HARARE – Agriculture-focused financial institution, Agribank, recorded a $1,8 million profit in the five months to May 2017 from $460 203 prior comparable period, buoyed by income from Treasury Bills (TBs), an official said.
Agribank chief executive Sam Malaba yesterday told the institution’s shareholders that interest income from capitalisation TBs had contributed $753 014 to the five month profit as non-interest income also improved 15 percent to $7,3 million against a $6,4 million projection.
“The 289 percent profit before tax also came in light of a 126 percent increase in profit before interest on capital TBs to slightly over $1 million against a $463 203 budget,” Malaba told shareholders at the bank’s Annual General Meeting in the capital.
He also pointed out that the cost to income ratio for the period at 78 percent was below a projected 88 percent and the December 2016 industry average of 27 percent.
“Total assets increased from $203,9 million in December 2016 to $221 million in May 2017, representing a growth of 8,4 percent,” he said.
Agribank — which recorded a 14 percent Non-Performing Loan ratio in the year to 2016 — is also under heat from its shareholder to meet a five percent regulatory target amid indications government also wants the institution to cut staff costs from the present 36 percent of total revenue to at least 30 percent.
“Seeing as we retrenched about 20 percent of our staff last year, we are looking at generating additional income from our e-banking channels to offset this ratio,” Malaba said.
Meanwhile, government — Agribank’s main shareholder — said it was re-investing a $914 000 dividend declared for the year to December 2016 back into the company’s operations. Finance minister Patrick Chinamasa, who attended the meeting on behalf of the shareholder said the bank was anticipated to use the money in an e-banking drive which began last year.
“As part of efforts to upgrade the bank’s e-channels and drive income, Agribank will also be investing about $5 million in Information Communication and Technology (ICT) channels to contribute towards non-funded income and help drive the traditional non-interest income lines,” he said.
Presently, the bank has completed a hardware upgrade and is working on upgrading its core banking system.
“This will allow the bank to move from the current core banking system R11 to R17, together with the data migration.
“Therefore, the bank will include additional modules as part of the final phase of ICT Upgrade System,” Malaba said, adding the process was anticipated to be complete by year end.
In 2018, the bank will also work on additional models with upgrades expected to be done by half year 2018.