Lusaka Securities Exchange listed Zanaco Plc’s exceptional trading and fee income performance grew its annual first quarter after tax earnings 22.8% higher to K52.8million. This was 4.6% softer than 4Q19 PAT. The big strong reliable bank doubled its non interest revenue to K264.1million supported by exceptional performance in its foreign exchange trading and fee – commission lines.
Foreign exchange trading and fee income leadership. The bank had a fair share of the markets foreign exchange business whose revenue was second to none while its wide clientele base allowed it healthy incomes on the fee and commissions which expanded 18.7% to K119.3million. Zanaco’s fee and commission income leadership was nonetheless capped by the unwarranted fee directive that continues to constrain growth across the industry.
Exceptional and deposit interest weighs expenses lines. However capping the gains generated, Zanaco’s non interest expenses rose by a significant 58.5% to K409.5million while its interest expense line widened 31.9% to K143.2million weighed by a 37.8% jump in interest paid on deposits. Zambia’s biggest local bank has over the last few years run restructure programs which has seen separations as the bank repositions itself in the market. It wouldn’t be surprising if that program has continued and is reflecting in the wider than usual non interest expenses in 1Q20.
Systematic across the industry, credit risks remains elevated as Zanaco’s impairment line ebbed 18.3% higher K24.1million.
Credit book expansion propels income growth. Total income, rose 53.7% to K494.8million supported by a 24% growth in advances income as the credit book expanded 29.9% to K5.3billion. Other key drivers of income growth were trading income that jumped 611% to K140.9million.
The Kwacha Arbitrageur