Leading financial services institution, Stanbic Bank has shrugged off the adverse effects of the COVID-19-induced lockdowns to post an inflation adjusted profit after tax of ZWL 5.2 billion for the year ended 31 December 2021, up 185 % from the ZWL 1.8 billion in the prior year.
The impressive set of results by The Standard Bank Group of South Africa subsidiary also saw it achieve a profit of ZWL 7.4 billion under the historical cost accounts, outpacing the prior period of ZWL3.2 billion.
In a statement accompanying the results, Stanbic Bank Chairman, Gregory Sebborn said the bank ended the year with a core capital of ZWL11.3 billion, up from ZWL3.8 billion in 2020. This equates to USD 103.7 million against the regulatory minimum of the local currency equivalent of USD30 million.
“The outlook remains somewhat uncertain due to currency instability, the COVID-19 pandemic and the growing inflationary pressures. However, the bank will continue to ensure that strategies are in place to mitigate the possible negative effects of these factors,” said Sebborn.
Stanbic Bank Chief Executive, Solomon Nyanhongo said the year 2021 was a difficult one on account of the COVID-19 pandemic which saw blanket lockdown conditions being introduced in the first two months of the year as the number of infections soared. The lockdown conditions had an adverse impact on the level of business activity in the first quarter of the year.
However, the subsequent mild relaxation of lockdown conditions contributed positively to the recovery of the economy as most businesses were now able to operate with minimal disruptions, as the country’s vaccination level improved.
Nyanhongo said this also contributed significantly to the bank’s positive performance which saw the 2021 inflation adjusted net interest income surge by 206% from ZWL2.7 billion in 2020 to ZWL8.1 billion, largely underpinned by the improved growth in the bank’s average interest earning assets from ZWL11.7 billion to ZWL34.1 billion as new lending assets and financial investments were acquired.
The Bank recorded a 72% increase in its net fee and commission income, growing from ZWL4.2 billion in 2020 to ZWL7.3 billion.
“The relaxation of the lockdown conditions led to the uplift in the volumes of transactions which were passing through our various service channels. However, the persistent foreign currency shortages on the foreign currency market impacted negatively on the level of trading activity resulting in depressed trading revenue,” said Nyanhongo.
The 2021 inflation adjusted credit impairments improved from ZWL1.2 billion in the prior period to ZWL320 million, largely supported by the strong recoveries which were recorded during the period on the Bank’s financial assets.
Nyanhongo said Stanbic’s inflation adjusted operating expenses grew by 3% from ZWL8.6 billion in 2020 to ZWL8.9 billion. This growth was largely driven by the once off costs which were incurred as the Bank completed its staff optimization project.
“This was compounded by the impact of exchange rate movements on our foreign denominated operating expenses which include, among others, licence fees, data lines, insurance and franchise fees. The Bank’s customer deposit base grew on a historical cost basis from ZWL35.5 billion in 2020 to ZWL91.8 billion largely underpinned by the uplift in our foreign currency deposits combined with the increase in money supply,” said Nyanhongo.
Sebborn noted that the global economy continues to recover, despite the ongoing COVID-19 pandemic. The global economy is expected to grow by 4.9% in 2022 driven by an active vaccine policy and firming commodity prices.
He said the Zimbabwean economy is also positioned to benefit from the growing trade prospects arising from the positive global economic outlook. The Zimbabwean economy grew by an estimated 6% in 2021 buoyed by a good rainfall season which resulted in improved agricultural output.
The growth momentum is expected to progress into 2022, with forecasts ranging from 3% (IMF) to 5% (Government). Mining and agriculture are envisaged to be the key growth drivers during 2022.
“Notwithstanding the positive GDP outlook for 2022, we remain cautious of the following potential business risks: Erratic rains which could reduce productivity for non-irrigated crops; The COVID-19 pandemic, especially given that the nation’s vaccination levels stand at below 25% of the population; Currency instability caused by excessive money creation but manifesting in hyperinflation and a dislocation between the foreign currency auction rate and parallel rates, as well as inefficiencies on the foreign currency auction system, leading to external payments backlogs; Longer power cuts due to frequent breakdowns at the thermal power plants.” Said Sebborn.
He noted that annual inflation, which had decelerated to 50.2% in August 2021, has been creeping upwards since then, reaching 60.7% by December 2021. The resurgence of inflationary pressures indicate that value and capital preservation will remain critical in the outlook period.
Nyanhongo said Stanbic Bank believes that a better community will be built if every member of society commits to helping the community.
To that end, Stanbic Bank continued to support members of the community with diverse needs such as educational support (be it construction of school blocks, bursaries, tuition or fees); health support, contributing to environmental awareness, among many others.
In 2021, the Bank continued to support the Albino Charity Organization of Zimbabwe’s (“ALCOZ”), as their needs remain critical because the beneficiaries greatly depend on the skin protection soaps and lotions for their day-to-day activities.
“We supported ALCOZ with 1 000 units of each of the following necessities: sunscreen lotions, antiseptic soaps, antiseptic liquid, sunhats and lip balms…Education remains key for sustainable social investment, therefore, in addition to our ongoing bursary program for tuition fees and laptops, we partnered Africa University to support five more students from their university. We are looking at adding more primary and secondary students countrywide. Furthermore, the construction and furnishing of a block of two classrooms at Nyarutombo Primary School in Muzarabani was completed. Toilets and a borehole to serve both the school and the community were also part of this development as we contributed in assisting the school to achieve examination centre status, relieving Grade Seven students from the current 20 km walk to the nearest examination centre,” said Nyanhongo.
Other beneficiaries included St Mary’s Mission in Wedza ( borehole, 10 000 litre tank and solar pumping system); Nyamuzuwe Waiting Mothers’ Home project in Mutoko in
efforts to further reduce infant and maternal mortality rates’; refurbishment of
one theatre at Sally Mugabe Central Hospital Maternity ward. The theatre is now fully equipped with the equipment requested by the hospital to help with Caesarean deliveries.
“We also donated a dialysis machine to Gwanda Hospital in Matebeleland North, which was in dire need of one after their solitary machine had become unreliable due to frequent breakdowns.”
Nyanhongo paid tribute to the Stanbic staff who remained resilient and dedicated to excellent service delivery.
“As always, I am humbled by the resilience and dedication of the Blue Bankers as they remained steadfast in ensuring the delivery of excellent customer service in the midst of increasing turbulence. The health and safety of our staff members remains key as the Bank continues to invest in hybrid working environments in an effort to minimise the spread of the deadly pandemic,” said Nyanhongo.
