BancABC transforming banking sector

Posted on January 14, 2011 | Category: Politics; Business, Sport –

Offering lucrative financing options geared at revitalizing local industries and fast tracking the economic recovery process, Banc ABC Group believes it is leading the pack in transforming the country’s banking sector.

With a commendable regional footprint covering Zimbabwe, Botswana, Zambia, Tanzania and Mozambique, the bank has significant advantage over its competitors in the local market.

“The regional footprint of the bank gives leverage in the Southern African markets especially on raising funding for various companies. There are some countries in which we are not yet present but in the mean time we are trying to consolidate business in the area where we have operations in. It is also important to note that we have a representative office in South Africa,” said the Group’s economist James Wadi.

Listed on the Botswana Stock Exchange (BSE) and the Zimbabwe Stock Exchange (ZSE), the primary listing being on the former and the secondary listing being on the ZSE, the bank is expanding its retail arm in order to reach out to more clients across the region.

Financing requirements for companies include the firm’s collateral and cash flow while individual loans are determined on one’s monthly salary.

Shedding some light on the banking sector, Wadi said the sector is pivotal to the revival of the economy as it oils the domestic industry by providing credit to various companies.

“The hostile environment that prevailed over the past decade made it difficult for most companies to operate efficiently.  However the loans that have been extended to industry, though short term in nature, have brought about notable improvement over the past 20 months”.

“The loans have also been increasing at a faster rate than the deposits which shows that the banking sector is indeed playing a crucial part in the revival of the economy,” he said.

Wadi acknowledged that the banking sector took a knock over the past decade when deposit levels declined to sea floor levels. He however said the sector is now regaining its momentum as witnessed by the various incentives available on the market.

“The phenomenal rise in banking sector deposits serves to highlight increasing confidence in this sector. Financial institutions are trying to be innovative by introducing new banking products in line with the changing taste of consumers. The banking sector will also need to leverage on ICT to offer banking services to remote areas.

“Fixed deposits also attract favorable interest rates of up to 8% depending on the amount and tenor of the deposits. The interest rates are quite lustrous as they are higher than what is offered in the region. I agree that in some cases the deposit rate is not commensurate with the lending rate. However the banks have this in mind and are making efforts to ensure that the savers are fully rewarded for their savings.

Wadi decried the fact that 90% of the deposits in the market are transitional deposits which are short term in nature making it difficult to on-lend on a long term basis.

“The transitional deposits are a big challenge for the banking sector as it makes it difficult to offer long term loans. This is the main reason why most loans in Zimbabwe are on a short term basis. Banks should be able to extend loans which are long term in nature so that the companies which are borrowing have ample time to reorient their business and pay back,” said Wadi.

He said Lines of Credit forwarded to Zimbabwe in recent months were equally insufficient as they failed to cater for the domestic demand for capital injection. Zimbabwe has a huge appetite for long term loans which is presently not being sufficiently catered for.

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