AFC Commercial Bank, (formerly Agribank), tax-free profit soared 1,086 percent to $ 569 million (historic terms) in the year through December 2020, thanks to improved revenue from the electronic banking and the growth of the loan portfolio.
The exceptional performance saw the bank declare a dividend of $ 191.6 million for the fiscal year ended December 31, 2020.
This dividend underlines that the bank is one of the few most successful parastatals that continue to provide shareholder returns.
Net interest income increased 790% to $ 281.8 million from $ 31.7 million in terms of historical costs. The loan portfolio increased during the period under review, reflecting the expansion of support to the agricultural sector.
“The bank’s loan portfolio grew 632% from $ 268.4 million to $ 2 billion as it continues to pursue prudent asset growth, with asset quality a key priority.” , the bank said in a statement Tuesday.
Non-interest income increased remarkably 802% in terms of historical costs to $ 496.3 million from $ 54.9 million the previous year. This growth is explained by the increase in transaction volumes on digital banking platforms, supported by increased investments in our digital infrastructure. .
Total revenue from electronic channels and point-of-sale (POS) machines accounted for 40% of total non-interest revenue. This remains an axis of growth for the bank.
Other operating income increased 1,232% in terms of historical costs to $ 657.9 million from $ 49.4 million the previous year.
The growth in other income was mainly driven by foreign currency fair valuation gains and fair valuation gains on investment properties and unlisted equities.
Total operating profit was $ 1.4 billion in terms of historical costs, representing an 877% growth over the previous year.
Inflation-adjusted operating income closed the year in December 2020 at $ 1,994 billion, compared to $ 1,396 billion in 2019. Inflation-adjusted profit before tax for 2020 was 238.9 million, compared to a loss of $ 1,854 billion in 2019. For the period January to May 2021, the bank posted a net profit of $ 308 million, well above budget.
The performance was mainly driven by significant growth in the loan portfolio, resulting in more interest and similar income.
The bank said total operating expenses for the year were $ 747.2 million in terms of historical costs, representing an annual growth of 753% from the previous year.
âThe Covid-19 pandemic has created a new normal of extraordinary cost pressures for the bank in 2020. The 2020 Covid-19 pandemic has forced the bank to refocus its resources in the short term, but the main priorities of the bank continued to stimulate business, âthe bank said.
As costs increased, the bank’s cost-to-income ratio improved further to 53% from 61% the previous year. The staff costs / income ratio for the year remained at 22% compared to the previous year.
AFC said the bank had therefore surpassed the 30 percent shareholder target for state-owned enterprises. Sustained cost containment also helped the bank achieve profitability. The bank’s statement of financial position at $ 8.7 billion in terms of historical costs recorded a significant growth of 472% in assets over the previous year.
This growth is supported by continued customer support, which reflects the continued consolidation of the AFC brand in the market.
Non-performing loans decreased to 1.38% as of December 31, 2020 from 3.70% as of December 31, 2019.
Customer deposits ended the year at $ 3.6 billion, an increase of 526% from 2019 in historical terms.
The liquidity ratio closed the year at 60 percent and well above the Reserve Bank of Zimbabwe (RBZ) minimum regulatory requirement of 30 percent, confirming the banking institution’s strong liquidity management .
Gross loans and advances stood at $ 4.1 billion in the interval to May 2021, roughly 100% above the December 2020 position.
The loan / deposit ratio was 67.4% as of May 31, 2021 against a budget of 49.1% and compared to the sector average as of December 31, 2020 of 39.5% according to the RBZ monetary policy statement of February 2021.
The capital base in historical terms currently stands at $ 602.7 million, well above the minimum capital requirement of $ 25 million set by RBZ, with the goal of reaching the equivalent of $ 30 million for Tier 1 banks by December 31, 2021.