Publications
Partners
Harare - The non-performing loans ratio for Nedbank’s Zimbabwean unit has declined to 2.9%, in a struggling economy where job losses have forced other banks to write off crucial values from their balance sheets.
Nedbank has majority control of and operates the MBCA Bank in Zimbabwe, and is among two South African banks in the country. The other SA bank in Zimbabwe is Standard Bank, while Standard Chartered, EcoBank and Barclays make up the remainder of Zimbabwe's regional and international banks.
However, according to Charity Jinya, managing director of MBCA, Nedbank has adopted stricter lending measures to keep its non-performing loans ratio lower.
This comes as the Reserve Bank of Zimbabwe has set up a state asset management company, geared to take over non-performing loans from distressed companies in a bid to cleanse their balance sheets of toxic assets.
“We have adopted various measures to contain bad loans and defaults, which have enabled us to have a non-performing loan ratio of 2.92% which is significantly lower than the market average of 14.52% as at June 30 2015,” Jinya said in emailed responses to questions.
The country’s banking industry is grappling with loss of confidence, with the stuttering economy having tipped into deflation. Finance Minister Patrick Chinamasa and the major international finance institutions have since revised the country’s economic growth outlook to 1.5% for this year.
Jinya said measures taken by MBCA to manage non-performing loans include “continuous improvement of our internal credit processes, regular reviews of lending facilities to align with developments in the market as well as introducing products that align” with customers’ borrowing needs.
Other companies, such as Atlas Mara’s BancABC, are considering writing off huge amounts loans which have not been repaid for the Zimbabwean market. Nedbank said the loan book for its Zimbabwean unit is being reviewed on a monthly basis, to ensure that adequate provisions are made to tackle potential defaults.
Officials at MBCA said measures taken by the Finance Ministry in Zimbabwe have helped boost stability in Zimbabwe's banking sector. These include recapitalisation of the RBZ to the tune of US$110; the government's assumption of Reserve Bank debt of $1.35bn to free up the central bank’s balance sheet; and resumption of the lender of last resort facility by the issuing of debt-backed securities.
Zimbabwe ditched its own currency in 2009 and adopted a multi-currency regime hedged against the US dollar. However, said Jinya, the post dollarisation period brought with it some non-performing loans for the industry.
The sector has been rocked by bank collapses in the past few years, with banks such as Allied Bank and Interfin closing down.
