FINANCIAL Services giant ABC Holdings Limited has conceded that currency reforms are yet to yield results as the country continues to witness heavy devaluation of the local currency and hyperinflationary conditions.
The firm is a subsidiary of Atlas Mara with operations in banking in seven sub-Saharan African countries. The firm, which operates Banc ABC in Zimbabwe says the volatile exchange rate stemming from high public debt has exerted some difficulties on its operations.
Government has tabled the transitional stabilisation programme aimed at ushering in fiscal and currency reforms to achieve economic stability. However, ABC Holdings feels the authorities' efforts are yet to be felt.
"In most countries, the central banks and governments are trying to stimulate economies by pursuing accommodative monetary and fiscal policies. In general, due to adverse movements in balance of trade and high public debt, exchange rates have been under some pressure, although depreciation, so far, has been relatively moderate with some interventions except for Zimbabwe, which has depreciated steeply," the bank's chairman Livingstone Gwata said in a statement accompanying financial results for the period ended June 30.
Zimbabwe is currently saddled with a $9 billion public debt that has had ripple effects on the economy, while the Zimbabwean dollar has also plunged against the US dollar since its re-introduction earlier this year.
It is now trading at US$1:ZWL$15 on the interbank market.
"Economic vitality in Zimbabwe persisted during the period, resulting in a rapid rise in inflation. For the first time since 2008, Zimbabwe is set to register a contraction in GDP due to persistent foreign currency and fuel shortages as well as the impact of drought. A number of economic reforms have been introduced to address the unfolding economic imbalances which saw the country introducing its own local currency in June 2019, the Zimbabwean dollar. The positive effect of these reforms is yet to be seen and in the meantime the country continues to witness hyperinflation conditions and heavy devaluation of the local currency," Gwata said.
Despite a weakening currency and rapid inflation pegged at 176% as at end of June, Banc ABC recorded a net profit of $62 million during the half year period ended June 2019 against $4 million first half last year. This growth was on the back of strong dealing activities, supported by strong balance sheet management in an inflationary environment.
The principal source of the bank's funding, net interest income grew from $12,3 million to $19,3 million during the period under review.
The bank's balance as shown via cash and cash equivalents was pegged at $123,9 million from $34 million during the prior year.
Banc ABC said the bulk of the bank's lending was at variable rate lending to reduce interest rate risk, an approach adopted as a result of scarcity of term deposits in the market, which limits the bank's ability to build a substantial and stable pool of fixed rate and long-term funding.
Total assets grew to $1 billion from $511,9 million, whereas liabilities were $901,3 million from $432 million in the prior period.
- newsday
Concern over Masvingo black market 
Kenya declares three days of mourning for Mugabe 
UK's Boris Johnson quits over Brexit stretegy 
SecZim licences VFEX 
Zimbabwe abandons debt relief initiative 
European Investment Bank warms up to Zimbabwe 
Young Investment Professional (YIP) Graduate Programme 2019 
Young Investment Professional (YIP) Graduate Programme 2019
Editor's Pick