Cash Shortage have led to minimized borrowing from customers which in turn led to the decrease in net earnings from lending and trading activities by 15%, from US$17.5 million to US$14.8 million, ZB Financial Holdings has revealed.
According to the Group Chairman. Ronald Mutandagayi’s financial report for the year ended 31 December 2017, cash shortages have led to a decreased use of cash and promoted the use of ‘plastic money.
“Banking fees, commissions and other income increased by $6.2m, from $35.3m to $41.5m. This was driven by the increased usage of the electronic banking platforms and the resultant increase in commissions on electronic transactions.
“This was the silver lining to the cash shortages in the country which led to a decreased use of cash and promoted the use of ‘plastic money.
“This shortage of cash, however, led to minimized borrowing from customers which in turn led to the net earnings from lending and trading activities decreasing by 15%, from $17.5 million to $14.8 million.
“This was after taking account an impairment charge of $3 million. Lending activities (interest on loans) are the traditional revenue earner for banks, not non-funded income and the Chief Executive acknowledged this, ‘he said.
Meanwhile, the group’s net profit after tax for the year ended 31 December 2017 was up 36%, from $11.4 million recorded in 2016 to $15.5million which Mutandagayi said was as a result of the strong performance of non-funded income.
“This impressive increase was as a result of the strong performance of non-funded income, otherwise known as fees and commissions or bank charges.
“However, if the impairment charge of $3m is set aside, net income and related income (gross interest income less related interest expenses) increased by 6%, from $16.7m to $17.8m.
“This was despite the gross income decreasing by 10%. The net income interest increased because the related interest expenses decreased by 35%,” he said.