FNB fears PF policies at BoZ will hurt profits

FNB fears PF policies at BoZ will hurt profits

Screen Shot 2015-04-22 at 01.25.59FNB Zambia Limited says the Bank of Zambia’s tight monetary policy may squeeze its profits. The central bank raised the amount of money that commercial banks are required to deposit with it to 18 per cent from 14 per cent in a bid to address the kwacha’s volatility. “Obviously, the decision was done with good intentions from the central bank [but] it will impact us [in the new financial period],” FNB Zambia chief executive officer Johan Maree told journalists yesterday after the bank announced its financial results for the six months ending December 31, 2014. “There will be an impact on profitability but it is not something that will be ulterior in our world and we have planned for it.” About two weeks ago, the Bankers Association of Zambia warned that the increase in statutory reserve ratio could raise commercial banks’ operational costs and put pressure on their profit margins. “What you will also find in the market is that credit extension will start slowing down, which is not good for the growth of both the economy and the banking sector,” Maree said. The tight monetary policy, coupled with a high interest environment, has posed significant challenges for the growth of FNB’s advance book despite a jump in profits. According to FNB chief financial officer Ackim Chalwe, the bank’s  advances only grew by 24 per cent from K1.5 billion in June 2014 to K1.8 billion in December 2014, supported by a 21 per cent growth in deposits from K1.9 billion to K2.3 billion over the same period. He said the bank delivered a strong set of results for the period considering a challenging economic environment. “The bank’s annualised income statement saw net interest income and net interest revenue grow to 35 per cent while profit after tax grew to 32 per cent,” Chalwe said, adding that the bank achieved profits after tax of K21.7 million for the period under review, which was the third reporting period in which the ban has posted profits after tax. He said the bank’s growth and profitability has been anchored around the electronic banking platforms, new products, customer services, strong credit policies and an expanding footprint. Chalwe said the bank planned to open three branches before the end of June and increase its ATM network expansion. “As we move into the new financial period, FNB Zambia will continue to push boundaries and work towards growing its customer base and business volumes through electronic solutions,” said Chalwe. – See more at: http://www.postzambia.com/news.php?id=7394#sthash.CQIQTRnL.dpuf

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