Interest caps hit POSB income

POSB’s net interest income declined by 9,84% to $11,02 million in the financial year ending December 31, 2017, which it blamed on the interest caps put in by the central bank last year.


Net interest income is the main source of revenue for a bank.

At POSB’s annual general meeting for the year ending December 31, 2017 held yesterday in Harare, POSB chief accounting officer, Garainashe Changunda attributed this decline to the 12% per annum interest cap on loans.

“I would attribute this to the interest caps,” he explained.

“You will recall the cap was set at 12% per annum and, because of that, we could not originate loans at a rate higher than 12%.

“In the previous years, we had products that had a significant yield, but because of the cap, our rate was confined to 12% or lower.”

The decline in the net interest income was from $12,23 million recorded in the 2016 comparative period.

POSB then adopted a strategy of lending less to corporates and more to individuals.

In February 2017, the Reserve Bank of Zimbabwe capped interest rates at 12%.

The decline in the net interest income forced POSB to implement cost containment measures and generate revenue growing strategies to grow the bottom line.

This strategy led to a slight uptick in profit after tax of $11,36 million for the period under review from $9,67 million recorded over the same time frame in 2016.

“The positive performance is largely due to the introduction of new products and new delivery channels, as well as full utilisation of existing products.

“Furthermore, the bank continued to implement cost containment, as well as revenue generating strategies as to grow the bottom line,” POSB chief executive officer, Admore Kandlela said.

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