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#Zimbabwe banks’ profits jump 48%

Banks’ net profit for the half-year to June jumped 47,99% to US$100 million from US$67,97 million reported in the same period las year, the central bank said.

By Chris Muronzi

In his monetary policy statement presented on Wednesday, Reserve Bank governor John Mangudya said net profits amounted to US$100,59 million, representing an increase of 47,99%, from US$67,97 million reported in the corresponding period in 2016.

He said 18 out of 19 operating banking institutions in the country reported profits in the same period.

“To ensure sustainable profitability, banking institutions should implement adaptable business models which are sufficiently solid and resilient over time, by further interrogating their value chains, with a particular focus on efficiency enhancement initiatives,” he said.

The average prudential liquidity ratio for the banking sector of 66,87% as at 30 June 2017 was above the regulatory requirement of 30%. The graph shows the trend in the banking sector average prudential liquidity ratio since March 2014.

“The average prudential liquidity ratio for the banking sector of 66,87% as at 30 June 2017, was above the regulatory requirement of 30%,” he said.

“The high average prudential liquidity ratio is largely reflective of the cautious lending approach adopted by banking institutions especially under the context of foreign exchange shortages. Lending exacerbates the demand for forex.”

Mangudya said despite the high average prudential liquidity ratios recorded across the sector, the banking sector continued to experience underlying shortages of US dollar cash.

“The cash constrains are a manifestation of the structural challenges facing the economy, including the high fiscal recurrent expenditures, particularly employment related costs, which result in increased demand for cash,” he said.

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