Indo Zambia bank FY19 after tax earnings ebbed an impressive 62% to K188.62million supported by 26% total income growth to K657.22million. These income bulls were occasioned by a 51% expansion in interest income line to K835.05million on account of a stronger loans and advances line that rallied 52% to K471.66million and duration in government securities to K346.81million accounting for 50% ebb compared to a year ago. The growth in carry income on investment in securities was an expected trading strategy leveraging off an elevated yield curve reflecting fiscal posture and government spending.
Higher funding costs weigh. However in the same vein funding costs accelerated interest expenses 121% to K296.10million dictated wholly by interest paid on deposits of K293.41million, a 123% growth offset in part by leaner credit impairment stock of K15.79million compared to K42.52million (FY18). Rising cost of deposits could be the genesis of the expensive deposit era, a dejavus of 2016 period which saw banks normalise after 2 years.
Indo Zambia’s non-interest income line softened 5% to K134.04million weighed by an 8% slide in commissions and fees, a vivid autopsy effect of unwarranted fee directive by the central bank in 2018. This was however cushioned by a 10% uptick in foreign exchange trading income growth to K51.75million.
Non-interest expenses expanded 17% to K364.61million impacting the bottom line in part. However the banks cost to income ratio infinitesimally rose to 54%.
Credit extension was aggressive expanding the book 23% to K2.1billion as total asset base grew 57% to K5.71billion.
Performance that upset the top 6 hierarchy. Indo Zambia banks performance is remarkable and has caused an upset in the top 6 list of earners so far pending Citibank’s performance release. The banks earnings after tax are currently in the top 5. Indo Zambia has done well in an 18 bank industry with income growth bulls across the board save impact of unwarranted fees which is systematic across the industry. Its credit book and asset growth for the year was strong especially given the waning appetite for balance sheet extension given the current economic posture. For a long time Indo Zambia has been an underdog whose current new strategy to compete against the traditional big 5 is yielding tangible results.
The Kwacha Arbitrageur.
