Oliver Kazunga, Senior Business Reporter
STATE-owned Agricultural Development Bank of Zimbabwe (Agribank) says it is not going to review its interest rates upwards at a time when other banks are increasing the lending rate margins.
In an interview yesterday, Agribank chairman Mr Thomas Nherera said by maintaining the interest rates at prevailing levels this would impact positively on the bank’s operations as the institution will leverage on maintaining existing clients and cultivating new ones.
“We are not changing our interest rates as far as the bank is concerned. This will perhaps positively affect our operations because if our interest rates are maintained while others are changing (reviewing upwards), it means customers will go for lower interest rates,” he said.
Two weeks ago Government, through Statutory Instrument 142 of 2019, abolished the multi-currency system in Zimbabwe and replaced it with a local unit of account (RTGS$/ZWL$) for transacting purposes.
This prompted the Reserve Bank of Zimbabwe to immediately announce a raft of support measures to buttress and strengthen the local unit of account. Among these was the adjustment of interest rate on the Reserve Bank overnight window upwards from 15 percent per annum to 50 percent in line with international trends.
Mr Nherera said Agribank was maintaining interest rates at present levels as it enjoys good relations with its customers. The bank declared a US$5,5 million dividend to Government after recording a 63 percent growth in profit to $13 million in the year to December 2018, breaking away from the traditional trend of State entities mired in perennial losses.
The agricultural finance institution is owned 100 percent by the Government and is one among a few group of entities, including TelOne and the National Oil Company of Zimbabwe, making profits and declaring dividends to the shareholder.
The bank’s loan book growth also reflected expansion in the institution’s agricultural financing initiatives.
Growth in non-interest income was mainly due to increased transactions from the ICT delivery channels and electronic banking (E-channels).
On a year to date basis, the bank recorded a year to date profit of $4,6 million and above budgeted profit of $3,7 million, representing a positive variance of 23 percent. Agribank’s interest income at $10,2 million grew by 45 percent on a year-on-year basis driven largely by increased business loans towards the agricultural sector and related value chains.Total non-interest income at $14,5 million grew by 40 percent on a year-on-year basis due to more customer transactional volumes on the […]