8,161,129.01 484,117.58 1,806,424.00 27,763,666.72 4,750,194.56 369,129.74 -1,488,291.85 587,392.54 2,441,565.81 3,355,476.00 3,994,522.87
-3,987,847.65
9,277,075.06 21,213,558.00 1,464,791.98 -
4,374,955.84 -5,271,514.87 5,205,487.87 75,751,921.52
``
77
APPENDIX 9 - STATISTICAL TABLES - continued
TABLE 2B COMPOSITION OF THE STATEMENT OF COMPEHENSIVE INCOME 2011
Merchant Banks
GENESIS PREMIER RENAISSANCE TETRAD TOTAL
(AVERAGE)
Interest Income 394,669.40 6,501,258.01 12,575,679.13 2,721,419.69 22,193,026.23
BSD-Interest Income from Loans Advances and Leases 385,920.30 5,500,610.32 12,251,154.20 2,721,419.69 20,859,104.51
ZW-Interest Income on Balances with Banking Institutions 8,749.10 661,811.63 .00 .00 670,560.73
BSD-Interest Income On Investments and Securities .00 338,836.06 324,524.93 .00 663,360.99
Interest Expense 234,573.80 3,850,581.00 4,612,795.19 1,590,056.85 10,288,006.84
BSD-Interest Expense On Deposit Accounts 234,573.80 3,812,456.15 4,612,795.19 1,590,056.85 10,249,881.99
BSD-Interest Expense On Central Bank Loans .00 .00 .00 .00 .00
BSD-Interest On Local banks Loans - Interbank Loans .00 38,124.85 .00 .00 38,124.85
BSD-Other Interest Expenses .00 .00 .00 .00 .00
Net Interest Income 160,095.60 2,650,677.01 7,962,883.94 1,131,362.84 11,905,019.39
Total Provisions For Current Period 434,598.95 2,467,847.60 16,780,732.93 -181,773.00 19,501,406.48
BSD-Specific Provisions .00 2,871,990.19 17,173,621.37 .00 20,045,611.56
BSD-General Provisions 434,598.95 -404,142.59 -392,888.44 -181,773.00 -544,205.08
Net Interest after Provisions -274,503.35 182,829.41 -8,817,848.99 1,313,135.84 -7,596,387.09
Non - Interest Income 282,437.10 2,541,690.00 1,610,254.10 1,233,773.65 5,668,154.85
BSD-Foreign Exchange .00 355,819.44 198,324.46 .00 554,143.90
BSD-Fees and Commission 24,105.86 2,185,870.56 1,519,888.71 1,233,773.65 4,963,638.78
BSD-Other Non Interest Income 258,331.24 .00 -107,959.07 .00 150,372.17
Non - Interest Expenses 2,538,504.42 8,419,580.18 10,596,982.46 1,631,454.06 23,186,521.12
BSD-Salaries and Employee Benefits 1,006,136.09 3,740,781.00 3,843,310.22 539,096.61 9,129,323.92
BSD-Occupancy - Net of Rental 417,651.18 1,022,348.66 859,548.17 82,355.88 2,381,903.89
BSD-Other Non Interest Expenses 1,114,717.15 3,656,450.52 5,894,124.07 1,010,001.57 11,675,293.31
Net Non - Interest Income -2,256,067.32 -5,877,890.18 -8,986,728.36 -397,680.41 -17,518,366.27
Income (Loss) before Taxation -2,530,570.67 -5,695,060.77 -17,804,577.35 915,455.43 -25,114,753.36
BSD-Taxation .00 -837,487.00 .00 .00 -837,487.00
Net Income / (Loss) after Taxation -2,530,570.67 -4,857,573.77 -17,804,577.35 915,455.43 -24,277,266.36
BSD-Extraordinary Items 0.00 0.00 0.00 0.00 .00
Net Income / (Loss) -2,530,570.67 -4,857,573.77 -17,804,577.35 915,455.43 -24,277,266.36
78
APPENDIX 10 - STATISTICAL TABLES TABLE 2C
COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME 2011
Building Societies CBZ BS CABS FBC BS ZB BS TOTAL (AVERAGE) POSB GRAND TOTAL
(AVERAGE)
Interest Income 6,654,478.21 33,138,816.00 3,368,207.00 1,838,165.52 44,999,666.73 8,122,572.30 451,553,001.46
BSD-Interest Income from Loans Advances and Leases
6,634,733.93 24,840,333.00 2,109,881.00 1,214,427.10 34,799,375.03 6,125,752.47 377,490,973.88
ZW-Interest Income on Balnces with Banking Institutions
19,744.28 .00 .00 21,945.59 41,689.87 .00 14,181,753.14
BSD-Interest Income On Investments ans Securities
.00 8,298,483.00 1,258,326.00 601,792.83 10,158,601.83 1,996,819.83 59,880,274.44
Interest Expense 1,488,309.57 14,117,652.00 1,097,629.58 384,381.24 17,087,972.39 2,274,808.17 168,853,517.17
BSD-Interest Expense On Deposit Accounts
216,272.42 13,198,588.00 908,771.58 384,381.24 14,708,013.24 2,274,808.17 133,340,071.33
BSD-Interest Expense On Central Bank Loans
.00 .00 .00 .00 .00 .00 556,845.00
BSD-Interest On Local banks Loans - Interbank Loans
1,272,037.15 .00 .00 .00 1,272,037.15 .00 11,142,773.38
BSD-Other Interest Expenses
.00 919,064.00 188,858.00 .00 1,107,922.00 .00 23,813,827.46
Net Interest Income 5,166,168.64 19,021,164.00 2,270,577.42 1,453,784.28 27,911,694.35 5,847,764.13 282,699,484.29
Total Provisions For Current Period
741,112.27 2,189,436.61 257,828.00 .00 3,188,376.88 669,480.74 64,608,809.59
BSD-Specific Provisions 319,631.34 1,858,309.61 257,828.00 .00 2,435,768.95 457,732.92 45,695,277.95
BSD-General Provisions 421,480.93 331,127.00 .00 .00 752,607.93 211,747.82 18,913,531.65
Net Interest after Provisions
4,425,056.37 16,831,727.39 2,012,749.42 1,453,784.28 24,723,317.47 5,178,283.39 218,090,674.70
Non - Interest Income 9,173,771.69 25,684,590.00 5,350,711.04 5,580,927.34 45,790,000.07 15,339,345.12 364,045,430.90
BSD-Foreign Exchange 27,018.95 .00 .00 .00 27,018.95 -176,730.46 73,771,742.81
BSD-Fees and Commission
7,135,703.97 21,113,470.00 3,615,241.04 5,181,856.79 37,046,271.80 15,505,482.58 249,737,747.84
BSD-Other Non Interest Income
2,011,048.78 4,571,120.00 1,735,470.00 399,070.55 8,716,709.33 10,592.99 40,535,940.25
Non - Interest Expenses 6,021,935.96 25,063,120.00 4,461,955.62 4,449,821.30 39,996,832.88 16,461,137.21 466,817,451.25
BSD-Salaries and Employee Benefits
1,175,134.03 9,853,611.00 2,618,153.00 1,993,791.20 15,640,689.23 7,066,598.27 227,759,834.99
BSD-Occupancy - Net of Rental
.00 -346,969.00 232,502.00 -106,935.88 -221,402.88 960,945.01 30,223,547.61
BSD-Other Non Interest Expenses
4,846,801.93 15,556,478.00 1,611,300.62 2,562,965.98 24,577,546.53 8,433,593.93 208,834,068.65
Net Non - Interest Income
3,151,835.73 621,470.00 888,755.42 1,131,106.04 5,793,167.19 -1,121,792.09 -102,772,020.35
Income (Loss) before Taxation
7,576,892.10 17,453,197.39 2,901,504.85 2,584,890.32 30,516,484.66 4,056,491.31 115,318,654.35
BSD-Taxation 40,753.53 .00 .00 .00 40,753.53 .00 29,244,778.25
Net Income / (Loss) after Taxation
7,536,138.57 17,453,197.39 2,901,504.85 2,584,890.32 30,475,731.13 4,056,491.31 86,073,876.10
BSD-Extraordinary Items 0.00 0.00 0.00 0.00 .00 0.00 66,998.50
Net Income / (Loss) 7,536,138.57 17,453,197.39 2,901,504.85 2,584,890.32 30,475,731.13 4,056,491.31 86,006,877.60
79
APPENDIX 11 - STATISTICAL TABLES
TABLE 2D COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS 2011
Commercial Banks
Building Societies
Merchant Banks
Discount House Savings Bank
GRAND TOTAL / AVERAGE
ASSETS USD USD
USD USD USD USD
DOMESTIC NOTES AND COIN 161,389,545.07 8.70% 7,044,257.10 4.51%
6,743,075.02 4.76% .00 0.00% 1,108,470.55 4.49% 176,285,347.74 8.06%
BALANCES WITH CENTRAL BANK 214,250,338.43 11.55% 6,583,950.16 4.21%
516,018.34 0.36% 8,047,034.25 90.82% 55,530.44 0.22% 229,452,871.62 10.50%
BALANCES WITH DOMESTIC BANKING INSTITUTIONS 13,586,168.37 0.73% 1,668,561.69 1.07%
4,588,071.06 3.24% 1,167.45 0.01% 809.00 0.00% 19,844,777.57 0.91%
ASSETS IN TRANSIT .00 0.00% 539,687.72 0.35%
.00 0.00% .00 0.00% .00 0.00% 539,687.72 0.02%
BALANCES WITH FOREIGN INSTITUTIONS 411,789,258.99 22.21% 2,346,157.70 1.50%
.00 0.00% .00 0.00% .00 0.00% 414,135,416.69 18.95%
SECURITIES AND INVESTMENTS 22,447,616.71 1.21% 21,670,630.55 13.86%
13,358,779.08 9.43% 11.90 0.00% 12,077,335.13 48.91% 69,554,373.36 3.18%
LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 566,441,608.70 30.55% 68,526,929.20 43.84%
28,006,636.82 19.78% .00 0.00% 6,003,533.91 24.31% 668,978,708.63 30.61%
FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) 17,136,074.92 0.92% .00 0.00%
.00 0.00% .00 0.00% .00 0.00% 17,136,074.92 0.78%
REPOSSESSED PROPERTIES / ASSETS .00 0.00% .00 0.00%
.00 0.00% .00 0.00% .00 0.00% .00 0.00%
FIXED ASSETS 226,273,676.19 12.20% 28,344,139.63 18.13%
83,547,528.18 59.00% 812,491.13 9.17% 3,582,629.66 14.51% 342,560,464.79 15.67%
BSD - BS OTHER ASSETS 23,727,634.90 1.28% 8,112,076.22 5.19%
4,835,831.74 3.42% .00 0.00% 1,866,417.98 7.56% 38,541,960.84 1.76%
TOTAL ON-BALANCE SHEET ASSETS 1,657,041,922.29 89.36% 144,836,389.96 92.66%
141,595,940.24 100.00% 8,860,704.73 100.00
% 24,694,726.67 100.00% 1,977,029,683.89 90.45%
OFF-BALANCE SHEET ITEMS 197,329,791.30 10.64% 11,475,044.87 7.34%
.00 0.00% .00 0.00% .00 0.00% 208,804,836.17 9.55%
TOTAL ASSETS 1,854,371,713.59 100.00% 156,311,434.83 100.00%
141,595,940.24 100.00% 8,860,704.73 100.00
% 24,694,726.67 100.00% 2,185,834,520.05 100.00%
EQUITY AND LIABILITIES
TOTAL DEPOSITS 1,224,437,668.00 70,552,496.15
45,238,479.95 .00 18,452,941.65 1,358,681,585.74
DEMAND DEPOSITS 684,615,599.15 36.92% 8,257,807.96 5.28%
1,658.79 0.00% .00 0.00% 13,702,214.61 55.49% 706,577,280.51 32.33%
SAVINGS DEPOSITS 342,245,119.58 18.46% 73.00 0.00%
31,197,002.87 22.03% .00 0.00% .00 0.00% 373,442,195.45 17.08%
TIME DEPOSITS/FIXED DEPOSITS 99,204,596.80 5.35% 54,191,828.52 34.67%
13,528,227.96 9.55% .00 0.00% .00 0.00% 166,924,653.29 7.64%
FOREIGN CURRENCY DEPOSITS 77,925,592.53 4.20% 8,102,786.66 5.18%
.00 0.00% .00 0.00% .00 0.00% 86,028,379.19 3.94%
NEGOTIABLE CERTIFICATES OF DEPOSIT 20,446,759.95 1.10% .00 0.00%
511,591.06 0.36% .00 0.00% 4,750,727.04 19.24% 25,709,078.04 1.18%
BALANCES WITH OTHER BANKING INSTITUTIONS 12,426,142.50 0.67% 7,669,721.44 4.91%
.00 0.00% .00 0.00% .00 0.00% 20,095,863.94 0.92%
LIABILITIES IN TRANSIT 2,330,829.90 0.13% 6,188.71 0.00%
.00 0.00% .00 0.00% .00 0.00% 2,337,018.61 0.11%
FOREIGN LIABILITIES 51,620,439.57 2.78% 12,274,291.08 7.85%
.00 0.00% .00 0.00% .00 0.00% 63,894,730.65 2.92%
SECURITIES AND OTHER FUNDING LIABILITIES 500,859.10 0.03% 36,649.57 0.02%
2,756,003.00 1.95% 288,120.03 3.25% 250,000.00 1.01% 3,831,631.71 0.18%
CAPITAL AND RESERVES 238,960,804.28 12.89% 45,217,338.78 28.93%
87,943,712.70 62.11% 8,193,042.25 92.46% 4,253,204.52 17.22% 384,568,102.53 17.59%
OTHER LIABILITIES 126,765,179.23 6.84% 9,079,704.71 5.81%
5,637,680.16 3.98% 379,542.44 4.28% 1,738,580.11 7.04% 143,600,686.66 6.57%
TOTAL ON-BALANCE LIABILITIES 1,657,041,922.59 89.36% 144,836,390.44 92.66%
141,575,876.54 99.99% 8,860,704.73 100.00
% 24,694,726.28 100.00% 1,977,009,620.57 90.45%
OFF-BALANCE SHEET ITEMS - LIABILITIES 197,329,791.70 10.64% 11,475,044.87 7.34%
20,064.00 0.01% .00 0.00% .00 0.00% 208,824,900.57 9.55%
TOTAL EQUITY AND LIABILITIES 1,854,371,714.29 100.00% 156,311,435.31 100.00%
141,595,940.54 100.00% 8,860,704.73
100.00
% 24,694,726.28 100.00% 2,185,834,521.14 100.00%
80
APPENDIX 12 - LIST OF REGISTERED AND OPERATING INSTITUTIONS
COMMERCIAL BANKS Total Assets: $USD
Banking Institution Address 2009 2010 2011
ABC Corp 1 Endevour Crescent, Mt. Pleasant Business Park, Harare
59,708,939.68 249,754,344.44 378,118,583.10
AGRIBANK 15th Floor, Hurudza House, 14 - 16 Nelson Mandela Avenue Harare
36,577,495.94 62,696,008.85 99,868,959.98
BARCLAYS Corner 1st Street/Jason Moyo Avenue Harare 187,167,003.00 231,654,428.00 281,596,325.36
CBZ Union House, 60 Kwame Nkuruma Avenue Harare 547,181,119.47 767,392,904.31 969,515,549.61
CFX* 14,771,579.14 - -
FBC FBC Centre, Nelson Mandela Avenue Harare 147,817,515.72 185,694,588 196,117,694.28
IBC Zimbank House, Cnr. 1st Street/Speke Avenue, Harare 294,990.55 960,361.79 1,883,927.09
INTERFIN Block 4, Tendeseka Park, Samora Machel Avenue 41,164,450.42 175,076,490.07 212,931,453.34
KINGDOM 12th Floor, Karigamombe Centre, 53 Samora Machel Avenue
88,992,285.41 150,953,080.17 150,521,536.73
MBCA Old Mutual Centre, 3rd Street/Jason Moyo Harare 97,610,868.09 163,813,381.18 181,627,589.83
METROPOLITAN Metropolitan House, 3 Central Avenue 31,584,410.94 65,502,106.76 107,471,677.48
NMB BANK 1st Floor, Unity Court, Kwame Nkurumah Avenue Harare
40,959,294.26 105,356,197.00 168,198,364.65
81
COMMERCIAL BANKS Total Assets: $USD
Banking Institution Address 2009 2010 2011
ROYAL** 8th Floor, Takura House, 67 Kwame Nkurumah Avenue - - 12,673,506.58
STANBIC Stanbic Centre, Samora Machel Avenue Harare 202,912,171.43 344,752,834.80 361,483,510.72
STANCHART 2nd Floor, Old Mutual Centre, Cnr. 3rd Street/Jason Moyo Avenue Harare
276,762,523.89 412,003,510.81 387,777,679.52
TN BANK 6th Floor, 101 Kwame Nkrumah Avenue Harare 22,131,735.78 49,351,006.37 113,349,876.30
TRUST** Trust Towers 56-60 Samora Machel Avenue Harare - - 39,424,860.45
ZABG 8th Floor, ZB Life Towers, 77 Jason Moyo Avenue Harare
21,391,313.95 16,670,604.24 17,416,881.86
ZB Bank Zimbank House, Cnr. 1st Street/Speke Avenue, Harare 78,508,466.34 155,029,277.92 234,687,194.10
Merchant Banks
GENESIS 2nd Floor, Corner House, Samora Machel Avenue 13,601,343.64 4,962,018.04 3,407,079.59
NDH* 5th Floor, MIPF House, 5 Central Avenue, Harare 2,530,330.29 - -
PREMIER Sam Levy's Office Park, Block A, Peirs Road, Borrowdale
30,933,277.58 53,136,450.14 71,327,062.91
RENAISSANCE Renaissance Park, Borrowdale Road 45,701,111.72 115,033,385.67 101,064,796.95
TETRAD 1st Floor, Building No. 5, Arundel Office Park Mt. Pleasant Harare
22,380,921.18 48,111,631.64 73,670,282.36
82
Building Societies Total Assets: $USD
Banking Institution
Address 2009 2010 2011
CBZ BS Beverley Place, Selous Avenue Harare 32,843,061.39 56,779,696.91 108,653,255.96
CABS Northridge Park, Northend Close Borrowdale Harare 85,976,157.55 181,576,230.00 336,275,331.48
FBC BUILDING SOCIETY
5th Floor, FBC Centre Nelson Mandela Avenue Harare 9,227,396.53 20,564,062.31 32,845,162.43
ZB BUILDING SOCIETY
6th Floor, Finsure House Cnr. Kwame Nkrumah/Sam Nujoma Harare
13,549,321.77 21,263,650.59 32,768,503.32
Discount House
Banking Institution
Address
DCZ* 70 Park Lane, Harare 8,860,703.73 - -
Savings Banks
Banking Institution
Address
POSB 6th Floor, Causeway Building Cnr. Third Street/Central Avenue Harare
24,694,726.67 48,649,738.22 64,987,856.04
* Institution closed
** Not yet operational
