AFRASIA ZIMBABWE HOLDINGS LIMITED
The macro-economic fundamentals have largely shown a downward trend resulting in a revision in the GDP forecast. The economy has suffered general liquidity challenges and the financial services sector has not been spared. The liquidity issues have been further amplified by the absence of a lender of last resort and a very tame interbank market.
To set the foundation for AfrAsia Bank Zimbabwe Limited’s (ABZL) recovery efforts, the Group embarked on a major rationalization programme aimed at stabilizing the business, focusing on cost containment, optimizing resources and identifying growth opportunities in a challenging environment. This streamlining of operations is on-going and has resulted in a reduction of the branch network with five branches having closed.
For the future outlook, the Group will continuously monitor progress and remains ready to respond to any emerging challenges and opportunities in the economy.
ABZL successfully embarked on a reassessment exercise of its non-performing loan (NPL) book. Currently with one of the cleanest books in the banking sector, the Bank has improved its risk management processes, strengthened the Board oversight on lending policy and revamped internal policies. Focus going forward is strictly on secured lending targeting various growth sectors of Zimbabwe’s economy.
ABZL was not spared from the harsh economic conditions that prevailed during the period under review. The persistent liquidity shortages created challenges in meeting customer cash requirements, and hampered creation of interest earning assets. The Bank incurred a loss after taxation for the period under review of USD 5.2m compared to a loss after taxation of USD 20.2m reported for the eighteen months ended 30 June 2013. Despite making the loss, the Bank managed to reduce the impairment loss on loan and advances from USD 23.5m reported for the eighteen months ended 30 June 2013 to the current year figure of USD 2.1m. The Group’s strategic cost containment measures managed to release USD 8.3m in cost savings during the year.
During the period under review AZHL has kept its stakeholders updated on developments within the Group mainly through engagement and communiqués. There has been some targeted media focus as well.
We have embarked on a plan to raise long term funding to resolve the liquidity challenges in a decisive manner. These involve a combination of equity sourcing, sale of assets and issuance of bonds and similar type instruments. We are expecting these initiatives to come to fruition in the next 6 months.
In view of the financial performance of the Zimbabwe operations, AfrAsia Bank has prudently provided for an amount of MUR 325m in the financial year 2013-2014.