Banking deposits grow

Published: 02 July 2014
TOTAL banking deposits have marginally improved to $4,82 billion as of March 31, 2014 from $4,73 billion last year, the Reserve Bank of Zimbabwe has said.

In a report for the quarter ending March 31, 2014, the central bank said the macro-economic environment has been characterised by the widening current account balance on the back of progressive expansion in imports against static exports, low aggregate demand, low industrial capacity utilisation and limited inflows of foreign direct investment as well as limited foreign lines of credit.

The above macro-economic constraints and institution-specific deficiencies, RBZ said translated into challenges that affect banking institutions performance in respect of capitalisation, asset quality, earnings performance and liquidity.

"As at March 31, 2014 banking sector deposits amounted to $4,82 billion whilst loans and advances were $3,64 billion, translating into loans to deposits ratio of 78,03 percent.

"Banks lending portfolio continue to be skewed towards consumptive lending," said the monetary authorities.

By the end of the first  quarter, demand deposits accounted for 57,92 percent of the total banking deposits.

The Reserve Bank highlighted that the financial services sector remained generally stable despite the challenges such as transitory deposits, limited inter-bank trading, general market illiquidity and limited lender of last resort function.

"The prevailing macro-economic environment translated into low capitalisation of banking institutions, high cost of funding; limited credit creation, liquidity constraints and rising non-performing loans," it said.

It said credit risk remains one of the most significant challenges facing the banking sector.

The central bank reviewed that a number of banking institutions were compliant with the minimum capital requirements.

"The remaining non-compliant banks are instituting various measures towards compliance."

It said the banking sector was generally profitable with 16 out of 21 operating institutions (including the savings bank), recording profits for the quarter ended 31 March 2014.

During the period under review, the banking sector remained profitable with an aggregate net profit of $20,47 million up from $0,47 million during the corresponding period in 2013.

A few banking institutions with a combined market share of only 8,14 percent in terms of assets were facing liquidity and solvency challenges and these were considered to be of low systemic importance.

"The Reserve Bank continues to closely monitor these institutions," said RBZ.
- The Herald
Tags: Banking, RBZ,

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