Introduction:
The Group’s primary financial results are adjusted for inflation in terms of International Accounting Standards (IAS) 29 – Financial Reporting in Hyperinflationary Economies.
Historical cost financial results have been issued for information purposes only.
Performance Outturn:
The Group recorded a 29.8% decline in total income from ZW$4.128bn for the period to 30 June 2020 to ZW$2.897bn for the comparable period to 30 June 2021. The decline in revenue performance was mainly underpinned by a 67% decrease in fair value credits, from ZW$1.571bn in 2020 to ZW$0.519bn in 2021 and an 80% decline in other operating income from ZW$1.706bn in 2020 to ZW$0.336bn in 2021.
Net interest income rose by 148.6%, from ZW$0.366bn in 2020 to ZW$0.909bn in 2021, whilst banking commissions and fees also rose in real terms by 115.6%, from ZW$0.533bn in 2020 to ZW$1.15bn in 2021. Loan impairment charges to the income statement rose from ZW$0.164bn in 2020 to ZW$0.256bn in 2021.
Net insurance related earnings rose from ZW$0.116bn in 2020 to ZW$0.239bn in 2021, on the back of a favourable claims experience. Gross premiums increased by 18.4% from ZW$0.592bn in 2020 to ZW$0.701bn in 2021, whilst there was a 3.1% decrease in insurance related expenses from ZW$0.477bn to ZW$0.462bn during the same period.
Operating costs increased by 73.5% from ZW$1.180bn in 2020 to ZW$2.048bn in 2021, largely as a result of the catch-up adjustment on the cost base in tandem with the inflation profile.
The cost to income ratio improved from 84% in 2020 to 71% in 2021. The Group continues to monitor the sustainability of its operations, especially in light of continued upward pressure on the cost base exerted by the inflationary environment.
Profit from ordinary activities declined by 71.2% from ZW$2.948bn in 2020 to ZW$0.849bn in 2021. An increased transfer to the life fund of ZW$0.226bn, compared to ZW$0.028bn in 2020 was made, underpinned by sustained strong performance of the underlying assets.
The Group earned ZW$0.357bn as its share of profits reported by its associate companies for 2021, compared to a loss of ZW$0.234bn in 2020. The share of profits from associates continues to be driven mainly by the revaluation of investment properties which constitute the bulk of the assets at a significant listed investee entity.
The Group posted a net profit of ZW$0.785bn in 2021, representing a 66.2% decline from the ZW$2.320bn attained in 2020.
Meanwhile, the Group’s total assets increased by 25.4% in real terms, from ZW$22.903bn as at 31 December 2020 to ZW$28.711bn as at 30 June 2021.
Deposits and other related funding account balances grew by 45.8%, from ZW$8.578bn as at 31 December 2020 to ZW$12.510bn as at 30 June 2021.
The Group maintained a comfortable liquidity margin of safety, with the ratio of liquid assets to customer deposits being 65.44% as at 30 June 2021, down from 78.9% reported on 31 December 2020. This compares favourably against a regulatory benchmark of 30%.
The Group’s total equity increased by 8.3%, from ZW$9.7bn as at 31 December 2020 to ZW$10.484bn as at 30 June 2021, driven mainly by the positive performance for the period.
Operations Review:
Banking Operations:
ZB Bank Limited posted a profit of ZW$0.506bn for the six months to 30 June 2021, 66.4% down from ZW$1.504bn in the corresponding period in 2020. This was mainly on the back a 72.7% increase in operating expenses from ZW$0.976bn in 2020 to ZW$1.686bn in 2021.
The Bank’s total assets stood at ZW$19.769bn as at 30 June 2021, from ZW$15.006bn as at 31 December 2020. ZB Building Society posted a profit of ZW$0.066bn in 2021, 73% down from ZW$0.243bn in 2020. The Society’s total assets stood at ZW$1.639bn as at 30 June 2021, from ZW$1.35bn as at 31 December 2020.
The banking operations have continued to leverage on established strategic partnerships to drive performance and will widen this base going forward.
Insurance Operations:
ZB Reinsurance Limited posted a profit of ZW$0.1bn for the first six months in 2021 compared to ZW$0.266bn in the corresponding period 2020. Its total assets increased in real terms from ZW$1.013bn as at 31 December 2020 to ZW$1.129bn.
The company has maintained good relations with its cedants and retrocession partners.
ZB Life Assurance Limited posted a profit of ZW$0.21bn in the first six months to 30 June 2021, compared to ZW$0.09bn in the corresponding period in 2020. Its total assets increased in real terms from ZW$3.93bn as at 31 December 2020 to ZW$4.378bn as at 30 June 2021.
The company has rolled out interesting products including the funeral service facility, which is being offered as an add-on to its bouquet of services.
Other Strategic Operations:
The Group, through its investment banking unit, ZB Capital (Private) Limited, continues to offer fund-raising and advisory services to a wide range of partners, including but not limited to Government, State-Owned Enterprises and the private sector.
Internal Processes:
The Group is progressing the digitalisation agenda in order to enhance its operational efficiencies and most importantly, offer improved service delivery to its customers.
Appreciation:
I would like to express my appreciation to our valued customers for their continued support.
I also extend my gratitude to staff and the management team for their contributions to the performance outturn during this review period.
Finally, I remain grateful to the Board for its invaluable oversight.
S. T. Fungura
Group Chief Executive
15 September, 2021
