TOTAL banking sector deposits in Zimbabwe increased by 5.2 percent to $5.9 billion as at end of June this year, the Reserve Bank of Zimbabwe (RBZ) said yesterday.
Presenting the Mid-Term Monetary Policy statement, the central bank Governor, Dr John Mangudya, said since the introduction of a multi-currency system in February 2009, bank deposits have been on an upward growth trajectory growing from $705,76 million as at June 30, 2009 to close to $6 billion.
“Total banking sector deposits increased by 5.2 percent to 5.9 billion as at June 30, 2016, from $5.6 billion as at December 31, 2015,” said Dr Mangudya.
He indicated that demand deposits constituted 50,75 percent of the total deposits as at June 30, 2016 followed by time deposits at 22,33 percent.
Interbank deposits constituted 12,50 percent, savings deposits were at 5,84 percent while foreign and other deposits constituted 5,20 percent and 3,37 percent respectively.
“During the period January to June 2016, however, the banking sector was exposed to cash shortages largely as a result of macro-economic challenges facing the country, including lack of fiscal space and the current account deficit,” he said.
Dr Mangudya said during the period under review, the banking sector average prudential liquidity ratio stood at 52.47 percent and was above the regulatory minimum requirement of 30 percent.
“Eighteen banks were compliant with the prudential liquidity ratio as at 30 June 2016. Notwithstanding the high average prudential liquidity ratio, the banking sector has been experiencing cash challenges.
“The worsening trade deficit and an inclination towards holding and externalising physical cash have continued to drain cash from the economy, and the adverse effects are transferred to the banking sector manifesting in cash shortages at banking institutions,” he added.
In response to liquidity constraints, Dr Mangudya said the Reserve Bank adopted a number of policy measures to ameliorate the cash challenges including importing cash, the promotion of the usage of plastic money as well as the use of other currencies within the multi-currency basket and cash withdrawal limits.
“Banking sector loans and advances declined from $4 billion as at 30 June 2015 to $3.7 billion as at 30 June 2016, largely as a result of cautious and prudent lending measures by banking institutions in response to the operating environment that requires banks to contain foreign exchange induced demand pressures attributable to lending activities,” said the Governor.
He said the disposal of non-performing loans to the Zimbabwe Asset Management Company (Zamco) had also significantly contributed to the reduction in the banks’ loan portfolios.
Dr Mangudya said lending to individuals, manufacturing and agriculture continued to dominate the banking sector loan portfolio during the first half.
On Non-Performing Loans, he said, there has been an improvement to 10.05 percent as at 30 June 2016, from 10.82 percent as at December 31, 2015.
In terms of capitalisation, the banking sector’s aggregate core capital increased by 5.80 percent from $982.50 million as at 31 December 2015 to $1.04 billion in the first half on the back of improved earnings performance.
Chronicle (Zim Papers)