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Harare - Zimbabwean banks recorded significant growth in profitability for the first quarter to March 31 2014, after the Reserve Bank of Zimbabwe (RBZ) removed the interest rate cap that had affected profitability in the year 2013.
According to the RBZ’s first-quarter report to March 2014, Zimbabwean banks reported a profit of US$20.4m up from the $4.46m made the whole of last year.
Last year Zimbabwean banks operated under a memorandum of understanding (MOU) with the central bank that put a cap on lending rates and bank charges.
The MOU - which came into effect on February 1 2013 - required, among other things, that lending rates be capped at 12.5%, above each respective bank’s weighted average cost of funds.
The institutions were also ordered to charge up to 0.5% of cash withdrawal amount subject to a minimum charge of $2.50 while ledger fees, maintenance and service fees would cost up to $4 per account.
The MOU was, however, cancelled with effect from December 1 2013. Its removal has seen banks earn huge profits with a total of 16 operating banking institutions recording profits for the quarter ended 31 March 2014.
Credit risk remains a worry
Credit risk has, however, remained with the average ratio of non-performing loans to total loans increasing to 16.96% as at March 31 2014, up from 15.92% as at December 31 2013.
“This trend is partly a reflection of macroeconomic challenges that have militated against borrowers’ ability to service loans,” said the RBZ.
- Fin24
According to the RBZ’s first-quarter report to March 2014, Zimbabwean banks reported a profit of US$20.4m up from the $4.46m made the whole of last year.
Last year Zimbabwean banks operated under a memorandum of understanding (MOU) with the central bank that put a cap on lending rates and bank charges.
The MOU - which came into effect on February 1 2013 - required, among other things, that lending rates be capped at 12.5%, above each respective bank’s weighted average cost of funds.
The institutions were also ordered to charge up to 0.5% of cash withdrawal amount subject to a minimum charge of $2.50 while ledger fees, maintenance and service fees would cost up to $4 per account.
The MOU was, however, cancelled with effect from December 1 2013. Its removal has seen banks earn huge profits with a total of 16 operating banking institutions recording profits for the quarter ended 31 March 2014.
Credit risk remains a worry
Credit risk has, however, remained with the average ratio of non-performing loans to total loans increasing to 16.96% as at March 31 2014, up from 15.92% as at December 31 2013.
“This trend is partly a reflection of macroeconomic challenges that have militated against borrowers’ ability to service loans,” said the RBZ.
- Fin24
