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Conrad Mwanawashe Business Reporter
POSB is expecting a four percent contribution to its bottom-line from its newly launched microfinance division in the short term. The Express Loans Microfinance scheme was launched June this year on a pilot basis and was scaled up in September with the loan amounts ranging from $300 to $5 000 at competitive interest rates and repayment period of up to six months.

“Without risking giving too much away to competition, 30 percent of the portfolio to date is towards SMEs while 70 percent has been disbursed to individuals,” POSB chief executive officer Admore Kandlela.

Mr Kandlela said most individuals are borrowing to finance some micro-business in one way or the other given the high levels of informal trading prevailing at the moment.
The bank’s target market for the microfinance business includes individuals and small businesses inclusive of civil service and Government departments, as well as private-sector employees, with loan repayment deductions being made at source. It also targets sole proprietors with proof of steady income streams and Small and Medium Enterprises operating in various sectors, such as farming, mining, agro-dealers, transport and manufacturing, among others.
The bank is comfortable with the division’s performance so far.

“This is fairly new part of our business whose takeoff we are satisfied with, and optimistic about its prospects.
“There is high demand for our micro-loan products; mostly attributable to our competitive interest rates and long repayment period,” said Mr Kandlela.
POSB is pursuing strategies that enhance financial inclusion and bring financial services closer to the people at a minimal cost.

“These strategies include instant banking, and branchless banking which will be used as the bedrock for our product offerings, whose prominence will be very apparent in the next 18 months,” he added.

In the year to December 31 2013, POSB posted a loss of $209 000 compared to a profit of $2,47 million in the prior year.
The bank’s total income declined by 15 percent to $19,21 million in 2013 from $22,73 million in the previous year operating costs declined by four percent as a result of a realignment of its cost structure.