TN Bank is to cut back on aggressive lending in recognition of the prevailing liquidity crunch and focus on improving non-funded income lines in a bid to grow revenue streams.
Report by Kudzai Chimhangwa Non-funded income is derived from deposit, transaction fees and monthly account service charges among others.
Zimbabwe’s banking sector has been accused of discouraging savings through high bank charges, leading to many people opting to keep their money out of the formal financial system.
However, cabinet recently issued the central bank governor Gideon Gono a directive to take action on exorbitant interest rates and bank charges being levied on customers.
TN Bank chief executive officer George Nyashanu said the recently de-merged TN Bank Limited would leverage on synergies availed by the strategic partnership with telecommunications company, Econet Wireless.
“We are implementing strategies to improve branch performance, and also looking forward to an upward trajectory in commissions earned from Ecocash transactions,” he said, adding that 38% of the 1,6 million registered Ecocash users in Zimbabwe preferred using TN Bank.
“The strategic focus will now be on increasing non-funded income lines such as launching ATMs for Ecocash products and the upgrading of the TN Cash card this year,” said Nyashanu.
Nyashanu said Zimbabwe’s volatile financial environment compelled the board and management to adopt a cautious approach to lending but would only continue in areas of strategic value.
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Loan to deposits ratio should ease off in the second quarter of the year and this should improve the liquidity position, he said.
“Lending to the corporate sector will not be as aggressive, but we will continue to engage strategic partners in this area. Up to 70% of the consumer loans in our book constitute government loans deductible through the SSB (Salary Services Bureau),” Nyashanu said.
Nyashanu said the development of the business in terms of deposits mobilisation was slower than what was happening in the cost structures.
In the half year to June 30, Lifestyle Holdings Ltd (formerly TN Holdings) registered a group profit after tax of US$1,8 million, with the demerged TN Bank Limited contributing US$1 million and TN Harlequin Luxaire contributing a profit of US$1,3 million during the half year ended June 30 2012.
The group attributed the performance to a good quality loan book, curtailment of costs through sharing of facilities and various internal services.
The bank’s net interest income increased by 34% to US$4,7 million largely due to the increase in the loan book which went up 26%.
In July 2012, TN Bank Limited was de-merged from then TN Holdings Limited through the issue of TN Bank Limited shares to TN Holdings Limited’s shareholders.
Nyashanu said the bank was presently capitalised to the tune of US$36 million, in excess of the required US$25 million by December 31 while commitments from shareholders had been made to meet the US$100 million threshold by 2014.
