Getbucks seeks Central Bank capitalisation reprieve

Listed financial services firm, Getbucks Microfinance Bank has approached the Reserve Bank of Zimbabwe (RBZ) for extension of the deadline for compliance with regulatory minimum capital requirements as it is unlikely to meet the December 31, 2021 timeline. 

The RBZ set a minimum capital level for deposit taking microfinance banks at US$5 million by end of December 2021. 

GetBucks joins other financial services providers like Steward Bank that have approached the regulator over minimum capital requirements after it emerged the bank’s ability to meet the regulatory requirement was in doubt and therefore was seeking other means to raise capital from shareholders. 

Getbucks Microfinance Bank’s Limited’s inflation adjusted regulatory capital was $192 million as at the end of the third quarter to September 30, 2021. 

Company secretary Wimbayi Chigumbu said shareholders would also pursue equity transactions to bridge the gap between the current capital levels and the new regulatory requirement. 

“However, given the limited amount of time until December 2021 it is unlikely that the regulatory capital will be met, and the regulator has been approached with a request to extend the deadline,” Mr Chigumbu said in a trading update for the third quarter. 

Despite the challenging business environment, GetBucks said it will leverage on its foreign currency dealership licence to broaden its foreign currency generating portfolio. 

Granted in August 2020, the dealership licence enables the bank to participate in the international banking segment offering a broader range of products while also increasing foreign currency transactional income.

“The institution will strategically look to increase it’s portfolio of foreign currency generating business leveraging on the authorised dealer licence,” said Mr Chigumbu. 

During the quarter under review, GetBucks attained $167 million in total income, representing a 123 percent increase on the $75 million total income attained in the same period in prior year. 

Profit after tax for the three-month period fell 49 percent to $17 million, which was lower compared to the $29 million for the comparative period as a result of the increase in the rate of inflation as the quarter progressed. 

The loan book closed off at $202 million compared to September 2020’s $69 million due to increased funding lines. 

The effects of the Covid-19 pandemic began to weigh off during this quarter resulting in improved loan sales and transactional volumes of the institution.

However, the easing of lock down measures increased business activity in the economy and with that, the economy began to see inflation going up because of the increased demand for foreign currency.

“The Zimbabwe dollar lost ground against the US dollar in the informal market during this quarter triggering an increase in the month-on-month inflation figures rising from 2,6 at the beginning of the quarter and ending at 4, 7 percent in September, bringing an end to relatively long periods of stability that had been enjoyed thus far, “ Mr Chigumbu said. – Herald