After having made a debut in the top five performers FY2019, one local bank worth watching is Indo Zambia Ltd. The bank won best upcoming digital bank after launch of various applications to improve banking solutions and has also been a key financier of the Small to Medium Sized Entrepreneur (SMEs) business especially in the COVID pandemic era. Indo Zambia’s after tax first quarter earnings grew 57.0% to K36.9million from 1Q19, however this was 39.8% softer than 4Q19’s PAT.
Indo’s headline earnings expanded 33.6% to K174.9million as its interest income lines rose 35.2% as the bank lengthened duration in an elevated Kwacha yield environment that climbed 56.2% and decent earnings 16.2% wider on the advances line reflecting the quality of the credit book.
A 40.8% uptick in foreign exchange trading income offset by a 12.5% plummet in fee and commission line, an autopsy effect of unwarranted fee directives, kept non interest income marginally higher by 7.0%.
Funding costs remain elevated evidenced by a 77.4% climb in interest paid on deposits while non interest expenses were 39.2% higher eroding gains generated in the quarter.
The banks impairment base leaned to K3million however for the size of credit book in a suppressed credit environment seems understated and could prima facie be due to a model that does not reflect sovereign risk or International Financial Reporting Standard No.9 (IFRS9) has not been fully implemented. The loans and advances book grew a marginal 3% to K1.9billion.
The Kwacha Arbitrageur
