CHAIRMAN’S STATEMENT
Operating Environment:
For the half year to 30 June 2022, the major issues in the domestic operating environment continued to be instability in the exchange rate regime and worsening inflation profile. The local currency depreciated by 237.1% against the USD from US$1: ZW$108.67 on 1 January 2022 to US$1: ZW$366.27 on 30 June 2022 – the local currency depreciated the most in Q2 2022, by 157.2%, from US$1: ZW$142.42.
Meanwhile, year on year inflation averaged 103.2%, whilst month on month inflation averaged 14.3%, between January 2022 and June 2022. Although the annual inflation outturn for the half year to 30 June 2022 improved from the comparative period in 2021, it is worth noting that, where in the same period in prior year annual inflation was on a downward trajectory, in 2022 year on year inflation is actually on an upward trajectory, and monthly inflation is now in double digit. Aside from the currency depreciation, the worsening inflation profile was also impacted by the pass-through effects from rising global inflation occasioned by the Russia-Ukraine war, which resulted in rising international commodity prices.
A great improvement was recorded in COVID-19 cases during the period under review, with the worst of the pandemic seemingly being behind us now. Business operations were conducted at near full capacity, as the economy continues to recover from outbreak of the Corona virus.
Group Performance:
For the six months ending 30 June 2022 the Group posted inflation adjusted net earnings after taxation of ZW$6.069bn, an increase of 165% over the prior year comparative period whilst in historical cost terms the net earnings after taxation increased by 2 001% to ZW$20.370bn. This performance was underpinned by growth in inflation adjusted total assets of 13% to ZW$124.811bn (31 December 2021: ZW$110.538bn) and in historical cost terms total assets grew by 135% to ZW$116.961bn (31 December 2021: ZW$49.850bn). The financial performance is discussed in greater detail by the Group Chief Executive in his report.
Capital Requirements:
As at 30 June 2022, all Group companies, with the exception of ZB Building Society, were in compliance with prescribed minimum capital requirements. The Group is finalising on options available to address the capital adequacy challenges at ZB Building Society, which are expected to be completed by 31 December 2022.
Dividends:
The Board has declared an interim dividend of ZW77.18 cents per share for the period ending 30 June 2022. A separate dividend notice will be published to this effect.
Compliance & Regulatory Issues:
The Group has dealt with the majority of the governance issues which were the subject of a Corrective Order issued by the Reserve Bank of Zimbabwe (RBZ) on 7 March, 2017 and reviewed in March 2018. The Group has made its submissions to RBZ and it awaits the lifting of the order upon satisfactory review.
Directorate:
Mrs. E. N. Mungoni was appointed as Group Finance Director with effect from 1 January 2022. I wish her success in this new role.
Outlook:
The domestic economy is projected to maintain the growth momentum in 2022 and beyond. The Government of Zimbabwe has projected 2022 GDP growth of 4.6%. Growth is expected to be underpinned by higher output in the accommodation and food services (tourism), mining, manufacturing, and construction sectors of the economy.
The Group’s strategic priority for the remaining months of 2022 is to continuously seek ways to preserve its capital from inflation-induced value erosion. In addition, a significant focus will be targeted at completing the sprints of the Organizational Transformation Programme with the goal of making happy customers through the provision of service excellence; and also enhancing group performance outturn.
Conclusion:
I wish to extend my appreciation to all our valued stakeholders, for the continued support to the ZBFH Group. I would also like to express my gratitude to the Board, Management and Staff, for their collective contributions to the notable performance despite a challenging operating environment.
P. Chiromo
Chairman
30 August, 2022
