CHAIRMAN’S STATEMENT
Environment
Macroeconomic conditions remained difficult in 2013, owing to the slowdown in economic activity, with the under-performance of the real sectors being reflected in the rising number of company closures and job losses. While in quantitative terms, Gross Domestic Product (GDP) increased at a decreasing pace in 2013, registering an estimated real growth of 3.4%,(2012: 10.6%), this did not translate into a noticeable upturn in economic activity and an improvement in liquidity in the economy.
On the back of the depreciating value of the Rand relative to the United States Dollar and diminishing aggregate demand, as a result of acute domestic liquidity shortages, inflation remained generally low in 2013, averaging 1.64% year-on-year.
The economy also endured a slowdown in the annual growth of money supply, from 21.09% in January 2013 to 3.29% in December 2013, reflecting the absence of fiscal space and meaningful capital inflows by way of export earnings, credit lines and foreign direct investment.
Outlook
In the outlook period, full implementation of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET) is expected to provide some growth impetus to the economy, particularly in agriculture, mining and quarrying, Information and Communication Technology (ICT), construction, SMEs and real estate sectors.
However, this should be premised on the availability of funding mechanisms, which should help to improve the liquidity conditions in the economy. The full assumption of the role of lender of last resort by the Reserve Bank of Zimbabwe will also assist in stabilizing and strengthening the financial sector.
The Group’s Performance
The Group posted a disappointing profit for the year of $0.9 million (2012:$10.9 million).
This was due to a reduction in income which was not met by a commensurate decrease in costs. The decline in income was partly due to management’s deliberate decision not to increase the lending book. This was done to curb the increase in the loans to deposit ratio which was restricted to 61%.
The Memorandum of Understanding concluded between the Reserve Bank of Zimbabwe (RBZ) and the Bankers Association of Zimbabwe had a significant impact on the Group’s revenues derived from banking commissions and charges.
The Group has embarked on a group wide cost cutting exercise, benefits of which will be more visible in the future.
The performance is discussed in more detail by the Group Chief Executive Officer in his report.
Future Prospects
The Group welcomes measures taken by the RBZ to defer the requirement for a capital level of US$100 million for commercial banks to the year 2020. Consequently, the Group has strategically slowed down the search for new equity partners in order to avoid the possibility of a dilutive transaction at unfavorable prices. It is also hoped that the approach will give ample opportunity for the Group to engage with parties that will deliver strategic value to the business.
The merger of the Group’s banking operations stalled on account of technical issues and the need to expose the relative valuations to detailed scrutiny. The transaction is now expected to be concluded before the end of the first half of 2014.
Material issues
The Company and its subsidiaries continue to be listed as Specially Designated Nationals (SDNs) by the Office of Foreign Assets Control (OFAC) of the United States of America’s Treasury Department.
The legal matter in which Transnational Holdings Limited has been challenging the acquisition of Intermarket Holdings Limited by ZB Financial Holdings has remained pending.
Acknowledgement
The Board and I would like to thank Mr. Elisha Mushayakarara, our longstanding Group Chief Executive, who retired from the Group on 31 May, 2013. Mr. Mushayakarara served the Group with distinction. We wish him well in his retirement and success in his new endeavours.
Mr. Ronald Mutandagayi, the former Managing Director of ZB Bank was appointed Group Chief Executive on 1 June, 2013. The Board welcomes Mr. Mutandagayi to his new position and acknowledges his efforts in the seven months he has been in office. The Board wishes him a long and successful career with the Group.
Sadly, during the year the Group lost its Executive Head of Human Resources and Training, Mrs Pumla Simela Ncube, who passed on in October, 2013. The Board and all at ZBFH remember Mrs Simela Ncube with much fondness and recognise her contributions to the Group.
Ms Iris Chirisa, an IT Consultant, was appointed to the Board in December 2013. The Board welcomes Ms Chirisa to the Group.
On behalf of the Board, I would like to thank management and staff for remaining steadfast in a tough economic environment.
I also wish to thank all our business stakeholders and authorities for their continued support.
Finally, I would like to thank all the directors in the Group for their commitment and wise counsel during the year.
B P Nyajeka
Chairman
24 March, 2014
