MBCA clients to access lending from Nedbank
MBCA Bank, a unit of South Africa’s fourth largest bank by market capitalisation, Nedbank, registered an increase in post tax profit for the half-year ended June 30, 2015, remarkably shrugging off an economic decline that resulted in increased job losses and company closures.
Post tax profits increased to US$2,7 million during the review period, from US$1,9 million during the prior comparative period in 2014 after operating income charged to US$13 million during the review period, from an operating profit of US$11,5 million in 2014.
The bank’s operations during the review period were boosted by significant reduction in the cost of operating the business.
Chairman, Willard Zireva, who announced that the bank’s customers would now directly access loans from the Nedbank Group, told shareholders in a commentary accompanying the financial results last week that MBCA’s cost to income ratio declined to 72,6 percent during the period from 78,6 percent during the same time last year.
These figures remain high compared to regional comparatives, but in a market dogged by high costs, achieving a six percentage points decline in costs is a significant achievement.
It is news of direct access to relatively priced South African loans that may excite hundreds of MBCA Bank’s struggling industrial customers currently enduring high interest rates in Zimbabwe of up to 30 percent.
Foreign loans still carry a high premium considering the high political risk, high level defaults and an unsustainable national debt profile.
But even after taking these factors into consideration, the offshore loans have generally landed cheaper in this market compared to what local financial institutions charge.
In a way, MBCA Bank customers have started benefiting from the bank’s close association with southern Africa’s largest economy.
Nedbank Group is majority shareholder in the Zimbabwean financial services firm, controlling a 74 percent stake.
Old Mutual Zimbabwe Limited owns about 18,30 percent shareholding while employees, through a Share Trust, control about 0,66 percent.
“The bank maintains a positive view of the future and has thus positioned itself to take advantage of opportunities that may arise,” Zireva said.
“Where these opportunities cannot be funded from our balance sheet, the bank will use existing lines of credit from regional and international financial institutions. In addition the bank’s clients will continue to access direct lending from the Nedbank Group,” he added.
A Nedbank executive told the Financial Gazette’s Companies & Markets last year that the group took the Zimbabwean market seriously, adding that a range of positive spin-offs were on the way despite the gruelling economic crisis the country was facing.
“We want to grow as a bank and the launch of Nedbank in Zimbabwe will provide a new platform to grow the business,” said Thulani Vilakazi, Nedbank Africa subsidiaries’ head of strategy, marketing and communication.
He said Zimbabwe was one of the bank’s priority markets, and that rebranding of MBCA would spur growth.
He said the Zimbabwean unit’s trade finance was the biggest earner in the Nedbank stable.
“We decided it’s time to push this brand (Nedbank) into Zimbabwe and next year its (MBCA) going to be Nedbank Zimbabwe,” Vilakazi said.