THE newly-appointed ZB Financial Holdings CEO Shepherd Fungura says his immediate mission is to harden the group’s balance sheet as it seeks to expand beyond Zimbabwean borders to enhance its foreign currency generating capacity.
In an environment characterised by inflation, Fungura says guarding against value erosion is a major strategic imperative.
Laying out his key strategies for the bank as he takes over the reins at the company, whose banking division recently had major shareholder movements, Fungura said the strategy will be achieved through investing in assets that will outperform inflation and ensure value preservation.
“Towards this end, balance sheet hardening is one of the major strategies I will pursue, and this will be achieved mainly by investing more in hard assets, including land and real estate and equities, rather than monetary assets,” Fungura said.
“These assets have better ability to track or out-perform inflation, and hence ensure value preservation. It also helps that in the outlook the country’s inflation profile is forecast to continue to improve.
“Over and above balance sheet hardening, the group will also seek to expand beyond Zimbabwean borders in order to enhance its foreign currency generating capacity thus diversifying from the relatively less stable local currency.”
This comes as the bank turned full circle in its recovery from sanctions administered by the Office of Foreign Assets Control (Ofac), which were lifted in 2016. One of the banks’ major success stories has been re-establishing correspondent banking relationships in Europe, China and South Africa.
“Resultantly, the bank has been able to not only mobilise offshore lines of credit but has also re-introduced Visa and is at an advanced stage of re-introducing MasterCard to the market,” Fungura said.
He pointed out that the major setback in the transition has been that some residual effects of Ofac listing remained for a while, for example, some potential international partners continued to associate ZB with Ofac listing.
The bank is also aiming to maintain its non-performing loans (NPLs) below 5% as it stresses on having quality underwriting processes in place.
As of June 30, 2021, the NPL ratios for the bank and the group were 0,27% and 0,68% respectively, which are both within the regulatory benchmark of 5%.
“Although as a financial institution we do not only lend against security, but viability, it is nevertheless essential to have tangible security in place to cover borrowings. Having security in place is also important in as much as it reduces provisioning,” he said.
Five years ago, ZB received in excess of US$18 million in Treasury Bills from the Zimbabwe Asset Management Corporation in respect of its NPLs. – Zim Ind