Unchanged rating for Stanbic Bank Zimbabwe Limited
GCR has retained Stanbic Bank Zimbabwe Limited’s (“Stanbic”) long term domestic Z$ currency rating of AA- (double A minus). In addition, the rating has been maintained on rating watch. Stanbic is a wholly owned subsidiary of the Standard Bank Group of South Africa, one of the largest banking groups in Africa, with total assets amounting to over US$202bn and a market capitalisation of around US$26bn as at 31 December 2010. The level of technical and implied financial support offered by the bank’s parent company, coupled with the ability to leverage off the strong brand name, was favourably considered. However, it remains unclear how the Indigenisation & Empowerment Act promulgated in March 2008 will impact the bank’s shareholding structure.
The bank is well capitalised, with a capital base of US$27.3m and a risk weighted capital adequacy ratio of 17.8% as at FYE10 (FYE09: 20.1%). Gross non-performing loans (“NPLs”) increased to 3% of gross loans as at FYE10 (FYE09: 0.1%) on the back of strong loan growth. Provisions were raised in line with prudential guidelines, with net NPLs remaining low relative to capital and net advances at 0.4% and 1.3% respectively. Supported by wider interest rate margins, an expanded loan book and solid growth in fee & commission income, Stanbic recorded a 15% rise in NPAT amounting to US$7.8m for F10. Accordingly, net interest income contributed a higher 41% (F09: 18%) of total operating income. However, operating efficiency declined, with the bank posting a cost/income ratio of 69% for F10 (F09: 62%). The balance sheet remains strong, with the bank recording a liquidity ratio of 72% as at FYE10, against a statutory minimum of 20%. Notwithstanding this, liquidity risk remains a major challenge for Zimbabwean banks due to inadequate market liquidity, the limited capacity of the central bank to act as a lender of last resort and the lack of a functional interbank market.
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