Zimbabwe News

Ecobank Zimbabwe declares $593 million dividend

The Chronicle

Business Editor
GIANT financial services group, Ecobank Zimbabwe Limited, has declared ZW$593 million dividend having maintained sound operations during the period ended December 2020 despite the adverse effects of the Covid-19 pandemic and inflationary pressures.

During the period under review Ecobank recorded inflation adjusted operating profit of ZW$6.4 billion compared to ZW$5.6 billion in prior comparable period. The bank’s balance sheet as of 31 December 2020 stood at ZW$41.1 billion largely driven by deposits of ZW$33.2 billion.

Total operating income grew by 19.2 percent from ZW$7 billion to ZW$8.3 billion mainly driven by non-interest income, which grew by 19.1 percent from ZW$5.7 billion in 2019 to ZW$6.8 billion in 2020.

“The directors are proposing a final dividend of ZWL$593 million to be paid to the shareholder registered on the books of the bank on 31 December 2020,” outgoing chairman, Mr Fortune Chisango, said in a statement accompanying the financial report.

According to the report, the bank was able to meet all its maturing obligations with core capital as of 31 December 2020 standing at ZW$4.3 billion (US$46.6 million).

Mr Chisango said the bank was adequately capitalised and is on course to meeting the minimum regulatory capital requirement of US$30 million or its local currency equivalence by 31 December 2021.

However, a net monetary loss of ZWL$4.8 billion was recorded for the period largely due to composition of the bank’s balance sheet that is dominated by monetary assets and liabilities. Profit before taxation decreased from ZWL$3.5 billion in 2019 to ZWL$1.7 billion in 2020.

The bank’s managing director, Mr Moses Kurenjekwa, explained that due to hyperinflationary cost push pressures, the business suffered a spike in costs by 39.4 percent from ZW$1.4 billion to ZW$1.9 billion.

“Additional costs came a result of the new costs introduced to meet compliance with Covid-19, operating requirements of Personal Protective Equipment (PPEs) and other attendant costs,” he said.

“Resultantly profit before tax declined by 52.8 percent from ZW$3.6 billion in 2019 to ZW$1.7 billion following adjustments for hyperinflation.

“The business will continue to explore ways to improve incomes and aggressively manage its costs under the current environment and maintain its cost to income ratio within the 20 percent range.”

Despite the Covid-19 setback, Ecobank has expressed hope for improved performance this year anchored on the anticipated bumper harvest and targeted mining sector growth, which will benefit the entire economy. As such, the bank said it was positioning itself to exploit the environment to identify opportunities and be adaptive to maintain an organic growth trajectory. This includes active participating in facilitating financing of critical and other essential imports.

Mr Chisango said the massive rollout of Covid-19 pandemic vaccines and relaxed lockdown measures by the Government bring optimism and hope of increased economic activity.

He also said the foreign currency auction system introduced last year in June remains critical to supporting a more efficient allocation of the foreign currency resources.

Going forward the bank plans to leverage more on its digital platforms and space to provide seamless service to all its market segments under the new normal.

As part of its corporate social responsibility initiatives, Ecobank has US$30 000 towards the procurement of 3 000 rapid test kits to the Ministry of Health and Childcare for the national Covid-19 response programme.

The bank also participated in the Bankers Association of Zimbabwe (BAZ) combined fundraising programme where it contributed ZW$555 555, among other partnerships that focused on running information roadshows in Harare and Bulawayo. Ecobank says it would continue to scale up use of modern technologies to enhance service delivery and play its role in championing health and education development interventions targeted at marginal areas that are more prone to national disasters.

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