Annual Report 2012

ANNUAL REPORT 2012

TABLE OF CONTENTS

Governor’s Foreword...... 5 Deputy Governor’s Foreword ...... 6 Senior Division Chief’s Foreword ...... 7 CHAPTER ONE: OVERVIEW ...... 9 MACRO-ECONOMIC DEVELOPMENTS ...... 9 Global Developments… ...... 9 Domestic Developments…...... 10 ARCHITECTURE OF THE BANKING SECTOR ...... 14 OWNERSHIP STRUCTURE ...... 14 CHAPTER TWO - MAJOR DEVELOPMENTS IN THE BANKING SECTOR ...... 16 INTERNATIONAL REGULATORY AND SUPERVISORY DEVELOPMENTS ...... 16 Revised Basel Core Principles For Effective Banking Supervision… ...... 16 Basel III: A Global Regulatory Framework ...... 16 REGULATORY AND SUPERVISORY DEVELOPMENTS IN ZIMBABWE ...... 17 Minimum Capital Requirements… ...... 17 Microfinance Bill… ...... 17 DEVELOPMENTS IN THE BANKING SECTOR ...... 18 Licensing ...... 18 Conversion of Banking Licences ...... 18 Cancellation of Licences...... 19 Curatorships… ...... 20 Mergers and Acquisitions…...... 20 Supervisory Co-operation… ...... 21 Mobile Banking Initiatives in Zimbabwe… ...... 22 DEVELOPMENTS IN THE MICROFINANCE SECTOR ...... 24 DEVELOPMENTS IN THE ASSET MANAGEMENT SECTOR ...... 26 CHAPTER THREE: STATUS AND PERFORMANCE OF THE BANKING SECTOR ...... 28 BALANCE SHEET STRUCTURE ...... 28 SECTORAL ANALYSIS ...... 38 Commercial Banks...... 38 Merchant Banks...... 44 Building Societies ...... 48 Asset Management Companies ...... 51 Microfinance Institutions ...... 53 Introduction… ...... 53 Architecture of the Microfinance Industry… ...... 54 Performance of the Microfinance Sub-Sector…...... 54 CHAPTER FOUR - OUTLOOK ...... 58 APPENDICES ...... 61

Vision of Bank Licensing, Supervision & Surveillance Division

To become an effective, efficient and dependable regulatory and supervisory authority for the financial sector, supportive of economic development in Zimbabwe.

Mission of Bank Licensing, Supervision & Surveillance Division

To promote and maintain the safety and soundness of the financial system through proactive and rigorous regulation and supervision, in line with international best practice.

Objectives of Bank Licensing, Supervision & Surveillance Division

The objectives of the Division are to:

 enhance and maintain the safety and soundness of the financial system through effective risk-based supervision;

 periodically review regulatory and supervisory policies and procedures in line with international best practice and changes in the macroeconomic environment;  promote public confidence in the financial system by ensuring a consistent, objective and transparent regulatory and supervision process;  minimise moral hazard and supervisory forbearance through taking prompt supervisory action against weak and troubled financial institutions in order to protect the integrity of the financial system;

 promote sound corporate governance practices and adoption of adequate risk management systems;  foster a culture of strict compliance with laws, rules, regulations, policies, procedures, guidelines and international best practice; and  build supervisory capacity through structured training and development programmes to enhance the skills base.

PURPOSE OF THE REPORT

This annual report is prepared in terms of Section 78 of the Banking Act [Chapter 24:20]. The purpose of this annual report is to provide an analysis of the condition and performance of the banking sector in Zimbabwe for the year ended 31 December 2012. This report presents an overview of the supervisory operations and activities during the period under review.

Governor’s Foreword

1. The major challenge on the global arena continued to be the Euro-zone crisis which further threatened the global economy to a recession. Risks to global financial stability increased on the back of a weakened outlook for growth and persistently volatile markets, notwithstanding various countercyclical measures instituted to address the challenges. 2. In the sub-Saharan Africa region, economic growth remained generally robust with real GDP outturn for SADC expected to be about 5.3% in 2013. 3. Meanwhile, the domestic economy experienced a slow down in economic activity on account of the deterioration in global and local economic conditions. These adverse developments combined with limited access to offshore lines of credit, compounded the country’s external sector position with ramifications on the banking sector. 4. During the year, the banking sector experienced a number of challenges including persistent market illiquidity, asset quality vulnerabilities and limited lender of last resort facility, among others. 5. The Reserve Bank, in collaboration with other stakeholders, is making conscientious effort to address these macroeconomic challenges. 6. On the supervisory front, the Reserve Bank continued to enhance its supervisory practices to ensure the banking sector remains safe and sound. 7. I would like to take this opportunity to thank all stakeholders for their contribution and continued support in ensuring a stable financial sector.

Dr. G. Gono

Governor

Senior Division Chief’s Foreword

1. The Reserve Bank continued to undertake its core mandate of promoting a sound banking system through its various supervisory methodologies. 2. There were 23 operating banking institutions as at 31 December 2012, down from 26 as at 31 December 2011, under the supervision of the Reserve Bank. 3. One banking institution was placed under curatorship following a determination that it was operating in an unsafe and unsound manner, while two others voluntarily surrendered their licences after failing to meet the minimum capital requirements, in line with provisions of section 14(4) of the Banking Act [Chapter 24:20]. 4. There were 150 microfinance institutions under the supervision of the Reserve Bank as at 31 December 2012, up from 146 in 2011. Reserve Bank cancelled licences of five (5) microfinance institutions following on-site examinations which determined that they were engaging in illegal deposit taking activities. 5. The on-site examinations on banking institutions conducted by the Reserve Bank revealed major weaknesses including poor corporate governance practices, inadequate capitalisation and chronic liquidity challenges among others. 6. In an endeavour to strengthen the financial intermediation role of the sector, the Reserve Bank has increased the minimum capital requirements for banking institutions. As at 31 December 2012, a total of 14 banking institutions were in compliance with the 31 December 2012 minimum capital requirements, whilst five banking institutions had made significant progress towards compliance, in terms of the credibility of their capitalization plans. Two banking institutions had recapitalization plans in need of further improvement to render them credible while one institution was under curatorship. 7. Total banking sector deposits increased from $3.05 billion as at 31 December 2011 to $4.41 billion as at 31 December 2012, while loans increased by 27.5% from $2.76 billion to US$3.54 billion over the same period. 8. Loans and advances have, however, remained largely short-term in nature and channelled towards the financing of working capital with limited funding going

CHAPTER ONE: OVERVIEW

MACRO-ECONOMIC DEVELOPMENTS

Global Developments… 1.1 Following the Global Financial Crisis which took its toll on advanced economies in 2008 to 2009, the global economy experienced a period of tentative stability in the first quarter of 2012. The recovery, although positive for the advanced economies and the global economy at large, remained fragile as the year drew to a close. 1.2 Economic activity in the United States strengthened on the back of numerous ameliorative measures including quantitative easing. However, recurring difficulties in the Euro-zone led to significant market stress and volatility and continued to pose a key source of vulnerability to the world economy. 1.3 Global concerns about financial stability in the Euro-zone and intensification of market stress threatened to plunge Europe, and possibly advanced economies, into another deep recession. 1.4 The impact of the financial market turbulence experienced in 2012 on the Euro- zone, emphasized the adverse impact of shifting market sentiments through bank funding squeeze and tighter credit growth, with adverse feedback to the real economy. However, the decisive action taken by the European Central Bank to provide long-term liquidity to banks and fiscal adjustment, as well as increased activity in the United States, helped to stabilize the situation. 1.5 In terms of economic growth, the global economy contracted from 3.9% in 2011 to 3.3% in 2012 on the back of fragile economic recovery in United States and Europe. Uncertainty on US economic policy resulted in slow-down in economic activity in advanced economies from 1.9% in 2011 to 1.5% in 2012. 1.6 Notwithstanding the fragile global economic position, most emerging market economies and low-income countries continued to experience growth. In the sub- Saharan region, subdued import demand from both advanced and emerging market economies imposed constraints on economic activity in developing countries

1.7 Developing economies, such as Zimbabwe, however remain susceptible to the ripple effects of the Global Financial Crisis in the form of depressed external demand and reduced donor funding and foreign direct investment flows.

Domestic Developments… Economic Rebound

1.8 Domestic economic growth is estimated to have marginally decelerated to 10.6% in 2012, from a 2011 estimated growth rate of 11.9%. Economic growth performance remained largely driven by the mining and agriculture sectors. 1.9 The country continued to benefit from the stability ushered in by the multiple currency regime. 1.10 Figure 1.1 below shows trends in GDP growth from 2008 to 2012.

Figure 1.1: Real GDP Growth Rate (%)

15 Estimate

0 2008 2009 2010 2011 2012

-5

-10

-15

-20

Source: ZIMSTAT

Inflation Developments

1.11 Inflationary pressures have remained subdued on the back of tight liquidity

conditions, depressed aggregate demand and stable international oil and world food prices. Consequently, the country’s year-on-year inflation closed the year at 2.91%. 1.12 Figure 1.2 below shows annual inflation profile from January 2011 to December 2012.

Figure 1.2: Annual Inflation Profile (%)

(%) 2

Jun Sep Nov Jul Jan Jul Aug Dec Jan Jun Aug Sep Nov Dec

Mar Mar

Feb May Oct Apr May Oct Apr

0 Feb

- -

- 12 - 11 - -

- - - -

12 11

- 11 - 12

11 11 12 12

11 12

12 11

11 11 12 12

12 11

Source: ZIMSTAT, January 2013

1.13 The year-end inflation rate of 2.91% compared well with initial projections of 4%. The stability in the price level in the economy was largely a result of supply improvements, containment of costs, particularly the wage bill, depressed demand under tight liquidity conditions, tight market competition, and depreciation of the rand against the US dollar 1.14 In the outlook period, it is expected that inflation developments in the domestic economy will remain inextricably linked to trends in international oil prices, world food prices, the US$/rand exchange rate, import tariffs and the level of aggregate demand in the economy. In this regard, it is projected that in 2013, inflation will remain below 5%, mainly underpinned by slowdown in global food prices, steady

international oil prices, improved domestic capacity utilisation and managed expectations.

Sectoral Contribution to GDP

1.15 The 10.6% growth experienced in the Zimbabwean economy in the year ended 2012, was mainly underpinned by mining, transport and communication, finance and insurance, construction & real estate and agriculture as shown in the pie chart below: Figure 1.3: Sectoral Distribution of GDP

Agriculture, 10.8%

Mining, 9.2% Other sectors, 31.6%

Manufacturing, 11.6%

Tourism, 12.7% Education, 5.8% Transport & Communication, 10.7%

Finance & Insurance, 7.6%

1.16 Despite negative projections on the performance of the agricultural sector in 2012, the sector grew by 4.6% in 2012 and continued to contribute positively to economic growth. 1.17 The mining sector remained a key driver of economic growth as it grew by 10.1%, despite volatility in international commodity prices. 1.18 Meanwhile, the manufacturing sector battled to restore its capacity utilization levels due to stiff competition from imported commodities. Most manufacturing companies operated at below 50% capacity during the year. 1.19 In addition, the major challenges which affected the manufacturing sector included obsolete and inefficient machinery, inadequate and unreliable power

supply and limited lines of credit. As a result the sector only grew by 2.3% during the year.

Fiscal Developments

1.20 The country’s revenue generation capacity continued on a positive trajectory established at the on-set of the multicurrency regime. Revenues increased from $2.9 billion in 2011 to an estimated $3.6 billion in 2012, largely driven by improved tax collections. 1.21 Revenue represented 20.2% and 34.6% of GDP in 2011 and 2012, respectively. However, in the outlook period fiscal revenue is expected to remain relatively stagnant, thereby representing a limit on the Government’s fiscal space for much needed capital expenditure projects in the future.

Balance of Payments

1.22 The country’s external sector position remained under considerable pressure largely due to commodity price volatility on the global market. This was worsened by the continued dependence on imports which arose due to operational inefficiencies in local industries and stiff competition from cheap imports. 1.23 The resultant high import bill and the relatively weaker performance of exports undermined the performance of the external sector and left the country with a current account deficit of 28.5% of GDP.

Outlook for 2013

1.24 Economic growth projections for the forthcoming year have been set at 5.0%, mainly driven by growth in the mining sector. 1.25 Although inflation is expected to rise in the outlook period, it is expected to remain in the single digit levels with a projection of 4.5% in 2013. 1.26 The country’s growth prospects are, however, expected to remain highly hinged on developments in the global economy.

ARCHITECTURE OF THE BANKING SECTOR

1.27 During the year 2012, the number of operating banking institutions decreased from 26 to 23. Royal Bank and Genesis Investment Bank surrendered their operating licences to the Reserve Bank for cancellation during the year while Barbican Bank and Time Bank failed to commence operations. Interfin Bank was placed under curatorship in June 2012. 1.28 The table below shows the architecture of the banking sector as at 31 December 2012.

Table 1.1: Architecture of the Banking Sector

Type of Institution Number

Commercial Banks 16

Merchant Banks 2

Building Societies 4

Savings Bank 1

Total 23

Microfinance Institutions 150

Asset Management Companies 16

OWNERSHIP STRUCTURE

1.29 As at 31 December 2012, the financial sector ownership structure was spread among Government, foreigners and local individuals and corporates. Eight (8) banking institutions with significant foreign shareholding had assets worth $3.11 billion representing 50.18% of total banking sector assets while 49.42% of total banking sector assets worth $2.59 billion were held by 14 locally owned banks. 1.30 The figure below indicates banking sector ownership structure as at 31 December 2012.

Figure 1.4: Ownership Structure of Banks

Afrasia Kingdom MBCA Bank Ecobank 2.9% 2.0% Metbank 3.1% 3.2% FBC Bank CBZ Bank 4.6% 18.4% Barclays 5.2% Locally Foreign owned owned Stanbic banks banks 6.8%

ZB Bank 4.5% CABS 7.9%

NMB Bank Stanchart 8.2% 3.8%

TN Bank 3.3%

BancABC Interfin 10.8% 3.0% Agribank 2.2%

CBZ BS Tetrad 2.2% 2.0% ZB BS POSB FBC BS 0.9% Capital 0.6% 1.3% ZABG Trust 1.5% 0.7% 0.8%

CHAPTER TWO - MAJOR DEVELOPMENTS IN THE BANKING SECTOR

INTERNATIONAL REGULATORY AND SUPERVISORY DEVELOPMENTS

Revised Basel Core Principles For Effective Banking Supervision…

2.1 In 2012, the Core Principles for Effective Banking Supervision were reviewed and revised from 25 to 29. The Basel Committee merged the core principles with the assessment methodology into a single comprehensive document.

2.2 The revised set of 29 Core Principles have been reorganized to foster their implementation through a more logical structure starting with supervisory powers, responsibilities and functions, followed by supervisory expectations of banks emphasizing the importance of good corporate governance, risk management and compliance with supervisory standards.

2.3 The Reserve Bank has adopted the Basel Core Principles (BCP) as these are considered to be de facto minimum standards for sound prudential regulation and supervision of banks and banking systems. The BCPs for effective banking supervision are the foundation on which strong supervisory systems are built.

Basel III: A Global Regulatory Framework

2.4 In response to weaknesses identified in the Basel II framework during the global financial crisis that began in the United States of America in 2007, the Basel Committee on Banking Supervision issued enhancements to the framework through documents entitled “Strengthening the Resilience of the Banking Sector” popularized as the resilience document and “International Framework for Liquidity Risk Management, Standards and Monitoring”. The two documents constitute the Basel III framework.

2.5 The major objective of the enhancements is to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, thereby reducing the risk of spill-over from the financial sector to the real economy. The framework aims to achieve this by strengthening global capital and liquidity rules with the goal of

promoting a more resilient banking sector.

2.6 The framework introduces a capital conservation buffer and a counter cyclical buffer aimed at dampening the pro-cyclicality of capital standards that was noted in the Basel II framework. Further, the framework introduces a non-risk based leverage ratio which acts as a backstop to risk based capital measures.

2.7 It is worth noting that Zimbabwe already has a non-risk based leverage ratio in place and its definition of capital is largely compliant with the Basel III requirement. The Reserve Bank will, however, work at implementing applicable liquidity ratios within the banking sector.

REGULATORY AND SUPERVISORY DEVELOPMENTS IN ZIMBABWE

Minimum Capital Requirements…

2.8 The Reserve Bank increased minimum capital requirements for banking institutions and microfinance institutions in July 2012.

2.9 The revised core capital requirements are as follows in the table below:

Table 2.2: Revised Capital Requirements

Capital Requirements Institution Previous Revised ($) 31 Dec 2012 30 June 2013 30 Dec 2013 30 June 2014 Commercial Banks (US$m) 12.5 25 50 75 100 Merchant Banks (US$m) 10 25 50 75 100 Building Societies (US$m) 10 20 40 60 80 Finance Houses (US$m) 7.5 15 30 45 60 Discount Houses (US$m) 7.5 15 30 45 60 Microfinance Banks (US$m) 1 1.25 2.50 3.75 5 Microfinance Institutions 5,000 10,000 15,000 20,000 25,000

Microfinance Bill…

2.10 The Reserve Bank drafted the Microfinance Bill in 2011. The purpose of the bill was

to address the existing regulatory deficiencies and protect members of the public from the risks associated with services offered by micro-finance institutions.

2.11 The Preamble notes that the Bill covers the following:

a) To provide for the registration, supervision, de-registration and regulation of microfinance business in Zimbabwe. b) The Bill provides for consumer protection. There are provisions requiring MFI’s to publish information regarding their businesses. i. The Bill spells out minimum requirements for loan agreements; ii. The Bill incorporates a Code of Conduct for MFIs; iii. The Bill provides that no MFI may dispose of a customer’s security without obtaining a Court Order; and iv. MFIs should conduct themselves in an ethical manner. c) The Bill requires MFIs to conduct their business in accordance with sound administrative and accounting practices and to keep proper records of transactions. d) The Bill creates a Disciplinary Committee responsible for addressing consumer complaints. e) The Disciplinary Committee will be made up of the Registrar, a representative of the MFIs appointed by the Minister and a representative of the Reserve Bank appointed by the Governor.

DEVELOPMENTS IN THE BANKING SECTOR

Licensing

2.12 A total of 128 licences were issued to microfinance and moneylending institutions. The licences include new licences and renewals.

Conversion of Banking Licences

2.13 No banking institution converted its licence from one class of banking to another. It

is however, noted that Ecobank Zimbabwe Limited which converted its merchant banking licence to commercial banking licence in 2011, commenced commercial banking business on 19 May 2012.

Cancellation of Licences

Genesis Investment Bank Limited

2.14 Genesis Investment Bank Limited was placed under liquidation following the institution’s surrender of its banking licence.

2.15 An on-site examination conducted by the Reserve Bank prior to the surrendering of licence determined that the institution was no longer in a safe and sound financial condition. The bank was rated ‘5’ i.e. critical due to gross undercapitalization, chronic liquidity challenges, high level of non-performing loans, persistent losses, poor risk management systems, poor management information systems, poor board and senior management oversight and numerous violations of laws and regulations.

2.16 The institution’s licence was cancelled on 11 June 2012 in terms of section 14(4) of the Banking Act [Chapter 24:20].

2.17 The High Court Order for final liquidation was granted on 8 August 2012 and the Deposit Protection Corporation (DPC) was appointed as the liquidator.

Royal Bank Zimbabwe Limited

2.18 Royal Bank was closed by the Reserve Bank following the voluntary surrender of the bank’s licence on 27 July 2012. An on-site examination conducted by the Reserve Bank prior to the surrendering of licence determined that the institution was not in a safe and sound financial condition.

2.19 The bank was rated ‘5’ i.e. critical due to undercapitalization, chronic liquidity challenges, high level of non-performing loans, persistent losses, poor management information systems, poor board and senior management oversight and numerous violations of laws and regulations.

2.20 The institution was subsequently placed under provisional liquidation in February 2013 and DPC was appointed as the provisional liquidator.

Curatorships…

ReNaissance Merchant Bank Limited

2.21 ReNaissance Merchant Bank Limited which was placed under curatorship on 2 June 2011 had its curatorship terminated on 2 March 2012 following investment by National Social Security Authority. Subsequently, the bank re-branded to Capital Bank in June 2012.

Interfin Banking Corporation Limited

2.22 On 11 June 2012, Interfin Banking Corporation Limited was placed under the management of a Curator, Mr. Peter Bailey of KPMG Chartered Accountants Zimbabwe, following a determination that the institution was not in a sound financial condition and was facing critical liquidity challenges. The appointment was effected in terms of section 53 of the Banking Act [Chapter 24:20].

2.23 On 10 December 2012, the Reserve Bank extended the curatorship period for Interfin Bank by a further six (6) months to the 9th of June 2013 and retained Mr. Peter Bailey of KPMG Chartered Accountants as Curator.

2.24 The premise for the extension of curatorship was the inordinate delay in judicial processes regarding loan collections and negotiations of potential investors.

Mergers and Acquisitions…

TN Bank Limited

2.25 During the year under review, Econet Wireless Zimbabwe (EWZ) acquired 45% shareholding in TN Bank Holdings Limited which wholly owns TN Bank Limited.

2.26 Subsequently, EWZ acquired the remaining 55% shareholding in TN Bank in January 2013.

Kingdom Bank Limited

2.27 AfrAsia Bank Limited (Mauritius) acquired 35% shareholding in Kingdom Financial Holdings Limited (KFHL) in February 2012. Subsequently, KFHL rebranded to AfrAsia Kingdom Zimbabwe Limited (AKZL).

2.28 AKZL is the holding company for Kingdom Bank Limited, Kingdom Stockbrokers (Private) Limited, Kingdom Asset Management (Private) Limited and FDH Financial Holdings Limited Malawi.

Zimbabwe Allied Banking Group (ZABG)

2.29 A locally based company, Trebo & Khays (Private) Limited acquired 99.95% stake in ZABG during the period under review and the bank subsequently re-branded to Allied Bank during the year.

Supervisory Co-operation…

Co-operation with Local Supervisors

2.30 In line with the COMESA Financial Stability Framework, the Multi-Disciplinary Financial Stability Committee formed two sub-committees namely, Technical Committee for Financial Stability Assessment and the Supervisory & Regulatory Cooperation.

2.31 The sub-committees constitute members from the Securities Commission (SEC), Insurance and Pensions Commission (IPEC), Deposit Protection Corporation (DPC) and the Reserve Bank.

2.32 The inaugural meeting for the two sub-committees was held on 14 December 2012, wherein the terms of reference for the two committees were proposed and reports from the various stakeholders were tabled.

2.33 Going forward the sub-committees will be meeting on a quarterly basis. The sub- committees are expected to, among other issues, formally assess the state of

financial stability in accordance with the COMESA framework as well as prepare forward looking financial stability reports.

Memorandum of Understanding on Bank Charges and Interest Rates

2.34 In order to address concerns regarding high levels of bank charges, high lending rates and low interest rates on deposits, the Reserve Bank and the banking sector signed a Memorandum of Understanding on 31 January 2013 to regulate parameters within which bank charges and lending rates are levied.

Regional Integration

2.35 Regulatory authorities in the region have embraced a regional approach to supervision and regulation, in order to strengthen cross-border supervision and supervisory cooperation.

2.36 The Association of African Central Banks (AACB) Governors resolved to set up a formal dialogue among banking supervisors in Africa and endorsed the establishment of the Community of African Bank Supervisors (CABS) at its 36th ordinary meeting in August 2012 in Algiers, Algeria.

2.37 Within this context, the Reserve Bank will continue to strengthen its supervisory capacity and cooperate with other regulators on the continent on the adoption of international best practices and ensuring that all cross border banking groups are effectively supervised.

Mobile Banking Initiatives in Zimbabwe…

2.38 Mobile banking gained prominence in Zimbabwe following the adoption of the multi currency system in February 2009, as banking institutions sought to competitively position themselves through provision of convenience to the banking public. The country has adopted the bank-based mobile banking model.

2.39 Zimbabwe, with an estimated mobile penetration rate of 66% as at 31 December

2011, has made great strides in promoting financial inclusion through mobile banking. As at 31 December 2012, 14 out of 23 banking institutions were offering mobile banking to their clients.

2.40 Reflecting increased use of mobile banking facilities, the value of mobile payment transactions increased by 575% to US$8.1 million in 2011 from US$1.2 million in 2010. Similarly, the volume of mobile payment transactions increased phenomenally by 446% to 2.3 million in 2011 from 0.4 million in 2010.

2.41 The mobile banking services operating in Zimbabwe as at 31 December 2012 are highlighted in the table below:

Table 2.3: Mobile Banking Products in Zimbabwe

Banking Institution Mobile Network Operator (MNO) Product

BANK-BASED PRODUCTS

CABS Telecel Textacash Kingdom Telecel Cell Card/ Tetrad Telecel Emali CBZ All MNOs CBZ Mobile Banking Trust Econet Bank at Ease Metropolitan All MNOs Metbank Mobile Banking Standard Chartered Net-One and Telecel Mobile Banking TN Bank/CBZ/ZB /AGRIBANK Econet Ecocash FBC Bank Net-One One Wallet Banks on Telecel and Net-One Zimswitch ZIPIT Zimswitch*(CABS/FBC/POSB)

2.42 In Zimbabwe, mobile banking initiatives are bank-led models. The country’s National Payment regulations require non-banking institutions to partner banking institutions in providing mobile banking solution.

2.43 Mobile banking in Zimbabwe has been both additive and transformational and in the process aiding financial inclusion through availing accessibility and variety of financial services to the unbanked. It has resulted in a wider range of choices and enhanced the convenience of existing customers of mainstream financial institutions.

2.44 Microfinance institutions are also exploring the use of mobile banking technology to reach out to the unbanked population through the use of mobile payment platforms to facilitate loan applications, disbursements and repayments.

Regulation and Supervision of Mobile Products

2.45 In the face of accelerated technological change in financial services, financial regulators have generally adopted an approach of guiding providers through principles, rather than attempting to regulate the technological details of a fast moving environment.

2.46 Regulations are aimed at providing adequate protection for consumers, ensure economic and financial stability, provide inter-operability of mobile and electronic systems and guarantee security of transactions.

2.47 Central Banks, while allowing mobile payments, are required to ensure the stability of the banking and payment systems and also ensure that issuance of e-money does not affect the economy.

2.48 The Reserve Bank is currently seized with the drafting of appropriate guidelines and policies in the following areas:

a) Payment systems oversight guideline; b) E-money and electronic payments guideline; and c) Agency banking guideline.

2.49 The finalization and operationalisation of these guidelines is envisaged to provide strong impetus to current efforts aimed at fostering financial stability and effective payment systems oversight.

DEVELOPMENTS IN THE MICROFINANCE SECTOR

2.50 The microfinance sector plays a critical role in eradicating poverty and financial exclusion in any developing economy. The sector has continued to grow since the

adoption of the multicurrency regime.

2.51 The sector remains largely dominated by the top ten largest microfinance institutions which control 82.35% of the market share in terms of total loans as at 31 December 2012.

2.52 In view of the critical role played by the sector, the Reserve Bank continues to engage the microfinance institutions and to call upon them to observe internationally agreed Core Client Protection Principles (CCPP) for microfinance and to comply with laws and regulations when conducting microfinance business.

Supervision of the Sector

2.53 The Reserve Bank took supervisory action on five microfinance institutions that were illegally mobilizing deposits from members of the public as part of efforts to prevent irreparable harm to financial stability. Supervisory actions taken include rejection of application for licence renewals and directives to repay depositors for institutions which had capacity to do so.

2.54 The Reserve Bank stepped up supervision and surveillance of the sector by conducting targeted examinations of all licensed institutions in September 2012.

2.55 The major findings of the targeted on-site examinations are outlined hereunder.

a) The distribution of microfinance and moneylending institutions as at 31 August 2012 followed the distribution pattern of banking institutions, with high concentration being witnessed in the main cities and towns, leaving smaller towns and rural areas without access to any form of financial services as shown below:

Figure 2.1: Distribution of MFIs by Location

116 120

100 Harare Masvingo 80 Kadoma Mutare 60 Bulawayo Gweru 40 25 Murambinda Kariba 20 9 11 4 2 1 2 0

b) Some MFIs were taking deposits in violation of section 5 of the Banking Act [Chapter 24:20] which prohibits any other person from taking deposits except registered banking institutions;

c) The interest rates charged for loans by MFIs ranged from 4% per month to 40% per month; and

d) Some of the MFIs were using unorthodox and unethical debt recovery methods including disposal of assets without notification to borrowers and without following due process through the courts and holding of clients’ ATM cards.

DEVELOPMENTS IN THE ASSET MANAGEMENT SECTOR

2.56 The asset management sector continued to be dominated by three players which commanded a combined market share of 84% of total funds under management as at 31 December 2012. Due to the insignificant market share, most of the remaining 13 asset management companies’ levels of funds under management were

insufficient to generate adequate revenue to support business operations.

2.57 During the year 2012, the Reserve Bank in terms of the Collective Investment Schemes Act [Chapter 24:19], licensed one new unit trust namely Imara Asset Management Umbrella Fund Unit Trust.

CHAPTER THREE: STATUS AND PERFORMANCE OF THE BANKING SECTOR

BALANCE SHEET STRUCTURE

Composition of Assets… 3.1 Total banking sector assets increased by 31.91% over the year from $4.76 billion as at 31 December 2011 to $6.20 billion as at 31 December 2012 on the back of 25.09% increase in deposits.

3.2 Loans and advances which constituted 52.20% of total assets as at 31 December 2012 grew by 27.45% growth from $2.76 billion as at 31 December 2011 to $3.52 billion as at 31 December 2012.

3.3 Five banks controlled 50.48% of total banking assets in 2012 down from 51.34% in 2011. The table below shows the trend and composition of banking sector total assets from December 2011 to December 2012.

Table 3.1: Composition of Assets

ASSETS Dec-11 Dec-12 US$ % US$ % Domestic Notes & Coin 279,028,625 5.86% 414,172,711 6.68% Balances With RBZ 383,528,155 8.05% 463,643,044 7.47% Balances With Local Banks 128,401,363 2.70% 222,954,363 3.59% Assets In Transit 13,536,702 0.28% 7,690,428 0.12% Balances With Foreign Banks 357,340,816 7.50% 204,100,249 3.29% Securities & Investments 203,088,287 4.26% 333,930,397 5.38% Loans & Advances 2,547,594,316 53.48% 3,237,575,328 52.20% Foreign Claims 50,939,166 1.07% 165,973,304 2.68% Fixed Assets 454,129,962 9.3% 530,351,803 8.55% Other Assets 125,206,690 2.63% 192,696,460 3.11% Off-Balance Sheet Items 220,754,640 4.63% 425,294,499 6.86% Total Assets 4,763,548,724 6,202,631,174

3.4 As at 31 December 2012, on-balance sheet assets amounted to $5.78 billion compared to $4.52 billion recorded in 2011, representing a 5.75% growth. Off- balance sheet assets increased by 92.66% million from $220.75 million in 2011 to $425.29 million in 2012.

3.5 Notwithstanding increases in balances with local banks by 73.64% from $128.40 million to $222.95 million, interbank activity still remains generally limited. Securities and investments grew by 64.43% from $203.09 million at 31December 2011 to $333.93 million as at 31 December 2012 despite the depressed money market and absence of marketable securities in 2012.

Composition of liabilities...

3.6 Total liabilities increased from $4.20 billion as at 31 December 2011 to $5.32 billion as at 31 December 2012, representing a growth rate of 29.76%.

3.7 The composition of liabilities in the banking sector from December 2011 to December 2012 are shown in the table below:

Table 3.2: Composition of Liabilities

EQUITY & LIABILITIES Dec-11 Dec-12 US$ % US$ % Demand Deposits 1,818,142,861 38.17% 2,322,404,355 37.44% Savings Deposits 260,639,392 5.47% 269,249,941 4.34% Time Deposits/Fixed Deposits 842,884,981 17.69% 1,113,655,846 17.95% Foreign Currency Deposits 62,559,919 1.31% 44,767,458 0.72% Negotiable Certificates of Deposit 63,576,009 1.33% 62,321,349 1.00% Balances With Other Banks 161,998,442 3.40% 421,481,847 6.80% Liabilities in Transit 1,470,801 0.03% 13,683,514 0.22% Foreign Liabilities 304,599,477 6.39% 294,544,857 4.75% Securities & other Funding Liabilities 53,596,261 1.13% 34,254,459 0.55% Capital and Reserves 568,420,384 11.93% 749,089,245 12.08% Other Liabilities 399,280,522 8.38% 453,741,987 7.32% Off-Balance Sheet Items – Liabilities 226,379,673 4.75% 423,436,314 6.83% Total Equity and Liabilities 4,763,548,724 6,202,631,174

Composition of Deposits

3.8 Retail deposits remained volatile in 2012 as the economy continued to rely heavily on cash transactions coupled with a low disposable household income base which is exacerbated by low interest rates on savings and high bank charges. Savings

deposits as a proportion of total deposits decreased to 7.06% in 2012 from 8.55% in 2011 while demand deposits increased from 59.65% to 60.92%.

3.9 The table below shows composition of deposits as at 31 December 2011 and 31 December 2012

Table 3.3: Percentage of total deposits

Type of Deposit Dec-11 Dec-12 Demand Deposits 59.65% 60.92% Savings Deposits 8.55% 7.06% Time Deposits/Fixed Deposits 27.66% 29.21% Foreign Currency Deposits 2.05% 1.17% Negotiable Certificates of Deposit 2.09% 1.63%

Capitalisation…

3.10 As at 31 December 2012, 14 out of 22 banking institutions (excluding POSB which is not subject to minimum capital requirements) were in compliance with the prescribed minimum capital requirements. Three banking institutions’ CAR were below the minimum required ratio of 12% while one banking institution’s tier 1 ratio was not in compliance with the regulatory minimum of 8%.

3.11 The total net capital base in the banking industry increased from $511.62 million as at 31 December 2011 to $625.69 million as at 31 December 2012. The increase is largely attributed to growth in retained earnings and capital injections by the shareholders in a bid to comply with minimum capital requirements.

3.12 The proportion of Tier 1 capital to banking industry’s net capital base has been declining since 2009. Tier 1 capital constituted 83.15% and 75.73% of the banking industry’s net capital base as at 31 December 2011 and 31 December 2012, respectively indicating capacity of the banking sector to cushion against unexpected losses. The trend in the banking industry’s capital ratios from 2011 to 2012 are indicated below:

Figu re 3 .1: Banking Sector Capital Ratios

18 16.23 16 13.87 14 12 11.24 9.99 10 8.98 7.8 8 6 4 2 0 Dec 11 Dec 12

Equity/Assets (%) Capital Adequacy Ratio (%) Tier 1 Ratio (%)

3.13 As loans and advances increased, banking institutions’ risk weighted assets also increased, leading to the lower Tier 1 and CAR of 9.99% and 13.87% respectively as at 31 December 2012.

Bank Lending and Asset Quality…

3.14 Total loans and advances increased significantly over the past two years on the back of an increase in funding as reflected by the growth in deposits as shown in the figure below.

Figu re 3 .2: Growth in loans and advances

4 3.52 3.5 3 2.76 2.5 2 Total Loans ($ billions) 1.5 1 0.5 0 Dec 11 Dec 12

3.15 Loans and advances increased by 27.54% from $2.76 billion as at 31 December 2011 to $3.52 billion as at 31 December 2012. The growth in loans and advances is largely attributed to increased funding and banks’ aggressive lending strategy.

3.16 Loans to deposit ratio decreased from 81.79% by the end of December 2011 to 79.79% as at 31 December 2012.

3.17 The figure below shows the trend in the loan to deposit ratio during the year ended 31 December 2012:

Figu re 3 .3: Loans to Deposit Ratio

Loans/Deposits Ratio 90% 80% 70% 60% 50% 40% 30% 20% 10%

30.09.12 31.10.12 31.12.12 30.04.09 31.05.09 30.06.09 31.07.09 28.08.09 25.09.09 30.10.09 27.11.09 31.12.09 29.01.10 26.02.10 26.03.10 30.04.10 28.05.10 25.06.10 30.07.10 29.10.10 26.11.10 31.12.10 28.01.11 25.02.11 25.03.11 29.04.11 27.05.11 30.06.11 29.07.11 27.01.12 24.02.12 31.03.12 27.04.12 24.05.12 30.06.12 27.07.12 31.08.12

26.08.2011 30.09.2011 28.10.2011 25.11.2011 31.12.2011

Loans/Deposits Ratio

3.18 The figure below shows the sectoral distribution of credit as at 31 December 2012.

Figure 3.4: Sectoral Distribution of Credit

20.00% 18.34% 17.55% 17.31% 18.00% 16.00% 15.01% 14.00% 12.00% 10.00% 8.66% 8.00% 7.00% 6.79% 6.00% 4.16% 4.00% 2.61% 2.57% 2.00%

0.00%

Services

Construction

Agriculture

Communication

Transport

Distribution

Individuals

iaca Firms Financial

Mining

Manufacturing

3.19 Banking sector credit has largely remained short-term in nature due to the transitory nature of deposits coupled with the attendant liquidity shortages in the sector.

3.20 Bank credit has been directed mostly towards lending to individuals, services, manufacturing, agriculture and distribution sectors. Lending to individuals in the form of salary based loans is considered by banks to be less risk. Other sectors such as mining and construction which require long term capital have relatively lower market share of loans.

3.21 Asset quality in the banking sector deteriorated in 2012 as reflected by the increase in the ratio of adversely classified loans to total loans from 7.55% as at 31 December 2011 to 13.47% as at 31 December 2012.

3.22 The increase in non-performing loans is largely attributed to a combination of macro and micro-economic factors which affect clients’ ability to repay loans.

3.23 The figure below shows the trends in total loans and the ratio of adversely classified loans to total loans since 2009.

Figure 3.5: Total Loans and ACLs

4 16.00% 3.5 14.00% 3 12.00%

2.5 10.00% 2 8.00%

$ billions $ 1.5 6.00% 1 4.00% 0.5 2.00% 0 0.00% Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Loans & Advances ($ billions) ACL/TL (%)

Profitability…

3.24 While the banking sector remained profitable during the year ended 31 December 2012, total profit after tax for the banking sector declined from $86.01 million in 2011 to $70.32 million for the year ended 31 December 2012. The decline in profit after tax is mainly attributable to a combination of increases in non-interest expenses and loan loss provisions over the period. Total loan loss provisions for the banking sector increased by 76.66% from $64.64 million in 2011 to $114.14 million in 2012. Non-interest expenses which comprise of salary & benefits, occupancy costs and other operating expenses increased by 12.30% from $466.82 million to $524.25 million over the same period.

3.25 The banking industry’s total operating income increased by 15.50% from $646.74 million in 2011 to $746.99 million in 2012. Non-interest income of $405.38 constituted 54.27% of total income for the period ended 31 December 2012, indicating banks’ dependence on non-core income.

3.26 The proportion of net interest income to total income has, however been increasing as shown in the figure below:

Figu re 3 .6: Composition of Total Income

100%

90%

80% 54% 70% 56%

60%

50% Non-Interest Income

40% Net Interest Income

30% 46% 20% 44%

10%

0% Dec 11 Dec 12

3.27 Although non-funded income declined over the period, it still constitutes a higher proportion of total income. The increase in the proportion of net interest income indicates gravitation towards core banking business.

3.28 The major expenses comprised of salaries and employment benefits which amounted to $248.77 million as at 31 December 2012 up from $227.76 million as at 31 December 2011.

3.29 The figure below shows the composition of operating expenses.

Figu re 3 .7: Composition of Major Expenses

$282.11

Dec 12 $114.57 $248.77

$239.06

Dec 11 $64.61 $227.76

$0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 Expenses (millions)

Other expenses (depreciation & rentals) Provisions for Loan Losses Salaries & Emploment Benefits

3.30 Other operating expenses relate to occupancy costs and depreciation which amounted to $282.11 million in 2012.

3.31 Provisions to total cost also increased from 12.16% in December 2011 to 13.65% in 2012. Specific provisions as a proportion of total loans also increased from 1.5% to 2.10% during the same period.

3.32 Return on Assets (ROA) and Return on Equity (ROE) for the banking sector declined from 2.43% and 15.13% in 2011 to 1.65% and 9.52% in 2012, respectively.

3.33 The figure below indicates profitability indicators from 2011 and 2012

Figu re 3 .8: Profitability Indicators

16 15.13 14.45 14

10 9.32 8.21 NIM (%) 8 ROA (%)

Percentage 6 ROE (%) 4 2.43 1.65 2

0 31-Dec-11 31-Dec-12

3.34 During the period under review, a number of banking institutions retained most of their earnings, with few institutions declaring dividends.

Liquidity and Funds Management… 3.35 Total banking sector deposits have been on an upward trend over the period from December 2011 to December 2012 as indicated below.

Figu re 3 .9: Total Deposits

Total Deposits ($ billion) 5 4.41 4.5 4 3.38 3.5 3 2.5 Total Deposits ($ billion) 2 1.5 1 0.5 0 11-Dec 12-Dec

3.36 Short term deposits, which comprise of demand, savings and under 30-day deposits, constituted 60.46% of the total deposits as at 31 December 2012. The dominance of short term deposits is a reflection of the behavior of macro structural rigidities prevalent in the sector.

3.37 Lending rates quoted by banks have remained relatively high, largely due to persistent liquidity shortages, high credit demand, limited lines of credit and the absence of an active money market.

3.38 The absence of a functional money market has resulted in the widening of interest rates margins between lending and deposits rates. As at end of December 2012, nominal lending rates ranged between 8% and 32% with most banks quoting lending rates above 20%. Deposit rates, however, ranged between 0.15% and 17%.

3.39 Notwithstanding the realization of positive real interest rates on time deposits, term deposits have remained low on the backdrop of high opportunity cost of holding the deposits.

3.40 Despite high lending rates charged by banks, demand deposits, which constitute the bulk of the deposits, continue to attract low interest rates and high transaction charges. This negative development continues to militate against efforts geared at promoting a savings culture among the banking public.

SECTORAL ANALYSIS

Commercial Banks

3.41 There were 16 commercial banks operating in the sub-sector as at 31 December 2012 down from 18 that were operating as at 31 December 2011. The decrease in the number of commercial banks follows the placement of Interfin Bank Limited under curatorship and the surrender of a banking licence by Royal Bank of Zimbabwe Limited. Royal Bank had commenced operations on 17 February 2011.

Total Assets… 3.42 Total assets in this sub-sector increased by 31.73% from $3.94 billion as at 31 December 2011 to $5.19 billion as at 31 December 2012. The growth in total assets was mainly due to growth in deposits that grew by 25.09% from $3.05 billion as 31 December 2011 to $3.81 billion as at 31 December 2012.

3.43 The commercial banking sub-sector contributed 83.61% of total banking sector assets as at 31 December 2012.

3.44 The figure below shows a comparison of commercial banking sub-sector assets to total banking sector assets over the period 2011 to 2012.

Figure 3.10: Commercial Banks Asset Base

$ Millions 7,000

6,000 1,017

5,000

825 4,000

3,000 5,186 2,000 3,939

1,000

0 Other Banks 2011 2012 Commercial Banks

Total Liabilities… 3.45 Total liabilities for the commercial banking sub-sector grew by 31.68% on the back of growth in total deposits which grew by 30.64% from 2011 to 2012.

3.46 Retail deposits comprised of demand and savings deposits accounted for the bulk

of commercial banking deposits, contributing 72% as at 31 December 2012.

3.47 The figure below shows the distribution of deposits in the commercial banking sector as at 31 December 2012.

Figu re 3 .11: Distribution of Commercial Bank Deposits

FCA, 1.39%

NCDs, 0.93%

Fixed Deposits 24.67%

Demand Deposits 65.66% Savings Deposits 7.34%

3.48 The loans to deposit ratio for the sub-sector decreased from 87.96% as at 31 December 2011 to 95.63% as at 31 December 2012.

Capital Adequacy… 3.49 The commercial banking sector had an average capital adequacy ratio of 13% as at 31 December 2012. Three (3) institutions had capital adequacy ratios which were below the regulatory minimum of 12% as at 31 December 2012.

3.50 Total net capital base for the sub-sector increased from $415.60 million as at 31 December 2011 to $444.4 million as at 31 December 2012, spurred by the efforts to ensure compliance with the new capital requirements of $25 million effective 31

December 2012.

Asset Quality… 3.51 Total loans and advances increased by 30.13%, from $2.29 billion as at 31 December 2011 to $2.98 billion as at 31 December 2012. The increase in total loans was mainly attributed to increased underwriting capacity as a result of increased levels of deposits within the sub-sector.

3.52 The commercial banking sub-sector maintained its dominance in terms of loans and advances as loans by commercial banks constituted 83.92% of total loans as at 31 December 2012.

3.53 The figure below indicates the contribution of the commercial banking sub-sector to banking industry loans for the period 2011 to 2012.

Figure 3.12: Commercial Bank Loans against Total Banking Sector Loans

4.00 3.50 0.57 3.00 0.47

2.50

2.00 Billions 1.50 2.98 2.29 1.00 0.50 0.00 2011 2012

Commercial Banks Other Banks

3.54 Asset quality deteriorated in the commercial banking sub-sector in 2012 as evidenced by the increase in the ratio of adversely classified loans to total loans from 5.89% as at 31 December 2011 to 13.78% as at 31 December 2012.

Earnings… 3.55 The commercial banking sector (excluding Interfin which is under curatorship) remained profitable during the year ended 31 December 2012 as indicated by total earnings of $87.40 million. The sector recorded return on assets and return on equity ratios of 1.21% and 5.45% for the year ended 31 December 2012. However, profitability is under threat from credit losses emanating from poor loan performance.

3.56 Net interest margin increased from 7.21% in 2011 to 10.08% in 2012, while cost to income ratio in the sub-sector improved from 92.97% in to 90.60% during the same period.

3.57 The figure below indicates a comparison of key profitability indicators for the period 2011 to 2012.

Figure 3.13: Commercial Banks Key Earnings Indicators

100.00% 92.97% 90.60% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 17.58% 20.00% 10.08% 5.45% 7.21% 10.00% 2.70% 1.21% 0.00% ROA ROE NIM Cost to Income

Dec-11 Dec-12

3.58 The commercial banking sub-sector derived the bulk of its income from interest income and fees & commissions which contributed 46.88% and 28.54%, respectively, to total income for the year ended 31 December 2012.

3.59 The income mix for the sector indicates the commercial banking sector’s ability to

generate sustainable income from its core business of financial intermediation.

3.60 The income mix for the commercial banking sub-sector as at 31 December 2012 is indicated in the figure below:

Figure 3.14: Commercial Banking Sector Income Mix

4.70% 28.54% 55.86%

10.89%

Interest Income Income from Foreign Exchange Dealing Fees and Commission Other Non Interest Income

3.61 The cost structure for commercial banks was skewed towards salaries and employment benefits which accounted for 32.78% of total commercial banking sector costs for the year ended 31 December 2012, against interest expenses which accounted for 23.29%. Rentals, depreciation and other expenses were the other costs drivers for the sector.

Liquidity and Funds Management… 3.62 Commercial bank deposits grew by 23.46%, from $2.6 billion as at 31 December 2011 to $3.21 billion as at 31 December 2012.

3.63 Twelve (12) out of 16 commercial banks were compliant with the prudential liquidity ratio of 30% as at 31 December 2012. During the year under review, most banking institutions in the sub-sector operated smoothly with minor liquidity disruptions.

Merchant Banks

3.64 There were two (2) operational merchant banks as at 31 December 2012, down from four which were operational in 2011. The reduction follows the conversion into a commercial bank of Premier Banking Corporation (now Ecobank) and the liquidation of Genesis Investment Bank.

3.65 Genesis Investment Bank surrendered its licence on 11 June 2012 in line with section 14(4) of the Banking Act [Chapter 24:20], after failing to meet minimum capital requirements. Subsequently the institution was liquidated.

Total Assets… 3.66 The sub-sector had total assets of $218.77 million as at 31 December 2012 down from $249.47 million as at 31 December 2011. The decline in total assets is attributed to the decrease in the number of operating merchant banks.

3.67 The sub-sector’s asset mix mainly comprised loans and advances (48.56%) and investments and securities (10.60%). The figure below indicates the assets mix for the two operating merchant banks as at 31 December 2012.

Figu re 3 .15: Asset Mix for Merchant Banks

4.21% 0.98% 0.31% 11.42% 0.05% 14.14%

6.53% 13.56%

48.80%

DOMESTIC NOTES AND COIN BALANCES WITH CENTRAL BANK BALANCES WITH DOMESTIC BANKS BALANCES WITH FOREIGN INSTITUTIONS SECURITIES AND INVESTMENTS LOANS & ADVANCES, FIXED ASSETS OTHER ASSETS OFF-BALANCE SHEET ITEMS

Capital Adequacy… 3.68 Of the two operating merchant banks, one had a capital adequacy ratio of 8.93% which was below the minimum regulatory requirement of 12%. However, the institution’s capital adequacy ratio had significantly improved from negative 56.70% reported as at 31 December 2011.

Asset Quality… 3.69 Loans and advances for the sub-sector amounted to $127.48 million as at 31 December 2012, compared to $146.55 million as at 31 December 2011.

3.70 Asset quality challenges continued to bedevil the merchant banking sub-sector as reflected by the ratio of adversely classified loans to total loans (ACL/TL) of 38.24% as at 31 December 2012.

3.71 The figure below shows the trend of ACL/TL for the merchant banking sub -sector when compared to commercial banks, building societies and POSB from 2011 to 2012.

Figu re 3 .16: ACL/Total Loans Ratio by Sub -Se cto r

50.00% Commercial Banks 45.00% 43.59% Merchant Banks Building Societies 38.24% 40.00% POSB 35.00%

30.00%

25.00%

20.00% 14.05% 13.78% 15.00% 13.47%

10.00% 7.89% Adversly Classified Adversly Classified Loans to Total Loans 3.62% 5.00% 1.56% 0.00% 31-Dec-11 31-Dec-12

3.72 The decline in the ACL/TL ratio was attributed to the liquidation of Genesis Investment Bank, whose ACL/TL ratio as at 31 December 2011 had reached 88.93%.

Earnings… 3.73 The viability challenges faced by the merchant banking sector, characterised by poor asset quality and low business underwriting capacity, culminated in the sub- sector reporting losses. The viability challenges emanate from the business model of merchant banks which normally relies on wholesale funding to meet long term funding needs of corporate. However, in the obtaining environment, merchant banks have struggled to balance the funding needs of the sub-sector, resulting in a number of merchant banks realigning their business model to commercial banking in an effort to access retail deposits.

3.74 In view of the above challenges, the sub-sector recorded a combined loss of $4.80 million for the year ended 31 December 2012, from a loss of $24.26 million recorded in 2011. Both merchant banks recorded losses during the period.

3.75 Reflecting the challenges facing the sub-sector, key profitability indicators such as return on asset and return on equity ratios for the sub-sector, remained negative in 2012, respectively.

3.76 The figure below indicates the sector’s key profitability indicators for the period 2011 to 2012.

Figure 3.17: Profitability Indicators for Merchant Banks

40.00% 31.04% 30.00%

20.00% 8.40% 10.00%

0.00% ROA -3.02% ROE NIM -10.00% -4.79% -20.00% -13.25%

-30.00% -24.66%

2011 2012

3.77 Net interest margin increased from 8.40% as at 31 December 2011 to 31.04% as at 31 December 2012 while cost to income ratio improved from a sub-sector average of 183.48% to 98.22% during the same period. The improvement in the cost to income ratio over the period under review is attributed to the cancellation of the operating licence of Genesis Investment Bank whose cost to income ratio in 2011 was 409.55%.

3.78 The sub-sector derived the bulk of its income from loans and advances as depicted in the figure below:

Figu re 3 .18: Income distribution for Merchant Banks

29.30%

64.89%

5.55% 0.26%

Interest Income Foreign Exchange Dealing Fees and Commission Other Non Interest Income

3.79 The sub-sector’s poor profitability was mainly attributed to high provisioning levels of $8.73 million for the year ended 31 December 2012, which accounted for 33% of total costs. The figure below indicates the cost structure for the merchant banks sub-sector for the year ended 31 December 2012.

Figu re 3 .19: Merchant Banks’ Cost Structure

33.25%

25.64%

16.61%

24.50%

Total Provisions Interest Expense Salaries and Employement Costs Administration Costs

Liquidity and Funds Management… 3.80 Deposits in the sub-sector remained stable during the year with the sub-sector’s deposit mix inclined towards fixed deposits which constituted 53.81% of the total merchant bank deposits.

3.81 The sub-sector’s prudential liquidity ratio of 25.26% as at 31 December 2012 was below the regulatory minimum of 30%.

Building Societies

3.82 There were four (4) building societies operating in 2012. The sector acco unted for 11.56% of total assets, 11.38% of total loans and 10.97% of total deposits in the banking sector.

Total Assets… 3.83 Total sub-sector assets grew by 40.47% from $510.54 million in 2011 to $717.14

million as at 31 December 2012. The growth in total assets was largely attributed to the growth in deposits which grew by 53.06% over the period.

3.84 The figure below indicates the growth trends in total assets and total loans for the sector as at 31 December 2011 and 31 December 2012.

Figu re 3 .20: Building Societies Loans and Assets

Millions

800 717 700

600 511 500 405 400 285 300 200 100 0 2011 2012

Total Loans Total Assets

3.85 Loans and advances constituted 40.54% of building societies’ total assets.

Capital Adequacy… 3.86 The building societies sub-sector had average tier 1 and capital adequacy ratios of 29.49% and 35.69% as at 31 December 2012, respectively.

3.87 However, two (2) building societies failed to comply with the minimum capital requirement of $20 million for building societies effective 31 December 2012.

Asset Quality… 3.88 Total loans for the sub-sector increased by 41.94%, from $285.02 million as at 31 December 2011 to $404.56 million as at 31 December 2012. The ratio of adversely classified loans increased from 1.56% as at 31 December 2011 to 3.62% as at 31 December 2012, signifying increasing credit risk.

3.89 Building societies advanced mortgage facilities amounting to $164 million in 2012 up from $83.99 million in 2011. The increase in mortgage lending by the sub -sector was largely due to increases in deposits, support from parent companies and partly external lines of credit.

3.90 However, limited lines of credit continue to constrain sustained growth of mortgage lending by the sub-sector.

Earnings… 3.91 The building societies’ sub-sector was generally profitable with a profit after tax of $43.63 million for the year ended 31 December 2012, up from $30.47 million recorded for the year ended 31 December 2011.

3.92 Building societies earned the bulk of their income from interest on loans and advances and fees and commissions which contributed 51.15% and 34.24% 7.46% to total income, respectively. The sub-sector’s income mix for the year under review is shown below.

Figure 3.21: Building Societies Income Mix

7.46%

34.24% 51.15%

7.15% Interest Income from Loans Interest Income on Investments and Securities Fees and Commission Other Income

3.93 Average return on assets ratio decreased from 7.22% in 2011 to 6.09% in 2012, while the return on equity increased from 22.24% to 24.62%, during the same period.

Liquidity… 3.94 Building society deposits increased from $273.36 million as at 31 December 2011 to $418.41 million as at 31 December 2012.

Asset Management Companies

3.95 The asset management sector comprised 16 operating institutions as at 31 December 2012, the same number that was operating in 2011.

3.96 The sub-sector continued to experience liquidity challenges which manifested through minimal investments by individuals on both the capital and money market and shortage of alternative investments on the market. This has severely impacted on the volume of transactions on the capital and money markets and thus negatively impacting on the level of funds under management and ultimately the level of management fees earned.

Capital … 3.97 As at 31 December 2012, 15 out of 16 asset managers supervised by the Reserve Bank were compliant with the minimum regulatory requirement of $500,000.00 for asset management companies.

Funds under Management… 3.98 Total funds under management increased by 14.47% from $1.59 billion as at 31 December 2011 to $1.82 billion as at 31 December 2012.

3.99 Money market funds grew by 76.38% from $259.61 million as at 31 December 2011 to $457.89 million as at 31 December 2012 whilst quoted equities decreased by 1.73% from $773.55 million as at 31 December 2011 to $760.17 million as at 31 December 2012. The growth in money market funds was attributed to the gradual return of some money market activity in the economy as investors look to diversify their investment portfolios.

3.100 The figure below illustrates the composition and trend in funds under management

for the sector over the year.

Figu re 3 .22: Distribution of Total Funds under Management

Growth in Total Funds 2,000.00 under Management 8% 1,800.00 6%

1,600.00 1,400.00 4%

1,200.00 1,000.00 2%

800.00 $ millions $ 0% 600.00 PercentageChanges 400.00 -2% 200.00

0.00 -4%

Dec Dec

Sep Sep

Jun Jun

Mar Mar

- -

12 11

- -

11 12

Money Markert Total Equities Growth

Earnings and Profitability… 3.101 Asset managers’ total earnings decreased by 65.70% from $2.59 million in 2011 to $889,562.63 in 2012.

3.102 Return on assets and return on equity ratios subsequently declined from 11.21% and 15.75% for the year ended 31 December 2011 to 8.44% and 11.73% respectively, for the year ended 31 December 2012.

3.103 Management fees constituted 83.27% of total income in 2012, up from 74.30% recorded in 2011.

3.104 The figure below indicates the composition of the sector’s income for the period June 2011 to December 2012.

Figu re 3 .23: Asset Management Companies ’ In come Mix

Income from Investments & Securities Other Income 7% 9%

Management Fees 84%

Microfinance Institutions

Introduction…

3.105 Microfinance plays a critical role in the process of building inclusive financial systems for inclusive growth and development. The microfinance industry therefore has a strategic role in the efforts towards attainment of the Millennium Development Goals.

3.106 Micro, Small and Medium Scale Enterprises (MSMEs) are the engine for growth in most developing countries including Zimbabwe. A vibrant and sustainable microfinance industry promotes financial inclusion; that is access to credit, savings and payment systems and other financial products and services for the majority of the population incorporating low income households and MSMEs.

3.107 On the other hand, microfinance institutions (MFIs), given their extensive outreach, can play a crucial role in promoting access to financial services by the majority of the people. Microfinance institutions assist in the formalization and integration of the informal sector into the formal sector thereby facilitating economic growth and development.

Architecture of the Microfinance Industry…

3.108 As at 31 December 2012, there were 150 registered microfinance institutions under the supervision of the Reserve Bank up from 146 as at 31 December 2011.

3.109 Microfinance institutions continue to be concentrated in urban centres such as Harare, Bulawayo, Masvingo, Gweru and Mutare. However, a few institutions have opened branches in rural and peri-urban centres.

3.110 A number of microfinance institutions have embraced developments in information technology. Technology innovations present greater opportunities for microfinance institutions to reach out to microfinance clients in rural and marginalised areas where the population is too dispersed to support stand alone branches. Further, inadequate infrastructure as well as traveling costs hinder access to financial services by the majority of people.

3.111 The Reserve Bank supports the adoption of innovative technologies in the microfinance sector and encourages other microfinance institutions to continue to seek cost-effective ways to serve the large, low income market.

Performance of the Microfinance Sub-Sector…

3.112 The table below shows key indicators for the microfinance institutions under the supervision of the Reserve Bank as at 31 December 2011 and 31 December 2012.

Table 3.1: Microfinance Sector Key Indicators

31 Dec 2012 31 Dec 2011 No. of Licensed Institutions 150 146 No. of MFIs which submitted data 95 72 Total Loans $93.88 million $63.43 million Total Assets $116.01 million $98.71 million Average Net Profit $51,644.46 $37,014.71 Return on Assets 3.64% 5.31% No. of Clients 96,749 58,325 No. of Branche s 278 132 Portfolio at Risk (PaR > 30 days) 25.52% 10.10%

3.113 The assessment of the impact of microfinance on the Zimbabwean economy continues to be hampered by information gaps.

3.114 The Reserve Bank continues to urge microfinance institutions to submit regulatory returns in order to facilitate performance evaluation of the sector.

Total Loans…

3.115 Total loans in the sector increased by 47.97% from $63.43 million in 2011 to $93.88 million in 2012. The growth is largely attributed to the entrance of new market players, a few of which are supported by institutional shareholders while some have managed to secure foreign lines of credit to support their operations.

3.116 The sector has remained largely dominated by ten microfinance institutions which controlled 82.35% of the market share in terms of total loans as at 31 December 2012.

3.117 Asset quality as measured by the portfolio at risk (PaR>30 days) deteriorated from 2011 to 2012 reflecting high levels of credit risk in the sector. The PaR ratio deteriorated from 10.10 % in 2011 to 25.52% in 2012.

3.118 The high PaR ratio is largely attributed to multiple borrowings on the background of high interest rates leading to over-indebtedness of microfinance borrowers

compounded by the absence of robust credit reference bureaus.

Total Assets…

3.119 Total assets in the microfinance sector increased by 17.50% from $98.71 million as at 31 December 2011 to $116.01 million as at 31 December 2012. The proportion of loans as a percentage of total assets increased over the period from 64.26% in 2011 to 80.92% in 2012.

Earnings…

3.120 Average net profit in the sector improved from $37,014.71 in 2011 to $51,644.46 in 2012. Return on assets declined from 5.31% in 2011 to 3.64% in 2012, while return on equity though remained negative improved from 214.76% to 16.91% during the same period.

3.121 The microfinance sector derives the bulk of their income from interest on loans with the majority of expenses being accounted for by salaries and benefits and occupancy costs.

Challenges in the Microfinance Sector in Zimbabwe…

3.122 The microfinance sector is experiencing a number of challenges including the following:

Capitalisation

3.123 A number of microfinance institutions are struggling to build financial capacity to underwrite business and there is limited availability of wholesale funds for on lending.

3.124 Weak capitalisation is constraining the organic growth of microfinance institutions and is continuing to hamper the institutions’ ability to offer unsecured lending to their clients. Most microfinance institutions are focusing on payroll lending at the expense of support to the productive sector. Under these circumstances, the microfinance industry is failing to adequately support low income groups and MSMEs.

Weak Risk Management Systems

3.125 The microfinance sector is experiencing shortage of critical skills in accounting, credit analysis and administration mainly attributed to funding constraints, and inability to train and retain skills. This has negatively affected the institutions’ capacity to manage risks emanating from their activities.

Inadequate ICT Infrastructure and Weak Record Management

3.126 Inadequate funding has also affected microfinance institutions’ capacity to acquire robust ICT systems to support their operations. Weak MIS have also affected institutions’ ability to submit regulatory returns therefore hampering performance monitoring of the industry as well as financial stability assessments.

Absence of Robust Credit Reference Bureaus

3.127 The absence of robust credit reference bureaus for use by microfinance institutions operating in Zimbabwe has affected the quality of MFIs’ credit risk management systems. The Reserve Bank and the Ministry of Finance and Economic Development are currently developing the regulatory framework for accreditation of credit reference bureaus.

Illegal Deposit Taking by Some Microfinance Institutions

3.128 A number of credit-only microfinance institutions have engaged in illegal deposit taking activities in the multicurrency era. Some members of the public have been lured by the attractive yet unsustainable interest rates offered and have lost funds through these illegal deposit taking activities which have threatened financial stability.

CHAPTER FOUR - OUTLOOK

Introduction…

4.1 Adverse developments in the global economic conditions coupled with constraints in the domestic economy, notably underlying liquidity shortages inextricably linked to external sector developments, limited lender of last resort, as well as depressed money market activity will continue to characterize the banking sector in 2013. 4.2 Underlying liquidity challenges, coupled with the transitory nature of deposits, are expected to continue constraining the ability of banks to lend notwithstanding gains from increased capitalization. 4.3 In the absence of meaningful money market trading, earnings performance for some banks is expected to remain subdued, in turn affecting the ability to grow capital organically. In response, affected banks are likely to pursue mergers, particularly in light of new capital requirements as per the January 2013 Monetary Policy Statement. However, plans by Government to undertake additional Treasury Bill auctions in 2013 should provide relief in terms of investment opportunities. 4.4 Notwithstanding continued macro and micro-structure induced constraints facing the banking sector, various supervisory initiatives outlined herein are expected to enhance financial stability during the course of 2013.

Bank Recapitalization…

4.5 The phased recapitalization of banks in line with revised minimum requirements effective 31 December 2012 is expected to improve confidence in the banking sector and spur financial intermediation. Increased business volumes should also address challenges, particularly for smaller banks, associated with inability to attain critical mass in terms of revenue generation to meet operating costs. It is envisaged that such a development would see down-ward review of lending

rates and bank charges.

Stress Testing…

4.6 The continued improvement in banking institutions’ stress testing frameworks in terms of coverage, depth and analysis through the guidance of the Reserve Bank is expected to enhance early identification of vulnerabilities on banks’ balance sheet. This should in turn facilitate prompt remedial actions by bank management and enable them to implement strategies that promote their balance sheet resilience to identified vulnerabilities.

Non- Performing Loans…

4.7 The establishment of credit reference bureaus should assist in reducing the current asymmetric information gap between borrowers and lenders, in the process, improving credit risk management at banks. This should in turn, reduce the level of non – performing loans.

Savings Mobilization…

4.8 One of the reasons that have militated against the banking sector’s ability to mobilize deposits has been high bank charges that have tended to discourage opening of banks accounts. Low deposit rates have aggravated the problem. In respect of bank charges and interest rates, there was a significant milestone as banking institutions undertook to offer products and services that promote savings. It is envisaged that banking institutions and the Reserve Bank will sign a Memorandum of Understanding on Bank Charges which is envisaged to lower bank charges and inculcate a savings culture so necessary to the attainment of financial stability.

Financial Stability Enhancement …

4.9 Operationalisation of the Financial Stability Framework through establishment of the Multidisciplinary Financial Stability Committee in March 2012 and requisite technical committees was a welcome development that should significantly

enhance the safety and soundness of the financial sector in 2013 and beyond. This is premised on the fact that the financial stability framework facilitates ongoing monitoring and analysis of macro-financial conditions and developments in the real economy. 4.10 With the financial stability assessment provided for in the framework, identification and assessment of potential risks and vulnerabilities should lead to the adoption of preventive, remedial and resolution policies that promote financial stability.

Microfinance Sector…

4.11 The Reserve Bank continues to warn credit only microfinance institutions to desist from illegal deposit mobilisation while members of the public are advised not to participate in the get-rich-quick schemes as they risk losing their funds. 4.12 The requirement for all microfinance institutions to justify interest rates and all other charges levied on borrowed funds as well as adequately disclose their business conditions, is expected to create the necessary competition and possible reduction in interest rates. Against this background, finalization of Microfinance Bill, consumer awareness programs; and establishment of the Microfinance Advisory Council should strengthen self- regulation, market discipline and supervisory oversight, not only critical to the growth and development of the sector, but enhancement of financial inclusion.

Troubled and Insolvent Banks Policy …

4.13 The planned roll- out of the Troubled and Insolvent Bank Policy to banks in February 2013 is expected to provide the market with guidance in terms of the supervisory assessment methodology, as well as the benchmarks to be used when effecting various corrective options. This is expected to instil the required discipline in bank management. At the same time, the fair, consistent, transparent, cost effective and timely problem resolution approach to the framework should go a long way in enhancing troubled bank resolution framework going forward.

APPENDICES

APPENDIX 1 : OPERATIONS AND ACTIVITIES

FUNCTION OF BLSS

1. The Reserve Bank of Zimbabwe, in terms of Section 6 of the Reserve Bank Act [Chapter 22:15], is mandated to foster the stability and proper function of the Zimbabwean Financial System as well as supervision of banking institutions, among others.

Organization of the Bank Licensing, Supervision and Surveillance Division (BLSS)

2. In a bid to fulfill its mandate to foster and maintain financial stability, BLSS is organized into six (6) departments, aided by a Legal Counsel function. 3. The operational departments of the division are illustrated below.

Director/Bank Licensing, Supervsion & Surveillance

Chief Legal Advisor

Chief Bank Examiner Chief Bank Examiner Chief Bank Examiner Chief Bank Examiner Chief Bank Examiner\ Chief Bank Examiner Bank Licensing and Licensing &Supervision of Financial Modelling and Problem Bank Resolution Policy Research, Asset Management Supervision of Banks Microfinance Institutions Basel II Implementation and Market Stabilisation Compliance and MIS Companies APPENDIX 2: MAJOR SUPERVISORY TOOLS & METHODOLOGIES

1. In an effort to effectively fulfill the responsibility to promote and maintain the safety, soundness, and integrity of the banking system, the Reserve Bank employs various supervisory techniques, which are continuously refined to take cognisance of international best practices. The methodologies include risk- based supervision, consolidated supervision, macro-prudential and financial stability analysis and early warning systems.

Risk-Based Supervision…

2. Risk-based supervision is a structured supervisory process designed to identify key risk factors through qualitative and quantitative assessment of an institution’s risk profile, assess the adequacy of the risk management policies and practices that are used to mitigate risk; and focus supervisory resources (including examination time) based on the risk characteristics of the institutions.

3. This approach requires a strong understanding of the institution and focuses on validating management’s ability to identify, measure, monitor and control risks.

Consolidated Supervision…

4. The consolidated supervision approach evaluates the strength of individual banking institutions and the entire banking group, taking cognizance of the whole spectrum of risks that affect an institution, whether these risks are carried in the books of the regulated entity or related parties.

5. Consolidated supervision promotes the overall evaluation, both qualitatively and quantitatively, of the strength of a banking group to which a banking institution belongs, in order to understand the relationship among the entities and to assess the potential impact of other entities in the group on the operations of the banking institution.

6. Banking and non-banking activities conducted by a financial conglomerate and its subsidiaries and affiliates, both domestic and foreign, are borne in mind in determining the conglomerate and its related entities’ level of compliance with prudential regulatory requirements.

Macro-Prudential and Financial Stability Analysis…

7. Macro-prudential surveillance facilitates a holistic view of structural imbalances, interactions and vulnerabilities within the banking system at both national and global level. The analysis encompasses a surveillance of financial markets to assess the likelihood of economic shocks; analysis of macro-prudential linkages with particular focus on the extent to which shifts in financial soundness affect macro-economic and real sector developments. Information from macro- prudential analysis provides an input into the assessment of the banking sector.

8. Financial stability analysis provides a framework for the assessment of the condition of the financial system as a whole, identification of the potential downside risks to the financial system, analysis of alternate means of promoting and maintaining financial system stability and the surveying of policy developments designed to improve financial stability. Macro -prudential analysis, macro-stress testing and scenario analysis are the bedrock on which financial stability analysis hinges.

9. Macro-stress testing and scenario analysis which are essentially risk and vulnerability assessments are conducted on a continuous basis. The analyses explore susceptibilities to both endogenous and exogenous events which have a low probability of occurrence, but have a high potential for a costly impact should they materialize.

Core Deliverables of BLSS

10. BLSS’ underlying philosophy revolves around the concept that banking institutions should be free to operate according to market forces and should be entitled to set terms and conditions for their operations in a competitive environment. However, supervisory rules should be set to manage banking practices in order to protect depositors, other creditors and contribute towards a sound and stable financial system.

11. To ensure financial sector stability BLSS undertakes the following activities; licensing and de-licensing of banking institutions, off-site surveillance and on-site supervision.

Licensing and de-licensing of banking institutions…

12. In line with international best practice as espoused in the Basel Core Principles for Effective Banking Supervision, the licensing and de-licensing function of banking institutions, asset management companies and microfinance institutions is vested in the Reserve Bank of Zimbabwe.

13. The licensing framework considers the ownership structures; capitalization levels of the proposed institution in relation to the class of banking; the fitness and probity of members of the board and senior management, strategic and operational plans; internal controls; and risk management among others.

Off-site Surveillance…

14. Off-site surveillance, designed to complement on-site examinations and facilitate ongoing assessment of banks in between examinations, entails periodic analysis of the financial condition and performance of individual institutions and the entire banking sector.

15. This periodic analysis is based on the quantitative and qualitative information furnished by reporting institutions in the form of standardized statutory returns.

16. Off-site analysis, used as an early warning supervisory tool, involves regular, periodic and at times ad-hoc data collection, preliminary analysis and validation, detailed analysis and prudential meetings with the specific banking institution.

17. In line with the developments in the region, the Reserve Bank has adopted the SADC/ESAP Information Technology Harmonization Project, the Banking Supervision Application (BSA), which automates data collection, data validation and supervisory processes and workflows.

18. Apart from prudential returns, other sources of information which include the financial institutions’ internal management reports, published financial information

and prudential meetings between the financial institutions, external auditors and the Reserve Bank, provide an invaluable input to off-site surveillance.

19. In addition, the Reserve Bank conducts stress tests as part of the early warning systems to determine the vulnerability of individual banks as well as the entire banking system to various shock scenarios.

On-site Examinations…

20. As an international best practice of continuous supervision, BLSS conducts on- site examination of financial institutions under its purview. This involves actual visits to banking institutions to evaluate their safety and soundness.

21. The coverage of on-site examinations ranges from an investigation of specific areas to a comprehensive review of an institution's operations with focus placed on assessing management’s ability to identify, measure, monitor and control risks emanating from banking business.

22. On-site examinations are structured to provide a comprehensi ve evaluation and assessment of a range of supervisory issues including:

i. compliance with laws, regulations and the institution’s own internal policies and procedures; ii. corporate governance and competence of management; iii. adequacy of the institution’s risk management systems and internal control procedures; iv. adequacy of accounting and management information systems; and v. maintenance of proper books of accounts and other records.

23. The frequency of on-site examinations is determined by the institution’s risk profile as depicted by the results of the off-site assessment and significant developments which have a bearing on the financial condition of an institution.

APPENDIX 3

REGISTERED & OPERATING BANKING INSTITUTIONS AS AT 31 DECEMBER 2012

Commercial Banks Total Assets

Banking Institution Addre ss & Website 2011 2012 % Annual Growth

Agribank 15th Floor, Hurudza House 99.87 137.83 38.01% 14-16 Nelson Mandela Avenue Harare Tel: 774429 or 773704/5 or 774554 Fax 774554 www.agribank.co.zw

Allied 8th Floor, ZB Life Towers 17.42 41.83 140.13% 77 Jason Moyo Avenue Harare Tel:794420/32/59,793874 /794448 Fax: 794788 www.alliedbank.co.zw

Barclays Bank of 1st Street/Jason Moyo Avenue Harare 281.60 324.32 15.17% Zimbabwe Phone: 758280/99 or 758324 www.africa.barclays.com BancABC 1 Endevour Crescent 378.12 667.13 76.43% Mt. Pleasant Business Park Harare Phone: 701636/52 (739089 - Direct) Fax 727330 www.africanbankingcorp.com

CBZ Bank Limited 60 Kwame Nkrumah Avenue 969.52 1142.51 17.84% Harare Phone: 749714 or 748050/79 / 759110-6 Fax 758077 www.cbz.co.zw

Ecobank Sam Levy’s Office Park 71.33 124.39 74.39% BlockA, Piers Road Borrowdale Harare Phone:851642/7 Borrowdale) 706036/7 or 701350/3 or 703011/2/4 / 851642 Fax: 794993 www.premierfinancegrp.co.zw

FBC Bank Limited FBC Centre 196.18 284.76 45.15% Nelson Mandela Avenue Harare Phone:704462/704481/772705 Fax 704995 www.firstbank.co.zw

Commercial Banks Total Assets

Banking Institution Addre ss & Website 2011 2012 % Annual Growth

Interfin Block 4, Tendeseka Park 212.93 187.80 -11.80% Samora Machel Avenue Harare Phone:775019/24;75036/9; 777170-9; 700100/700065 796968/71/75/77 www.intermarket.co.zw

Kingdom Bank 12th Fl, Karigamombe Centre 150.52 195.26 29.72% Limited 53 Samora Machel Avenue Harare Phone: 749400 or 758469/70/71 or 749407 or 091 235315: Fax 755201 www.kingdom.co.zw

MBCA Bank Limited Old Mutual Centre 181.63 182.11 0.26% 3rd Street/Jason Moyo Harare Tel: 701636/52 Fax 727330 www.mbca.co.zw

Metbank Metropolitan House 107.47 198.19 -10.75% of Zimbabwe 3 Central Avenue Limited Harare Phone: 706091/706128 (701970 - Direct) Fax 733014 www.metbank.co.zw

NMB Bank 1st Floor, Unity Court 168.20 234.77 84.41% Limited Kwame Nkrumah Avenue HARARE 759651/9 or 754933/5 or 709122/68 or 709124/09 www.nmbz.co.zw

Royal Bank* 8th Floor, Takura House, 67 Kwame 12.67 - - Nkurumah Avenue Stanbic Bank Stanbic Centre 361.48 422.81 16.97% Zimbabwe Limited Samora Machel Avenue Harare Phone: 759471 Fax 772126 www.stanbic.co.zw Standard Chartered Bank 2nd Floor, Old Mutual Centre 387.78 425.80 9.80% Zimbabwe Cnr. Third Street/Jason Moyo Avenue Harare Limited Phone: 253801-7 or 252289 Fax 252288 www.sc.com

Commercial Banks Total Assets

Banking Institution Addre ss & Website 2011 2012 % Annual Growth

TN Bank 6th Floor, 101 Kwame Nkrumah 113.35 203.11 79.19% Avenue Harare Tel:79146/791444-8 Fax 791460

Trust Bank Trust Towers 56-60 Samora Machel 39.42 47.62 Avenue Harare

ZB Bank Limited Zimbank House 234.69 281.33 19.87% Cnr.1st Street/Speke Avenue Harare Phone: 751168/75 or 78662590/2576 www.finhold.co.zw

Merchant Banks Total Assets

Banking Institution Addre ss & Website 2011 2012 % Annual Growth

Capital Bank Renaissance Park 101.06 93.92 -7.07% Borrowdale Road Harare Phone: 852917-20

www.renaissance.co.zw

Genesis* 2nd Floor, Corner House, Samora 3.41 - Machel Avenue Tetrad 1st Floor, Building No. 5 73.67 128.16 73.96% Arundel Office Park Mt. Pleasant Harare Phone: 338401-6

Building Societies Total Assets

Banking Institution Addre ss & Website 2011 2012 % Annual Growth

Central African Building SocietyNorthridge Park 336.28 488.37 45.23% Northend Close Borrowdale Harare Phone: 883823/59 Fax 883804 www.cabsonline.co.zw

CBZ Building Society Beverley Place 108.65 133.75 23.10% Selous Avenue Harare Phone: 792631/5 / 705001 Fax 705999 FBC Building Society 5th Floor, FBC Centre 32.85 56.11 70.81% Nelson Mandela Avenue Harare Phone: 783203-9

Web page not available ZB Building Society 6th Floor, Finsure House 32.77 38.91 18.74% Cnr. Kwame Nkrumah / Sam Nujoma Harare Phone: 252978, 252926, 253031, 758275

Savings Bank Total Assets

Banking Institution Addre ss & Website 2011 2012 % Annual Growth

POSB 6th Floor, Causeway Building 64.99 80.60 24.02% Cnr. Third Street/Central Avenue HARARE Phone:729700-9;737911-9; 735081-8 or 791134-D/L Fax: 749012

* Banking Institution surrendered banking licence

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012: COMMERCIAL BANKS

ASSETS ABC AGRIBANK BARCLAYS CBZ ECOBANK DOMESTIC NOTES AND COIN 13,673,157 2.05% 11,728,747 8.51% 56,494,955 17.42% 40,815,919 3.57% 2,958,576 2.38% BALANCES WITH CENTRAL BANK 23,258,127 3.49% 3,508,653 2.55% 47,245,633 14.57% 136,497,153 11.95% 6,554,472 5.27% BALANCES WITH DOMESTIC BANKING INSTITUTIONS 41,329,949 6.20% 253,904 0.18% 300,983 0.09% 53,127,915 4.65% (522,705) -0.42% ASSETS IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH FOREIGN INSTITUTIONS 36,212,594 5.43% 3,933,537 2.85% 24,150,472 7.45% 32,605,515 2.85% 1,682,985 1.35% SECURITIES AND INVESTMENTS 9,284,298 1.39% 3,685,249 2.67% 14,509,647 4.47% 1,015,621 0.09% 8,409,319 6.76% LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 370,391,844 55.52% 87,824,627 63.72% 93,244,598 28.75% 624,851,171 54.69% 83,285,926 66.96% FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) - 0.00% - 0.00% - 0.00% 152,234,034 13.32% - 0.00% REPOSSESSED PROPERTIES / ASSETS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% FIXED ASSETS 37,514,051 5.62% 24,461,143 17.75% 41,470,708 12.79% 51,618,594 4.52% 5,360,642 4.31% BSD - BS OTHER ASSETS 9,759,445 1.46% 1,443,946 1.05% 4,236,119 1.31% 26,724,607 2.34% 3,426,700 2.75% TOTAL ON-BALANCE SHEET ASSETS 541,423,465 81.16% 136,839,805 99.28% 281,653,115 86.84% 1,119,490,529 97.98% 111,155,914 89.36% OFF-BALANCE SHEET ITEMS 125,706,388 18.84% 990,867 0.72% 42,669,136 13.16% 23,024,087 2.02% 13,234,220 10.64% TOTAL ASSETS 667,129,853 100.00% 137,830,672 100.00% 324,322,251 100.00% 1,142,514,616 100.00% 124,390,134 100.00%

EQUITY AND LIABILITIES 410,447,272 43,214,714 222,968,602 688,529,885 49,511,378 TOTAL DEPOSITS DEMAND DEPOSITS 144,945,433 21.73% 30,624,262 22.22% 210,036,328 64.76% 434,758,092 38.05% 21,685,947 17.43% SAVINGS DEPOSITS 71,201,715 10.67% - 0.00% 11,532,274 3.56% 4,335,071 0.38% - 0.00% TIME DEPOSITS/FIXED DEPOSITS 194,300,123 29.12% 12,590,452 9.13% 1,400,000 0.43% 219,286,231 19.19% 27,825,431 22.37% FOREIGN CURRENCY DEPOSITS - 0.00% - 0.00% - 0.00% 30,150,491 2.64% - 0.00% NEGOTIABLE CERTIFICATES OF DEPOSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH OTHER BANKING INSTITUTIONS - 0.00% 11,539,788 8.37% 958 0.00% 305,860,591 26.77% 19,898,749 16.00% LIABILITIES IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% FOREIGN LIABILITIES 60,161,542 9.02% 37,149,348 26.95% 221,485 0.07% - 0.00% - 0.00% SECURITIES AND OTHER FUNDING LIABILITIES 17,500,000 2.62% - 0.00% - 0.00% - 0.00% - 0.00% CAPITAL AND RESERVES 41,496,316 6.22% 28,465,121 20.65% 39,295,961 12.12% 94,433,562 8.27% 30,674,546 24.66% OTHER LIABILITIES 11,818,336 1.77% 16,470,835 11.95% 19,166,109 5.91% 30,666,491 2.68% 11,071,241 8.90% TOTAL ON-BALANCE LIABILITIES 541,423,465 81.16% 136,839,806 99.28% 281,653,115 86.84% 1,119,490,529 97.98% 111,155,914 89.36% OFF-BALANCE SHEET ITEMS - LIABILITIES 125,706,388 18.84% 990,867 0.72% 42,669,136 13.16% 23,024,087 2.02% 13,234,220 10.64% TOTAL EQUITY AND LIABILITIES 667,129,853 100.00% 137,830,673 100.00% 324,322,251 100.00% 1,142,514,616 100.00% 124,390,134 100.00%

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012 : COMMERCIAL BANKS

MBCA INTERFIN KINGDOM METBANK ASSETS FBC BANK DOMESTIC NOTES AND COIN 20,027,766 7.03% 57,522 0.03% 21,154,242 10.83% 6,195,285 3.13% 15,726,865 8.64% BALANCES WITH CENTRAL BANK 50,661,112 17.79% 289,923 0.15% 3,633,700 1.86% 13,394,031 6.76% 38,623,043 21.21% BALANCES WITH DOMESTIC BANKING INSTITUTIONS 17,955,910 6.31% 304,918 0.16% 3,023,383 1.55% 20,373,578 10.28% 10,000,000 5.49% ASSETS IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH FOREIGN INSTITUTIONS 8,229,982 2.89% 36,261 0.02% 3,258,155 1.67% 187,143 0.09% 12,520,771 6.88% SECURITIES AND INVESTMENTS 9,036,274 3.17% 15,459,818 8.23% 5,364,385 2.75% 1,518,542 0.77% 5,404,426 2.97% LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 150,169,862 52.74% 131,491,519 70.02% 120,607,723 61.77% 100,909,432 50.92% 89,721,498 49.27% FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) - 0.00% - 0.00% 10,877,968 5.57% - 0.00% 17,736 0.01% REPOSSESSED PROPERTIES / ASSETS - 0.00% - 0.00% - 0.00% 4,125,819 2.08% - 0.00% FIXED ASSETS 16,346,708 5.74% 8,051,811 4.29% 11,476,546 5.88% 50,650,855 25.56% 3,515,009 1.93% BSD - BS OTHER ASSETS 8,257,664 2.90% 4,023,360 2.14% 15,860,686 8.12% - 0.00% 4,905,463 2.69% TOTAL ON-BALANCE SHEET ASSETS 280,685,279 98.57% 159,715,133 85.05% 195,256,788 100.00% 197,354,686 99.58% 180,434,810 99.08% OFF-BALANCE SHEET ITEMS 4,069,747 1.43% 28,081,893 14.95% - 0.00% 835,491 0.42% 1,671,261 0.92% TOTAL ASSETS 284,755,025 100.00% 187,797,025 100.00% 195,256,788 100.00% 198,190,177 100.00% 182,106,071 100.00% EQUITY AND LIABILITIES

TOTAL DEPOSITS 209,092,143 94,697,676 124,036,264 132,330,778 107,720,529

DEMAND DEPOSITS 177,017,695 62.16% 94,697,676 50.43% 19,568,934 10.02% 48,491,158 24.47% 73,511,059 40.37% SAVINGS DEPOSITS - 0.00% - 0.00% 47,101,574 24.12% - 0.00% 3,066,228 1.68% TIME DEPOSITS/FIXED DEPOSITS - 0.00% - 0.00% 57,365,755 29.38% 83,839,620 42.30% 31,143,242 17.10% FOREIGN CURRENCY DEPOSITS 2,072,161 0.73% - 0.00% - 0.00% - 0.00% - 0.00% NEGOTIABLE CERTIFICATES OF DEPOSIT 30,002,288 10.54% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH OTHER BANKING INSTITUTIONS - 0.00% 2,737,679 1.46% 2,517,403 1.29% - 0.00% 3,834,602 2.11% LIABILITIES IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% FOREIGN LIABILITIES 22,526,315 7.91% 34,499,930 18.37% 19,708,516 10.09% 15,066,954 7.60% 27,909,419 15.33% SECURITIES AND OTHER FUNDING LIABILITIES - 0.00% - 0.00% 10,121,060 5.18% - 0.00% - 0.00% CAPITAL AND RESERVES 32,413,603 11.38% (97,088,539) -51.70% 31,049,662 15.90% 44,504,053 22.46% 27,333,795 15.01% OTHER LIABILITIES 16,653,218 5.85% 124,868,387 66.49% 7,823,882 4.01% 5,452,901 2.75% 13,636,465 7.49% TOTAL ON-BALANCE LIABILITIES 280,685,279 98.57% 159,715,133 85.05% 195,256,787 100.00% 197,354,686 99.58% 180,434,810 99.08% OFF-BALANCE SHEET ITEMS - LIABILITIES 4,069,747 1.43% 28,081,893 14.95% - 0.00% 835,491 0.42% 1,671,261 0.92%

TOTAL EQUITY AND LIABILITIES 284,755,025 100.00% 187,797,025 100.00% 195,256,787 100.00% 198,190,177 100.00% 182,106,071 100.00%

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012 : COMMERCIAL BANKS

ASSETS NMB BANK STANBIC STANCHART TN BANK TRUST

DOMESTIC NOTES AND COIN 10,716,412 4.56% 49,009,671 11.59% 80,852,692 15.88% 4,456,580 2.19% 345,015 0.72% BALANCES WITH CENTRAL BANK 22,671,712 9.66% 28,040,867 6.63% 30,620,748 6.01% 6,442,197 3.17% 94,696 0.20% BALANCES WITH DOMESTIC BANKING INSTITUTIONS 20,503,155 8.73% - 0.00% 6,683 0.00% 54,376 0.03% - 0.00% ASSETS IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH FOREIGN INSTITUTIONS 5,092,023 2.17% 51,799,621 12.25% 2,429,304 0.48% 2,728,507 1.34% 776,441 1.63% SECURITIES AND INVESTMENTS 5,501,963 2.34% 16,921,685 4.00% 38,366,417 7.54% 22,312,771 10.99% 12,674,192 26.62% LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 153,294,827 65.30% 213,547,266 50.51% 199,776,626 39.24% 136,456,894 67.18% 18,960,498 39.82% FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) - 0.00% 16,266 0.00% - 0.00% - 0.00% - 0.00% REPOSSESSED PROPERTIES / ASSETS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% FIXED ASSETS 11,302,759 4.81% 26,360,977 6.23% 36,494,425 7.17% 16,337,967 8.04% 10,196,726 21.41% BSD - BS OTHER ASSETS 5,685,124 2.42% 19,528,160 4.62% 3,758,661 0.74% 7,125,119 3.51% 2,071,836 4.35% TOTAL ON-BALANCE SHEET ASSETS 234,767,975 100.00% 405,224,513 95.84% 392,305,556 77.06% 195,914,411 96.46% 45,119,404 94.75% OFF-BALANCE SHEET ITEMS - 0.00% 17,586,883 4.16% 116,779,861 22.94% 7,197,515 3.54% 2,497,984 5.25% TOTAL ASSETS 234,767,975 100.00% 422,811,396 100.00% 509,085,417 100.00% 203,111,926 100.00% 47,617,388 100.00%

EQUITY AND LIABILITIES

TOTAL DEPOSITS 152,279,385 325,065,917 298,291,757 145,118,869 24,483,755

DEMAND DEPOSITS 104,745,637 44.62% 318,815,502 75.40% 267,295,066 52.50% 122,681,561 60.40% 7,324,895 15.38% SAVINGS DEPOSITS 5,215,191 2.22% 2,518,025 0.60% 18,321,460 3.60% 507,413 0.25% 438,971 0.92% TIME DEPOSITS/FIXED DEPOSITS 42,318,557 18.03% 3,732,390 0.88% 130,425 0.03% 21,929,895 10.80% 16,719,889 35.11% FOREIGN CURRENCY DEPOSITS - 0.00% - 0.00% 12,544,806 2.46% - 0.00% - 0.00% NEGOTIABLE CERTIFICATES OF DEPOSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH OTHER BANKING INSTITUTIONS 15,050,000 6.41% 2,180,952 0.52% - 0.00% - 0.00% - 0.00% LIABILITIES IN TRANSIT - 0.00% 12,787,865 3.02% - 0.00% - 0.00% - 0.00% FOREIGN LIABILITIES 23,919,071 10.19% 5,050,223 1.19% 1,759,233 0.35% 3,475,685 1.71% - 0.00% SECURITIES AND OTHER FUNDING LIABILITIES - 0.00% - 0.00% 125,075 0.02% - 0.00% - 0.00% CAPITAL AND RESERVES 30,087,165 12.82% 46,429,327 10.98% 66,625,759 13.09% 34,681,158 17.07% 19,078,189 40.07% OTHER LIABILITIES 13,432,354 5.72% 13,710,228 3.24% 25,503,732 5.01% 12,638,698 6.22% 1,548,004 3.25% TOTAL ON-BALANCE LIABILITIES 234,767,975 100.00% 405,224,513 95.84% 392,305,556 77.06% 195,914,410 96.46% 45,109,948 94.73% OFF-BALANCE SHEET ITEMS - LIABILITIES - 0.00% 17,586,883 4.16% 116,779,861 22.94% 7,197,515 3.54% 2,507,441 5.27%

TOTAL EQUITY AND LIABILITIES 234,767,975 100.00% 422,811,396 100.00% 509,085,417 100.00% 203,111,925 100.00% 47,617,388 100.00%

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012 : COMMERCIAL BANKS

COMMERCIAL ASSETS ZABG ZB BANK BANKS TOTAL DOMESTIC NOTES AND COIN 1,060,726 2.54% 40,586,148 14.43% 376,028,126 7.25% BALANCES WITH CENTRAL BANK 3,081,009 7.36% 20,802,863 7.39% 435,419,939 8.40% BALANCES WITH DOMESTIC BANKING INSTITUTIONS 1,521,552 3.64% 6,968,311 2.48% 175,201,913 3.38% ASSETS IN TRANSIT - 0.00% 7,690,428 2.73% 7,690,428 0.15% BALANCES WITH FOREIGN INSTITUTIONS - 0.00% 12,478,382 4.44% 198,121,693 3.82% SECURITIES AND INVESTMENTS 2,029,940 4.85% 24,809,050 8.82% 196,338,983 3.79% LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 5,675,299 13.57% 117,767,061 41.86% 2,698,271,943 52.03% FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) - 0.00% 1,750,000 0.62% 164,896,004 3.18% REPOSSESSED PROPERTIES / ASSETS - 0.00% - 0.00% 4,125,819 0.08% FIXED ASSETS 19,540,408 46.71% 17,399,889 6.18% 388,847,524 7.50% BSD - BS OTHER ASSETS 2,495,725 5.97% 5,707,206 2.03% 125,035,036 2.41% TOTAL ON-BALANCE SHEET ASSETS 35,404,659 84.63% 255,959,338 90.98% 4,769,977,407 91.98% OFF-BALANCE SHEET ITEMS 6,428,727 15.37% 25,366,068 9.02% 416,140,128 8.02% TOTAL ASSETS 41,833,385 100.00% 281,325,406 100.00% 5,186,117,535 100.00% - EQUITY AND LIABILITIES 18,918,299 163,054,587 3,210,205,343 TOTAL DEPOSITS DEMAND DEPOSITS 10,157,457 24.28% 21,025,867 7.47% 2,107,826,102 40.64% SAVINGS DEPOSITS 933,403 2.23% 70,553,148 25.08% 235,724,474 4.55% TIME DEPOSITS/FIXED DEPOSITS 7,827,440 18.71% 71,475,572 25.41% 791,885,022 15.27% FOREIGN CURRENCY DEPOSITS - 0.00% - 0.00% 44,767,458 0.86% NEGOTIABLE CERTIFICATES OF DEPOSIT - 0.00% - 0.00% 30,002,288 0.58% BALANCES WITH OTHER BANKING INSTITUTIONS 1,104,643 2.64% 41,208,968 14.65% 405,934,333 7.83% LIABILITIES IN TRANSIT - 0.00% 895,649 0.32% 13,683,514 0.26% FOREIGN LIABILITIES - 0.00% 1,860,141 0.66% 253,307,862 4.88% SECURITIES AND OTHER FUNDING LIABILITIES - 0.00% 4,966,657 1.77% 32,712,792 0.63% CAPITAL AND RESERVES 15,797,790 37.76% 37,208,055 13.23% 522,843,450 10.08% OTHER LIABILITIES 5,117,655 12.23% 6,765,280 2.40% 336,814,386 6.49% TOTAL ON-BALANCE LIABILITIES 40,938,388 97.86% 255,959,338 90.98% 4,775,501,680 92.08% OFF-BALANCE SHEET ITEMS - LIABILITIES 894,997 2.14% 25,366,068 9.02% 410,615,854 7.92%

TOTAL EQUITY AND LIABILITIES 41,833,384 100.00% 281,325,406 100.00% 5,186,117,534 100.00%

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012 : MERCHANT BANKS

MERCHANT ASSETS CAPITAL TETRAD BANKS TOTAL DOMESTIC NOTES AND COIN 215,896 0.23% 1,915,436 1.53% 2,131,332 0.97% BALANCES WITH CENTRAL BANK 118,307 0.13% 566,987 0.45% 685,294 0.31% BALANCES WITH DOMESTIC BANKING INSTITUTIONS 8,653 0.01% 24,847,373 19.90% 24,856,025 11.36% ASSETS IN TRANSIT - 0.00% - 0.00% - 0.00% BALANCES WITH FOREIGN INSTITUTIONS 109,409 0.12% - 0.00% 109,409 0.05% SECURITIES AND INVESTMENTS 28,736,445 30.60% 780,366 0.63% 29,516,811 13.49% LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 50,253,646 53.50% 55,983,377 44.84% 106,237,023 48.56% FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) 1,077,300 1.15% - 0.00% 1,077,300 0.49% REPOSSESSED PROPERTIES / ASSETS - 0.00% - 0.00% - 0.00% FIXED ASSETS 1,879,812 2.00% 12,345,064 9.89% 14,224,876 6.50% BSD - BS OTHER ASSETS 3,209,514 3.42% 27,567,713 22.08% 30,777,227 14.07% TOTAL ON-BALANCE SHEET ASSETS 85,608,981 91.15% 124,006,315 99.33% 209,615,296 95.82% OFF-BALANCE SHEET ITEMS 8,314,371 8.85% 840,000 0.67% 9,154,371 4.18% TOTAL ASSETS 93,923,351 100.00% 124,846,315 100.00% 218,769,667 100.00% EQUITY AND LIABILITIES

TOTAL DEPOSITS 35,783,730 84,194,160 119,977,889

DEMAND DEPOSITS 4,312,596 4.59% 9,090,878 7.28% 13,403,474 6.13% SAVINGS DEPOSITS - 0.00% - 0.00% - 0.00% TIME DEPOSITS/FIXED DEPOSITS 31,471,133 33.51% 75,103,282 60.16% 106,574,415 48.72% FOREIGN CURRENCY DEPOSITS - 0.00% - 0.00% - 0.00% NEGOTIABLE CERTIFICATES OF DEPOSIT - 0.00% - 0.00% - 0.00% BALANCES WITH OTHER BANKING INSTITUTIONS - 0.00% 5,547,514 4.44% 5,547,514 2.54% LIABILITIES IN TRANSIT - 0.00% - 0.00% - 0.00% FOREIGN LIABILITIES 10,039,440 10.69% - 0.00% 10,039,440 4.59% SECURITIES AND OTHER FUNDING LIABILITIES - 0.00% - 0.00% - 0.00% CAPITAL AND RESERVES 7,627,104 8.12% 28,561,305 22.88% 36,188,409 16.54% OTHER LIABILITIES 32,158,706 34.24% 5,703,337 4.57% 37,862,043 17.31% TOTAL ON-BALANCE LIABILITIES 85,608,980 91.15% 124,006,315 99.33% 209,615,296 95.82% OFF-BALANCE SHEET ITEMS - LIABILITIES 8,314,371 8.85% 840,000 0.67% 9,154,371 4.18%

TOTAL EQUITY AND LIABILITIES 93,923,351 100.00% 124,846,315 100.00% 218,769,666 100.00%

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012 : BUILDING SOCIETIES

BUILDING ASSETS CBZ BS CABS FBC BS ZB BS SOCIETIES TOTAL DOMESTIC NOTES AND COIN 4,071,736 3.04% 23,567,980 4.83% 717,754 1.28% 823,694 2.12% 29,181,164 4.07% BALANCES WITH CENTRAL BANK - 0.00% 26,643,098 5.46% 51,945 0.09% - 0.00% 26,695,043 3.72% BALANCES WITH DOMESTIC BANKS 5,758,387 4.31% 7,910,110 1.62% 512,178 0.91% 7,012,454 18.02% 21,193,129 2.96% ASSETS IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% BALANCES WITH FOREIGN INSTITUTIONS - 0.00% 5,869,146 1.20% - 0.00% - 0.00% 5,869,146 0.82% SECURITIES AND INVESTMENTS - 0.00% 56,323,081 11.53% 17,500,000 31.19% 13,373,575 34.37% 87,196,656 12.16% LOANS, ADVANCES & BAs 80,219,684 59.98% 275,049,903 56.32% 29,277,134 52.18% 10,858,589 27.91% 395,405,310 55.14% REPOSSESSED PROPERTIES / ASSETS - 0.00% 122,772 0.03% - 0.00% - 0.00% 122,772 0.02% FIXED ASSETS 35,785,484 26.76% 77,419,259 15.85% 4,702,537 8.38% 5,946,601 15.28% 123,853,881 17.27% OTHER ASSETS 7,912,018 5.92% 15,468,034 3.17% 3,350,623 5.97% 897,174 2.31% 27,627,849 3.85% TOTAL ON-BALANCE SHEET ASSETS 133,747,309 100.00% 488,373,383 100.00% 56,112,171 100.00% 38,912,087 100.00% 717,144,950 100.00% OFF-BALANCE SHEET ITEMS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% TOTAL ASSETS 133,747,309 100.00% 488,373,383 100.00% 56,112,171 100.00% 38,912,087 100.00% 717,144,950 100.00% EQUITY AND LIABILITIES

TOTAL DEPOSITS 30,990,034 341,358,967 28,388,443 17,668,203 418,405,646

DEMAND DEPOSITS 9,518,316 7.12% 140,351,856 28.74% - 0.00% - 0.00% 149,870,172 20.90% SAVINGS DEPOSITS 15,292,602 11.43% - 0.00% 6,911,615 12.32% 7,755,838 19.93% 29,960,055 4.18% TIME DEPOSITS/FIXED DEPOSITS 6,179,116 4.62% 201,007,111 41.16% - 0.00% 5,620,106 14.44% 212,806,332 29.67% FOREIGN CURRENCY DEPOSITS - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% NCDs - 0.00% - 0.00% 21,476,828 38.27% 4,292,259 11.03% 25,769,087 3.59% BALANCES WITH OTHER BANKS - 0.00% 10,000,000 2.05% - 0.00% - 0.00% 10,000,000 1.39% LIABILITIES IN TRANSIT - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% FOREIGN LIABILITIES 7,273,394 5.44% 18,633,204 3.82% 5,290,956 9.43% - 0.00% 31,197,554 4.35% SECURITIES AND OTHER FUNDING LIABILITIES - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% CAPITAL AND RESERVES 47,317,831 35.38% 94,682,386 19.39% 19,101,891 34.04% 16,073,466 41.31% 177,175,573 24.71% OTHER LIABILITIES 48,166,050 36.01% 20,032,738 4.10% 3,330,881 5.94% 5,170,418 13.29% 76,700,087 10.70% TOTAL ON-BALANCE LIABILITIES 133,747,308 100.00% 484,707,294 99.25% 56,112,171 100.00% 38,912,087 100.00% 713,478,860 99.49% OFF-BALANCE SHEET ITEMS - LIABILITIES - 0.00% 3,666,089 0.75% - 0.00% - 0.00% 3,666,089 0.51% TOTAL EQUITY AND LIABILITIES 133,747,308 100.00% 488,373,383 100.00% 56,112,171 100.00% 38,912,087 100.00% 717,144,949 100.00%

COMPOSITION OF THE STATEMENT OF FINANCIAL POSITIONS – DECEMBER 2012: SAVINGS BANK

ALL BANKS ASSETS POSB GRAND TOTAL DOMESTIC NOTES AND COIN 6,832,089 8.48% 414,172,711 6.68%

BALANCES WITH CENTRAL BANK 842,768 1.05% 463,643,044 7.47%

BALANCES WITH DOMESTIC BANKING INSTITUTIONS 1,703,296 2.11% 222,954,363 3.59%

ASSETS IN TRANSIT - 0.00% 7,690,428 0.12%

BALANCES WITH FOREIGN INSTITUTIONS - 0.00% 204,100,249 3.29%

SECURITIES AND INVESTMENTS 20,877,947 25.90% 333,930,397 5.38%

LOANS, ADVANCES, BANKERS ACCEPTANCES AND LEASES 37,661,053 46.73% 3,237,575,328 52.20%

FOREIGN CLAIMS (INCLUDING BILLS OF EXCHANGE) - 0.00% 165,973,304 2.68%

REPOSSESSED PROPERTIES / ASSETS - 0.00% 4,248,591 0.07%

FIXED ASSETS 3,425,522 4.25% 530,351,803 8.55%

BSD - BS OTHER ASSETS 9,256,348 11.48% 192,696,460 3.11%

TOTAL ON-BALANCE SHEET ASSETS 80,599,022 100.00% 5,777,336,676 93.14%

OFF-BALANCE SHEET ITEMS - 0.00% 425,294,499 6.86%

TOTAL ASSETS 80,599,022 100.00% 6,202,631,174 100.00%

EQUITY AND LIABILITIES

TOTAL DEPOSITS 63,810,070 3,812,398,949

DEMAND DEPOSITS 51,304,607 63.65% 2,322,404,355 37.44%

SAVINGS DEPOSITS 3,565,412 4.42% 269,249,941 4.34%

TIME DEPOSITS/FIXED DEPOSITS 2,390,077 2.97% 1,113,655,846 17.95%

FOREIGN CURRENCY DEPOSITS - 0.00% 44,767,458 0.72%

NEGOTIABLE CERTIFICATES OF DEPOSIT 6,549,974 8.13% 62,321,349 1.00%

BALANCES WITH OTHER BANKING INSTITUTIONS - 0.00% 421,481,847 6.80%

LIABILITIES IN TRANSIT - 0.00% 13,683,514 0.22%

FOREIGN LIABILITIES - 0.00% 294,544,857 4.75%

SECURITIES AND OTHER FUNDING LIABILITIES 1,541,667 1.91% 34,254,459 0.55%

CAPITAL AND RESERVES 12,881,813 15.98% 749,089,245 12.08%

OTHER LIABILITIES 2,365,472 2.93% 453,741,987 7.32%

TOTAL ON-BALANCE LIABILITIES 80,599,022 100.00% 5,779,194,858 93.17%

OFF-BALANCE SHEET ITEMS - LIABILITIES - 0.00% 423,436,314 6.83%

TOTAL EQUITY AND LIABILITIES 80,599,022 100.00% 6,202,631,172 100.00%

COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME - DECEMBER 2012 : COMMERCIAL BANKS

ABC Bank AGRIBANK BARCLAYS CBZ ECOBANK FBC INTERFIN KINGDOM METROPOLITAN

Interest Income 60,742,049.13 10,476,758.99 8,039,362.00 134,221,145.68 9,796,785.00 33,452,522.88 24,096,332.74 19,646,401.97 19,887,416.80 BSD-Interest Income from Loans Advances and Leases 50,847,956.27 10,457,309.69 5,064,358.00 121,890,524.24 9,362,176.00 26,326,734.21 16,443,899.05 18,179,947.69 16,082,311.80 ZW-Interest Income on Balnces with Banking Institutions 4,152,617.57 19,449.30 2,630,422.00 12,010,912.82 70,283.00 87,361.36 .00 42,087.93 .00 BSD-Interest Income On Investments ans Securities 5,741,475.29 .00 344,582.00 319,708.62 364,326.00 7,038,427.32 7,652,433.69 1,424,366.35 3,805,105.00 Interest Expense 30,419,134.88 5,160,284.10 2,264,439.00 60,638,604.36 4,509,390.00 16,583,916.58 9,892,520.24 9,743,742.94 8,944,469.00 BSD-Interest Expense On Deposit Accounts 30,419,134.88 3,302,595.10 2,264,439.00 41,497,487.88 3,887,603.00 3,018,459.75 6,280,085.48 8,059,590.90 8,944,469.00 BSD-Interest Expense On Central Bank Loans .00 .00 .00 .00 .00 .00 .00 .00 .00 BSD-Interest On Local banks Loans - Interbank Loans .00 .00 .00 .00 621,787.00 8,639,099.11 .00 .00 .00 BSD-Other Interest Expenses .00 1,857,689.00 .00 19,141,116.48 .00 4,926,357.72 3,612,434.76 1,684,152.04 .00 Net Interest Income 30,322,914.25 5,316,474.89 5,774,923.00 73,582,541.32 5,287,395.00 16,868,606.30 14,203,812.50 9,902,659.03 10,942,947.80 Total Provisions For Current Period 12,094,065.23 1,326,783.23 869,898.00 1,309,172.64 1,314,314.00 1,021,454.70 60,862,528.00 -1,731,827.27 3,595,761.34 BSD-Specific Provisions 10,511,606.59 .00 495,928.00 1,309,172.64 1,102,521.00 466,394.99 60,640,391.00 -2,788,931.96 3,397,171.32 BSD-General Provisions 1,582,458.64 1,326,783.23 373,970.00 .00 211,793.00 555,059.71 222,137.00 1,057,104.69 198,590.02 - Net Interest after Provisions 18,228,849.02 3,989,691.66 4,905,025.00 72,273,368.67 3,973,081.00 15,847,151.60 46,658,715.50 11,634,486.30 7,347,186.46 Non - Interest Income 25,244,108.95 15,359,696.85 29,726,934.00 32,764,036.54 7,411,401.00 17,875,654.29 1,664,941.65 21,136,446.45 12,480,256.00 BSD-Foreign Exchange 4,145,008.78 .00 3,164,943.00 1,518,212.99 206,098.00 1,439,312.18 .00 4,007,890.24 .00 BSD-Fees and Commission 20,714,103.20 14,664,336.43 26,094,249.00 18,808,097.97 7,022,345.00 16,436,342.11 1,030,646.69 17,096,665.35 11,492,037.00 BSD-Other Non Interest Income 384,996.97 695,360.42 467,742.00 12,437,725.58 182,958.00 .00 634,294.96 31,890.87 988,219.00 Non - Interest Expenses 33,566,306.80 23,170,815.50 33,346,434.00 64,073,998.83 10,675,688.00 27,045,301.42 13,937,903.08 31,196,306.65 17,751,253.50 BSD-Salaries and Employee Benefits 14,443,476.20 12,164,862.83 18,564,696.00 33,636,169.50 4,355,481.00 13,910,949.58 6,255,607.34 11,395,209.67 10,352,434.50 BSD-Occupancy - Net of Rental 3,718,899.70 3,607,203.26 3,162,080.00 .00 935,040.00 1,173,828.40 2,183,277.87 2,599,121.26 1,066,924.00 BSD-Other Non Interest Expenses 15,403,930.89 7,398,749.41 11,619,658.00 30,437,829.33 5,385,167.00 11,960,523.44 5,499,017.87 17,201,975.72 6,331,895.00 - - Net Non - Interest Income -8,322,197.85 -7,811,118.65 -3,619,500.00 -31,309,962.29 -3,264,287.00 -9,169,647.13 12,272,961.43 10,059,860.20 -5,270,997.50 - Income (Loss) before Taxation 9,906,651.17 -3,821,426.99 1,285,525.00 40,963,406.39 708,794.00 6,677,504.47 58,931,676.93 1,574,626.10 2,076,188.96 BSD-Taxation 2,563,730.18 .00 570,427.00 10,777,239.42 240,351.00 1,719,457.40 .00 526,136.66 491,494.00 - Net Income / (Loss) after Taxation 7,342,921.00 -3,821,426.99 715,098.00 30,186,166.96 468,443.00 4,958,047.07 58,931,676.93 1,048,489.44 1,584,694.96 BSD-Extraordinary Items 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Net Income / (Loss) 7,342,921.00 -3,821,426.99 715,098.00 30,186,166.96 468,443.00 4,958,047.07 58,931,676.93 1,048,489.44 1,584,694.96

COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME - DECEMBER 2012: COMMERCIAL BANKS

COMMERCIAL TRUST MBCA BANK NMB BANK STANBIC STANCHART TN Bank ZABG ZB BANK BANKS BANK TOTAL Interest Income 15,483,653.00 25,522,018.94 32,465,036.47 18,300,655.82 16,815,346.95 5,623,516.37 1,200,152.90 31,067,732.76 466,836,888.40 BSD-Interest Income from Loans Advances and Leases 14,511,012.00 19,627,857.00 30,032,096.66 16,223,939.88 16,472,144.27 5,599,252.06 1,018,265.66 30,391,469.86 408,531,254.32 ZW-Interest Income on Balnces with Banking Institutions 801,157.00 1,448,696.31 307,214.53 22,281.82 343,202.68 24,264.31 121,708.50 658,297.44 22,739,956.56 BSD-Interest Income On Investments ans Securities 171,484.00 4,445,465.63 2,125,725.28 2,054,434.13 .00 .00 60,178.74 17,965.46 35,565,677.51 Interest Expense 4,644,665.00 9,878,651.10 422,831.96 6,460.70 5,982,932.82 2,595,751.66 818,169.66 12,547,290.94 185,053,254.95 BSD-Interest Expense On Deposit Accounts 1,652,537.00 6,736,953.60 422,831.96 6,460.70 5,696,611.97 2,595,751.66 818,169.66 11,319,850.98 136,923,032.53 BSD-Interest Expense On Central Bank Loans 622,371.00 .00 .00 .00 .00 .00 .00 .00 622,371.00 BSD-Interest On Local banks Loans - Interbank Loans .00 1,560,671.60 .00 .00 269,811.75 .00 .00 833,493.82 11,924,863.28 BSD-Other Interest Expenses 2,369,757.00 1,581,025.90 .00 .00 16,509.10 .00 .00 393,946.14 35,582,988.14 Net Interest Income 10,838,988.00 15,643,367.84 32,042,204.51 18,294,195.12 10,832,414.13 3,027,764.71 381,983.24 18,520,441.82 281,783,633.45 Total Provisions For Current Period 293,019.00 3,387,082.07 5,817,566.50 5,025,233.12 2,858,662.32 1,223,893.11 139,935.43 2,644,298.18 102,051,839.59 BSD-Specific Provisions 219,447.00 969,826.01 2,089,329.00 1,129,012.81 -527,895.79 444,767.43 141,130.08 2,079,858.21 81,679,728.34 BSD-General Provisions 73,572.00 2,417,256.06 3,728,237.50 3,896,220.31 3,386,558.11 779,125.68 -1,194.66 564,439.97 20,372,111.26 Net Interest after Provisions 10,545,969.00 12,256,285.77 26,224,638.01 13,268,962.00 7,973,751.81 1,803,871.60 242,047.81 15,876,143.64 179,731,793.85 Non - Interest Income 10,366,082.00 18,540,334.97 40,318,846.22 48,109,834.47 6,168,436.36 2,731,834.02 9,282,956.38 31,049,852.79 330,325,279.29 BSD-Foreign Exchange 2,334,680.00 147,905.55 17,881,490.29 2,700,514.68 107,578.53 .00 289,504.99 1,440,536.98 39,383,676.20 BSD-Fees and Commission 8,031,402.00 14,265,457.44 22,437,355.93 44,827,819.04 6,444,820.00 2,559,489.70 4,035,355.93 27,157,151.51 263,211,300.63 BSD-Other Non Interest Income .00 4,126,971.98 .00 581,500.75 -383,962.16 172,344.32 4,958,095.46 2,452,164.30 27,730,302.45 Non - Interest Expenses 14,652,450.00 20,947,553.83 42,655,610.03 37,616,204.60 15,201,091.46 10,119,153.44 9,382,331.72 41,053,773.36 446,392,176.21 BSD-Salaries and Employee Benefits 8,072,454.00 9,830,643.64 20,454,077.51 22,407,974.35 4,999,066.44 3,965,656.16 3,830,536.76 16,830,823.93 215,470,119.41 BSD-Occupancy - Net of Rental 1,599,135.00 1,950,961.43 2,984,884.31 10,634,198.30 1,243,085.15 1,600,338.19 1,782,688.33 4,453,658.80 44,695,324.00 BSD-Other Non Interest Expenses 4,980,861.00 9,165,948.76 19,216,648.21 4,574,031.95 8,958,939.87 4,553,159.09 3,769,106.63 19,769,290.63 186,226,732.81 - - Net Non - Interest Income -4,286,368.00 -2,407,218.86 -2,336,763.81 10,493,629.87 -9,032,655.09 -7,387,319.42 -99,375.34 10,003,920.57 116,160,523.27 Income (Loss) before Taxation 6,259,601.00 9,849,066.91 23,887,874.20 23,762,591.87 -1,058,903.28 -5,583,447.81 142,672.46 5,872,223.07 63,571,270.59 BSD-Taxation 1,639,736.00 2,448,684.24 6,688,814.59 6,940,474.32 -533,089.72 .00 -527,784.61 888,305.46 34,433,975.94 Net Income / (Loss) after Taxation 4,619,865.00 7,400,382.67 17,199,059.61 16,822,117.55 -525,813.56 -5,583,447.81 670,457.07 4,983,917.61 29,137,294.64 BSD-Extraordinary Items 0.00 0.00 0.00 0.00 0.00 19,041.68 0.00 0.00 19,041.68 Net Income / (Loss) 4,619,865.00 7,400,382.67 17,199,059.61 16,822,117.55 -525,813.56 -5,602,489.49 670,457.07 4,983,917.61 29,118,252.96

COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME - DECEMBER 2012: MERCHANT BANKS

CAPITAL TETRAD TOTAL

Interest Income 9,248,057.18 3,509,269.00 12,757,326.18 BSD-Interest Income from Loans Advances and Leases 8,915,472.85 3,509,269.00 12,424,741.85 ZW-Interest Income on Balnces with Banking Institutions .00 .00 .00 BSD-Interest Income On Investments ans Securities 332,584.33 .00 332,584.33 Interest Expense 4,013,325.59 2,419,987.50 6,433,313.09 BSD-Interest Expense On Deposit Accounts 4,013,325.59 2,141,076.00 6,154,401.59 BSD-Interest Expense On Central Bank Loans .00 .00 .00 BSD-Interest On Local banks Loans - Interbank Loans .00 278,911.50 278,911.50 BSD-Other Interest Expenses .00 .00 .00 Net Interest Income 5,234,731.59 1,089,281.50 6,324,013.09 Total Provisions For Current Period 8,579,118.26 151,892.00 8,731,010.26 BSD-Specific Provisions 58,390.89 .00 58,390.89 BSD-General Provisions 8,520,727.38 151,892.00 8,672,619.38 Net Interest after Provisions -3,344,386.67 937,389.50 -2,406,997.17 Non - Interest Income 6,360,307.77 543,638.00 6,903,945.77 BSD-Foreign Exchange 51,960.62 .00 51,960.62 BSD-Fees and Commission 878,446.39 213,655.00 1,092,101.39 BSD-Other Non Interest Income 5,429,900.76 329,983.00 5,759,883.76 Non - Interest Expenses 8,907,336.35 2,186,461.50 11,093,797.85 BSD-Salaries and Employee Benefits 4,001,744.46 359,855.00 4,361,599.46 BSD-Occupancy - Net of Rental 875,079.00 93,565.00 968,644.00 BSD-Other Non Interest Expenses 4,030,512.89 1,733,041.50 5,763,554.39 Net Non - Interest Income -2,547,028.58 -1,642,823.50 -4,189,852.08 Income (Loss) before Taxation -5,891,415.25 -705,434.00 -6,596,849.25 BSD-Taxation -1,654,729.00 -146,547.00 -1,801,276.00 Net Income / (Loss) after Taxation -4,236,686.25 -558,887.00 -4,795,573.25 BSD-Extraordinary Items 0.00 0.00 .00 Net Income / (Loss) -4,236,686.25 -558,887.00 -4,795,573.25

COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME - DECEMBER 2012: BUILDING SOCIETIES

BUILDING CBZ BS CABS FBC BS ZB BS SOCIETIES TOTAL Interest Income 10,829,710.84 49,331,911.00 5,653,512.91 2,311,006.50 68,126,141.25 BSD-Interest Income from Loans Advances and Leases 10,814,437.19 43,231,595.00 3,920,840.33 1,775,182.52 59,742,055.04 ZW-Interest Income on Balnces with Banking Institutions 15,273.65 .00 .00 19,322.70 34,596.35 BSD-Interest Income On Investments ans Securities .00 6,100,316.00 1,732,672.58 516,501.28 8,349,489.86 Interest Expense 2,518,243.80 19,571,931.00 2,040,399.52 501,610.69 24,632,185.01 BSD-Interest Expense On Deposit Accounts 2,004,204.51 17,903,269.00 1,509,130.32 501,610.69 21,918,214.52 BSD-Interest Expense On Central Bank Loans .00 .00 .00 .00 .00 BSD-Interest On Local banks Loans - Interbank Loans 30,497.63 .00 .00 .00 30,497.63 BSD-Other Interest Expenses 483,541.66 1,668,662.00 531,269.20 .00 2,683,472.86 Net Interest Income 8,311,467.03 29,759,980.00 3,613,113.39 1,809,395.81 43,493,956.23 Total Provisions For Current Period 376,000.82 1,885,369.09 372,993.34 .00 2,634,363.25 BSD-Specific Provisions 376,000.82 1,202,972.27 372,993.34 .00 1,951,966.43 BSD-General Provisions .00 682,396.82 .00 .00 682,396.82 Net Interest after Provisions 7,935,466.21 27,874,610.91 3,240,120.05 1,809,395.81 40,859,592.98 Non - Interest Income 10,412,761.94 24,760,436.00 7,952,984.47 5,979,285.68 49,105,468.09 BSD-Foreign Exchange 59,397.49 .00 .00 .00 59,397.49 BSD-Fees and Commission 8,646,326.01 21,400,457.00 4,396,668.64 5,555,575.65 39,999,027.30 BSD-Other Non Interest Income 1,707,038.44 3,359,979.00 3,556,315.83 423,710.03 9,047,043.30 Non - Interest Expenses 7,036,532.13 27,754,796.00 5,972,596.63 5,520,582.17 46,284,506.93 BSD-Salaries and Employee Benefits 923,395.75 10,855,120.27 3,721,910.02 1,798,304.84 17,298,730.88 BSD-Occupancy - Net of Rental .00 -170,814.00 261,672.56 -96,107.77 -5,249.21 BSD-Other Non Interest Expenses 6,113,136.38 17,070,489.73 1,989,014.05 3,818,385.10 28,991,025.26 Net Non - Interest Income 3,376,229.81 -2,994,360.00 1,980,387.84 458,703.51 2,820,961.16 Income (Loss) before Taxation 11,311,696.02 24,880,250.91 5,220,507.89 2,268,099.32 43,680,554.14 BSD-Taxation 51,277.08 .00 .00 .00 51,277.08 Net Income / (Loss) after Taxation 11,260,418.95 24,880,250.91 5,220,507.89 2,268,099.32 43,629,277.07 BSD-Extraordinary Items 0.00 0.00 0.00 0.00 .00 Net Income / (Loss) 11,260,418.95 24,880,250.91 5,220,507.89 2,268,099.32 43,629,277.07

COMPOSITION OF THE STATEMENT OF COMPREHENSIVE INCOME - DECEMBER 2012: SAVINGS BANK

ALL BANKS POSB GRAND TOTAL Interest Income 8,871,393.83 556,591,749.65

BSD-Interest Income from Loans Advances and Leases 7,127,836.58 487,825,887.79

ZW-Interest Income on Balances with Banking Institutions .00 22,774,552.91 BSD-Interest Income On Investments and Securities 1,743,557.25 45,991,308.95

Interest Expense 2,303,523.28 218,422,276.33

BSD-Interest Expense On Deposit Accounts 2,229,377.07 167,225,025.71 BSD-Interest Expense On Central Bank Loans .00 622,371.00

BSD-Interest On Local banks Loans - Interbank Loans .00 12,234,272.41

BSD-Other Interest Expenses 74,146.21 38,340,607.21 Net Interest Income 6,567,870.55 338,169,473.32

Total Provisions For Current Period 728,459.46 114,145,672.57

BSD-Specific Provisions 578,204.27 84,268,289.92 BSD-General Provisions 150,255.19 29,877,382.64

Net Interest after Provisions 5,839,411.09 224,023,800.75

Non - Interest Income 16,873,176.31 403,207,869.45 BSD-Foreign Exchange 64,977.10 39,560,011.41

BSD-Fees and Commission 16,812,974.81 321,115,404.13

BSD-Other Non Interest Income -4,775.60 42,532,453.91 Non - Interest Expenses 20,199,630.91 523,970,111.90

BSD-Salaries and Employee Benefits 9,176,537.03 246,306,986.78

BSD-Occupancy - Net of Rental 1,311,854.81 46,970,573.60 BSD-Other Non Interest Expenses 9,711,239.07 230,692,551.52

Net Non - Interest Income -3,326,454.60 -120,855,868.78

Income (Loss) before Taxation 2,512,956.49 103,167,931.97 BSD-Taxation .00 32,683,977.02

Net Income / (Loss) after Taxation 2,512,956.49 70,483,954.95

BSD-Extraordinary Items 0.00 19,041.68 Net Income / (Loss) 2,512,956.49 70,464,913.27