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Zimbabwe income declines
Victoria Mtomba, NewsDay
August 30, 2013

http://www.newsday.co.zw/2013/08/29/zimbabwe-income-declines/

The past few weeks have seen most banks reporting their half-year financial results.

While banks have generally performed better than other economic players, a binding memorandum of understanding (MOU) capping interest rates and bank charges has largely been criticised for declining margins.

Several banks, ZB Bank, FBC Bank, CBZ Bank, MBCA, Ecobank and BancABC, released their half-year financial statements.

The statements showed that interest income for some of the banks increased, but at low levels. FBC Holdings’ total income increased to $36,8 million from $36,7 million. The net fee and commission income rose to $11,5 million from $11,3 million.

FBC Holdings chief executive officer John Mushayavanhu said the increase was weighed down by the mandatory reduction of bank charges and interest margins as stipulated in the MOU signed between the banking sector and the central bank.

The bank recorded a reduction in fee income, commission income as well as interest income because there was a cap on the maximum rate that the banks could charge. Mushayavanhu said had it not been for the MOU, the bank would have recorded another $2,5 million in interest income, net fee and commission income.

“The MOU provides for regular review, we will discuss with the authorities. We will be giving the central bank our recommendations,” Mushayavanhu said.

CBZ Holdings net interest income, rose to $43,9 million from $41,4 million.

CBZ Holdings chairman Luxon Zembe said: “This sluggish performance lies in the severe decline in net investment in the productive sectors, weak medium-term export growth prospects and internal macroeconomic resource imbalances resulting from a growing public debt.

“The financial services industry in particular has been negatively affected by a declining deposit base coupled with the impact of the adoption of the memorandum of understanding on bank charges.”

Ecobank chairman David Whatman said in a statement accompanying the group’s results lending rates have fallen as a result of a decrease in the rate of inflation as well as the impact of the MOU on banks and interest rates.

CABS managing director Kevin Terry said the impact of the MOU to the building society was minimal since most of the society’s charges were still below the MOU threshold.

ZB Financial Holdings company executive head business development manager Shadowsight Chiganze said the bank was not affected by the MOU.

The Bankers’ Association of Zimbabwe chief executive officer Sijabulison Biyam declined to comment on the matter.

“We should hold fire, these issues are sensitive,” he said.

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