ZB Financial Holdings Faces Challenges Amid Tight Monetary Policies

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Harare,– Leading financial services group, ZB Financial Holdings (ZBFH), has expressed concerns over the impact of stringent policy measures on its credit creation capacity. Despite this, the group is implementing robust strategies to ensure stability and growth.

In April 2024, Reserve Bank of Zimbabwe (RBZ) Governor, Dr. John Mushayavanhu, introduced a series of measures, including a structured currency system aimed at curbing inflation and stabilizing the exchange rate. However, these measures have also posed challenges for financial institutions.

Presenting the group’s performance for the year ending December 31, 2023, ZBFH Acting Chairperson, Agnes Makamure, noted that although economic conditions, such as inflation and exchange rates, improved in the latter half of the year, credit creation remained constrained.

“This was mainly attributable to the tightening of monetary policy by the Central Bank, which curtailed speculative behavior in the market. On the other hand, the downside of a tight monetary stance was the deceleration of credit creation due to liquidity challenges,” Makamure said.

She explained that this situation negatively affected the group’s funded income performance and reversed some of the foreign exchange gains recorded earlier in the year. Additionally, the economy saw increased use of the US dollar across all sectors, which boosted ZBFH’s USD revenues.

These observations align with those of other economic stakeholders, who have reported declining demand in the economy due to tight liquidity conditions. There are growing calls for monetary authorities to implement measures to address this slowdown.

Despite the challenges, ZB Bank Limited posted a significant profit after tax of ZW$366.751 billion in 2023, up from ZW$68.464 billion in 2022. The bank’s total assets rose to ZW$2.168 trillion by the end of 2023, from ZW$911.032 billion the previous year.

Similarly, ZB Building Society recorded a profit after tax of ZW$60.907 billion in 2023, an increase from ZW$21.492 billion in 2022. Its total assets grew to ZW$156.069 billion from ZW$85.256 billion over the same period. During the year, the Banking Cluster advanced its project to upgrade its core banking system, which will continue into FY2024.

“Although the economic environment is likely to remain challenging in 2024, characterized by high levels of inflation, exchange rate volatility, and climatic changes, particularly the effects of El Niño, the Group is confident that its strategies will help navigate these conditions. This includes implementing effective front-end systems, promoting brand equity, and continuing our mantra of creating happy people,” added Makamure.