LUSAKA (Business Telegraph) – Lusaka Securities Exchange listed Zanaco bank’s first half revenues revealed exemplary performance across all income lines. The big strong reliable giant grew its total income by 36.1% year on year to K950.1mln supported by a strong interest income trajectory which rallied 30.1% to K848.3mln and a non interest earnings base.
Revenue leadership. On an annual basis, Zanaco Plc’s advances interest income rose 32.7% to K493.5mln (as the bank extended credit more offset by margin erosion pressure from a central bank 225bps rate cut in May) in parallel with its duration income that widened 29.0% to K351.8mln (on the back of a rally in treasury bill yields for the trading book and elevated fixed income yields for the banking book). Zanaco remains a foreign exchange earnings market leader half year at K196.0mln a 320.1% leap from 1H19 despite a softer performance in 2Q20 of K55.0mln. As expected, fee and commission incomes were another driver of strong performance at K240.1mln rallying 16.1% than first half position a year ago despite 2Q20 flat growth compared to 1Q20.
Higher interest and non interest costs. Interest expense was the highest of the top 5 banks reflecting a higher funding expense at K307.3mln (YTD), 14.7% wider ebb that 1Q20 level while non interest costs remain traditionally elevated at K791.5mln (YTD). A quarterly comparison of non interest expense reveals a marginal widening to K410.0mln from K381.0mln contributing to a cost to income ratio of 80.0%.
Read also: Zanaco Plc’s first quarter earnings reveal trading and fee income leadership
Conservative impairment vis sovereign posture. A credit provisioning stock of K35.3mln given the current level of exposure to government securities north of four yards in Kwacha terms reflects a very conservative buffer contrary to what other financial institutions have provided for in these harsh economic times aligning to IFRS9 prescription.
Earnings growth. The big strong reliable bank posted an after tax earning of K98.3mln reflecting an 82.6% jump from a year ago and a 14.2% slow down from quarter on quarter this year.
The Kwacha Arbitrageur