ACTING CHAIRMAN’S STATEMENT
Operating Environment:
During the half year to June 2023, the domestic economy recorded mixed fortunes, especially when performance is considered on a quarter-on-quarter basis: Q1 2023 witnessed significant power shortages and load-shedding, with the power situation improving noticeably in Q2 2023 following increased power generation capacity from Hwange Power Station units 7 and 8.
The Zimbabwean Dollar (ZW$) depreciated by 38.5% during Q1 2023, opening at 1:671.4466 to the US Dollar on 3 January 2023, to end at 1:929.8618 at 31 March 2023. In Q2 2023, the ZWL depreciated by a much wider margin of 515.5%, opening the quarter at 1:932.4874 on 3 April 2023, and ending the quarter at 1:5739.7961 on June 2023. On a year to date basis, the ZWL depreciated by 754.8% up to 30 June 2023.
Meanwhile, inflation was generally high at the beginning of the first quarter, with annual inflation recorded at 101.5% in January 2023. However, commencing February 2023 the authorities ceased publication of ZWL inflation and adopted “blended inflation” on the basis that a larger proportion of transactions (more than 70%) were now being conducted in USD. Annual inflation eased to 92.3% in February 2023 and ended the quarter at 87.6% in March 2023. As the exchange rate depreciated, inflation worsened in Q2 2023, with year-on-year blended inflation opening the quarter at 75.2% in April 2023 and ending at 175.7% in June 2023. In fact, in June 2023 officially recorded inflation reached hyperinflationary levels at 74.5% month-on-month movement.
During the half year to June 2023, the monetary authorities maintained a tight monetary policy stance, characterised by tight liquidity management, ostensibly to support exchange rate and price stability. In as much as this remains a very noble stance, its downside is the curtailing of credit creation, resultantly skewing banks’ performance towards non-funded income as interest income falls.
Group Performance:
The Group’s operations continued to be sustainably profitable, posting a profit after tax (PAT) of ZW$678.459bn, 2179% improvement from same period last year. The Group’s profit performance is discussed in greater detail in the Group Chief Executive’s report.
Capital Requirements:
As at 30 June 2023, all Group companies, with the exception of ZB Building Society, which is currently under consolidation process with ZB Bank and Intermarket Banking Corporation were in compliance with prescribed minimum capital requirements.
Dividends:
The Board has declared an interim dividend of ZW488.47 cents and USD0.00001 cents per share for the half year ended 30 June 2023. A separate dividend notice will be published to this effect.
Sustainability and Environmental, Social, and Governance (ESG) Reporting
The Group’s strategy and operations are underpinned by sustainability principles. The Group is one of 14 financial institutions in Zimbabwe which are seeking sustainability certification through the Reserve Bank of Zimbabwe (RBZ)-led Sustainability Standards Certification Initiative (SSCI). SSCI certification will be awarded by the European Organisation for Sustainable Development (EOSD). This is discussed in greater detail in the GCEO’s Statement.
Tied to the Group’s sustainability drive, the Group has made progress towards adopting Environmental, Social and Governance (ESG) Reporting. External consultants, Institute of Sustainability Africa (INSAF) have been engaged to assist the Group implement ESG Reporting, with a target of fully incorporating ESG Reporting by FY2023.
Directorate:
Mrs. Pamela Chiromo (Former Chairman) and Mr. Jacob Mutevedzi retired from the ZBFH Board with effect from 30 June 2023. I would like to extend my gratitude and appreciation to them for their distinguished service to the Group and wish them success in their future endeavours.
Mr. Luxon Zembe was appointed as the ZBFH Acting Board Chairman with effect from 30 June 2023.
Outlook:
The Group will continue to develop strategic business partnerships with real sectors of the economy, enhance sustainable revenue streams, especially foreign currency revenues, and take advantage of investment opportunities in order to preserve its capital position against possible loss of value from currency depreciation.
The Group will also continue to consolidate on one stop shop Service Centres, as a market differentiator in delivering distinctive quality service to customers. In the short term, prudent investment and cost containment measures will continue to be a priority in order to boost profitability. In the medium to long term, the Group continues with its digitalization journey with more focus on implementing robust and state of the art core banking and Life Assurance systems in order to enhance efficient products offerings that provide value and convenience to our customers.
Conclusion:
I would like to express my continued appreciation to our valued customers, shareholders and other key stakeholders, without whom the Group would not have been able to sustain its operations. My gratitude also goes to Board colleagues, Management and Staff, whose collective contributions culminated in the commendable performance for the half year period to 30 June 2023.
Luxon Zembe
Acting Chairman
31 August, 2023
