Enacy Mapakame Business Reporter
The country’s youth entrepreneurs’ bank- the EmpowerBank Limited, reported a loss after tax of $5,4 million for its first annual financial results for the year to December 2019 as the bank incurred set up costs necessary for a start-up financial services firm.
The bank marked its first year of operations during the year under review.
Figures from the bank (on historical basis) show that, loss before tax widened to $6,9 million compared to $1,6 million recorded as at December 2018. During the year under review, the bank implemented cost containment measures to keep losses under control under a hyper-inflationary environment.
Acting chief executive officer, Shadreck Mhembere, indicated that the year under review saw the bank focusing mainly on developing its infrastructure and technology to enable smooth flow of business, while the challenging economic environment also weighed in.
“The bank’s operations were not spared by the inflationary pressures in the environment,” said Mr Mhembere in a statement accompanying the bank’s financials.
“The set up costs were more than the revenue generated as the bank was still in the implementation stage.
“A lot of our efforts was put in development of the infrastructure, systems and technology to capacitate the bank to offer comprehensive services and solutions befitting a bank in the fourth industrial revolution era,” he said.
Total income grew 419 percent to $2,3 million but total costs were higher at $9,3 million. EmpowerBank’s loan book grew by over 2 000 percent to $5,56 million, while deposits also grew by over 2 000 percent during the period under review.
By close of the period, balance sheet stood at $40 million with a capital of $34 million, which was above the regulatory capital requirement of $5 million.
The 2020 minimum capital requirement has since been reviewed to US$5 million at the average interbank exchange rate, to be achieved by year end.
According to management, the bank has received support from its shareholder- Government — that released $20 million to capitalise the bank during the year under review.
Despite the capitalisation, the bank still requires funding for implementation of IT projects and solutions which are essential in retaining its target market — the youth.
As part of expansion projects, the bank opened branches in Masvingo, Bulawayo, Harare Main Post Office (CBD) sub-branch and Mbudzi Round About People’s Market office, as part of efforts to reach out to the target market and the financially excluded Zimbabweans.
For the financial year 2020, the bank anticipates to boost its agency banking model with a roll out of 60 agents across all the districts of Zimbabwe to enhance accessibility.
While the economic challenges currently prevailing in the economy are likely to persist in the year, management remains upbeat of the bank’s performance and consolidating its position as financial services group.