As effects of cyclone Ana subside, market players in Africa’s second largest copper hotspot will be looking at their watches to check what time it is, the earnings season o’’clock. The Zambian market will this week be marveling at the exceptional FY21 financial performance that Zambia National Commercial Bank (Zanaco Plc) has delivered. For Mukwandi Chibesakunda, these results will signal to shareholders, from individuals to institutional classes, the direction that her first 14 months of leadership has led the bank to. According to the 2021 prudential results in the local press, the largest indigenous Financial Institution (FI) in the red metal producer recorded earnings that the banking industry in the Southern African nation are seeing for the first time as the Big Strong Reliable Bank, just crossed the K1billion Profit After Tax (PAT) mark. This represents a 208% rally in year on year profitability growth to K1.06 billion.
Zanaco Plc Managing Director – Mukwandi Chibesakunda
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DOMINANT LEADERSHIP ACROSS INCOME LINES
The FY21 performance momentum was fueled by market leadership across all earning lines with a strong total revenue growth of 63.0% to just under 4 yards in local currency terms. The Lusaka Securities Exchange (LuSE) ISIN: ZM0000000250 listed bank showed strong interest rate trading income growth of 32.0% leveraging off a compressing Kwacha yield curve (a pay off for lengthened duration in government securities) and a 37.0% growth in revenue from lending activities while its foreign exchange trading paid-off with a 63.0% climb in margins and fees & commission income is a testament of the wide clientele expanse north of 2.5 million that continue to use the banks cocktail of digital products.
READ ALSO: Income leadership, a 48% earnings rally but steep expense base, Zanaco Plc’s FY20 theme
EXCEPTIONAL COST EFFICIENCY IMPROVEMENT, ON STRONGER (+VE) JAWS
The big strong reliable bank recorded a significant ebb in cost efficiency to 54.4% from 76.0% a year ago supported by positive jaws as revenue growth sprinted faster than its non-interest expense lines that expanded 21.0% slower than the traditional expectation.
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Zanaco Plc in the fourth quarter of 2021 was aggressively in the lime light for its market leadership in the green agenda faculty with investment partnerships such as that with World Wide Fund for Nature (WWF) for a $30million Kukula Capital SME managed fund while the bank made various appearances at the COP26 climate conference creating synergies with other international players. Other faculties the bank has been seen to dominate include the express agency banking space where Zanaco has in excess of 15,000 units creating over 25,000 jobs country wide. It’s subsidiaries continue to gear up for future ready banking propositions Digital Pay Go that will continue to provide earnings for the group.
SHARE PRICE QUADRUPLES IN A YEAR
The ISIN:ZM0000000250 (ZNCO) stock quadrupled in a space of 1 year to K1.9 per share having closed 2020 pandemic year at K0.47 a share reflecting strong positive perception from investors given the earnings rally seen over the last 12 months. The Zanaco stock is said to be the the best performing banking stock and is the 7th most traded equity on the Zambian bourse.
As risk appetite claws back into the Zambian market following an improved sovereign risk outlook, the LuSE listed bank is predicted to growth its earnings from presence is nontraditional sectors inferred from the strategic partnerships the FI has been seen to be making in the media space.
The Kwacha Arbitrageur, Cynical Investor and Nikiwa Capital Analyst