TIDMNMB
RNS Number : 3975L
NMBZ Holdings Ld
30 April 2020
NMBZ HOLDINGS LIMITED
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED AUDITED CONSOLIDATED RESULTS
FOR THE YEARED 31 DECEMBER 2019
FINANCIAL SUMMARY
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------ ------------ ------------ -------------
2019 2018 2019 2018
------------ ------------ ------------ -------------
Restated
------------ ------------ ------------ -------------
730 833 611 321 464 285
Total income (ZWL) 973 454 244 74 740 671
------------ ------------ ------------ -------------
Operating profit before impairment
charge and loss on net monetary 438 598 249 655 341 453
position (ZWL) 399 920 654 31 155 227
------------ ------------ ------------ -------------
Total comprehensive income 256 774 473 463
(ZWL) 708 94 784 934 396 21 267 632
------------ ------------ ------------ -------------
Basic earnings per share (ZWL
cents) 21.05 24.24 71.56 5.43
------------ ------------ ------------ -------------
1 191 079 2 701 740 1 191 079 434 957
Total deposits (ZWL) 845 776 845 949
------------ ------------ ------------ -------------
Total gross loans and advances 533 110 1 629 493 533 110 262 335
(ZWL) 289 700 289 026
------------ ------------ ------------ -------------
Total shareholders' funds and 707 853 514 858 579 169
shareholders' liabilities (ZWL) 329 707 046 79 962 313
------------ ------------ ------------ -------------
Enquiries:
NMBZ HOLDINGS LIMITED
Benefit P Washaya, Chief Executive Officer, NMBZ Holdings Limited benefitw@nmbz.co.zw
Gerald Gore, Deputy Chief Executive Officer, NMBZ Holdings Limited geraldg@nmbz.co.zw
Benson Ndachena, Chief Finance Officer, NMBZ Holdings Limited bensonn@nmbz.co.zw
Website:
http://www.nmbz.co.zw
Email:
enquiries@nmbz.co.zw
Telephone: +263-242-759 651/9
INTRODUCTION
The operating environment continues to be a challenging one; the
Group however, continued in the pursuit of its short and medium
term goals as evidenced by the accompanying results. The financial
results continue to be largely driven by the Bank's continued
diversification into the broader market segments, enhanced use of
the bank's digital offerings, stricter credit underwriting
standards, containment of non-performing loans and fair value gains
on investment properties and property and equipment. The Group's
financial performance was quite remarkable in spite of the
multiplicity of challenges that characterized the operating
environment.
The key inflation adjusted financial highlights of the Group as
at 31 December 2019 are depicted below:
Shareholders' funds and shareholders' liabilities ZWL707.9
million (2018 - ZWL514.9 million)
Total income ZWL730.8 million (2018 - ZWL611.3 million)
Total comprehensive income ZWL265.8 million (2018 - ZWL94.8
million)
Operating income before impairments and
monetary adjustments ZWL438.6 million (2018 - ZWL249.7
million)
GROUP RESULTS
Hyperinflationary reporting
Following the liberalisation of the exchange rate in February of
2019, there has been a significant deterioration in the exchange
rate of the local currency unit which in turn resulted in the
economy plunging into hyper-inflation. In light of this background,
the Directors assessed the impact of International Accounting
Standard (IAS) 29 "Financial Reporting in Hyperinflationary
Economies" and noted that the conditions required to apply IAS 29
had materialized in the Group's operating environment during the
period under review. Furthermore, the Public Accountants and
Auditors Board (PAAB) issued a pronouncement on 11 October 2019
indicating that the economy had become hyper-inflationary. The
Directors have thus prepared the accompanying financial statements
using the hyperinflationary accounting basis to achieve fair
presentation at the reporting date of 31 December 2019. The results
commentary below will be primarily on the Group's
hyper-inflationary adjusted financial statements at the reporting
date.
Financial performance
The profit before taxation was ZWL154 110 578 (2018 - ZWL145 890
961) during the period under review and this gave rise to total
comprehensive income of ZWL256 774 708 (2018 - ZWL94 784 934) after
total other comprehensive income of ZWL172 683 678. The Group
achieved a basic earnings per share of 21.05 cents (2018 - 24.24
cents).
Operating expenses amounted to ZWL240 539 828 and these were
down 17% from a prior year amount of ZWL289 533 595. The decrease
in operating expenditure was due to cost containment measures as
well as improved efficiencies arising out of digital innovations
adopted by the Group.
Impairment losses on financial assets measured at amortised cost
amounted to ZWL11 048 567 for the current period from a prior year
amount of ZWL24 920 236 and the decrease was mainly due to a strict
credit sanctioning regime which saw the underwriting of high
creditworthy counterparties by the Banking subsidiary. The bank has
continued with its drive to reduce non-performing loans (NPLs) and
the ratio stood at 1.37% as at 31 December 2019. This was lower
than the 31 December 2018 ratio of 7.43% and below the Bank's
target of 5% by 31 December 2019. The decrease in the NPL ratio was
largely due to aggressive collections and stricter credit
underwriting standards.
Financial position
The Group's total assets decreased by 37% from ZWL3 294 291 270
as at 31 December 2018 to ZWL2 089 311 325 as at 31 December 2019
mainly due to an 85% decrease in investment securities, a decrease
of 30% in cash and cash equivalents and a 46% decrease in loans,
advances and other assets. These reductions were partly offset by a
77% increase in investment properties and a 207% increase in
property and equipment.
Whilst the banking subsidiary continued with its intermediation
role and support for the productive sectors as reflected, the
reduction by 67% in gross loans and advances from ZWL1 629 493 700
as at 31 December 2018 to ZWL533 110 289 as at 31 December 2019 is
reflective of the reduction in the value of monetary assets as a
result of the hyperinflationary environment.
Investment securities (Treasury Bills and Bonds) decreased from
ZWL728 294 724 as at 31 December 2018 to ZWL107 166 155 as at 31
December 2019 mainly due to some maturities of government stock as
well as the effects of loss of value for monetary assets due to
hyperinflationary pressures. The bank has set maximum limits for
investment securities in order to ensure that most of the funds are
channelled towards the productive sectors of the economy.
Total deposits decreased by 56% from ZWL2 701 740 776 restated
as at 31 December 2018 to ZWL1 191 079 845 as at 31 December 2019
as a result of the aforementioned effects of the hyperinflationary
operating environment.
The Bank's liquidity ratio closed the period at 60.72% (2018 -
41.62%) and this was above the statutory requirement of a minimum
of 30%.
Capital
The banking subsidiary's capital adequacy ratio stood at 44.52%
(Historical - 39.49%) as at 31 December 2019 (31 December 2018 -
Historical - 23.25%). The ratio was above the statutory minimum of
12%. Our capitalisation level is adequate to cover all risks and
supports the underwriting of new business.
The Group's shareholders' funds and shareholders' liabilities
have increased by 37% from ZWL514 858 707 restated as at 31
December 2018 to ZWL707 853 329 as at 31 December 2019 largely as a
result of the current year's total comprehensive income.
The Bank's regulatory capital as at 31 December 2019 was ZWL360
889 480 and is above the minimum required regulatory capital of
ZWL25 million. The bank remains confident that its plan to meet the
recently announced minimum capital of the ZWL equivalent of USD30
million for a Tier 1 bank by 31 December 2020 is achievable.
FUNCTIONAL CURRENCY
Further to my announcement in the Group's financial statements
for the year ended 31 December 2018, we continued to closely
monitor the developments in the economic and monetary landscape. On
22 February 2019, the Reserve Bank of Zimbabwe (RBZ) issued an
Exchange Control Directive, RU 28 of 2019 which established an
Interbank foreign exchange market to formalize the buying and
selling of foreign currency through the Banks and Bureaux de
Change. To operationalize this, the RBZ denominated the existing
RTGS balances as RTGS dollars and initial trades between the RTGS
dollar and the USD were pegged at USD/RTGS$1:2.5. On the same date,
Statutory Instrument 33 (SI 33) of 2019 was also issued and it
specified that all assets and liabilities that were in USD
immediately before 22 February 2019 were deemed to have been valued
in RTGS$ at a rate of USD/RTGS$1:1.
On 24 June 2019, through Statutory Instrument 142 (SI 142) of
2019, the Government of Zimbabwe discontinued the multicurrency
regime which had been in place since February 2009 and introduced
the Zimbabwe Dollar (ZWL), which was designated as the country's
sole legal tender to be used for all local transactions and other
purposes.
The Directors, having assessed all these developments, accounted
for the change in the Group's functional currency from USD to RTGS
dollars on 22 February 2019, which subsequently changed to Zimbabwe
Dollars (ZWL) following the issuance of SI 142 of 2019 on 24 June
2019.
LEGACY DEBTS
The banking subsidiary owed USD13 840 412 to various providers
of lines of credit at 31 December 2019. The Bank registered these
foreign debts with the Reserve Bank of Zimbabwe (RBZ) as required
by the regulatory directives. During the period under review, the
Bank transferred to the RBZ the ZWL equivalent of the foreign debts
at a rate of USD/ZWL1:1. The RBZ has indicated that they will be
issuing a USD denominated instrument for these debts and
consequently these debts and the RBZ deposits have been accounted
for at the closing exchange rate of USD/ZWL 1:16.77 at 31 December
2019. This effectively values the original credit lines at a rate
of 1:1 on a netted off basis. Subsequent to year end, the RBZ
approved the line of credit balances amounting to USD13 840
412.
DIVID
The Board has resolved not to declare a dividend as the Group is
focusing on achieving the recently announced minimum regulatory
capital requirement of the ZWL equivalent of USD30 million for a
Tier 1 bank by 31 December 2020 for its banking subsidiary.
DIRECTORATE
Mr Erik Sanderson (non-executive director) resigned from both
NMBZ Holdings Limited and NMB Bank Limited boards with effect from
24 January 2019. I wish to thank him for his invaluable
contributions to the Group during his tenure as a Director and wish
him well in his future endeavours. Mr Erik Sanderson was replaced
by Ms Christine Glover, who was appointed to the NMBZ Holdings
Limited and NMB Bank Limited boards on 26 June 2019 and she brings
in a wealth of experience and diversity to the Group attained over
an illustrious career spanning over 30 years in the South African
financial services sector. I would like to welcome Ms Glover to the
boards and wish her a fruitful tenure.
Mr Givemore Taputaira was appointed as an Independent
Non-Executive director of NMBZ Holdings Limited and NMB Bank
Limited subsequent to year end on 2 January 2020. Mr Taputaira has
over 18 years' experience in ICT and business development in 7
different countries within Africa. I would like to welcome Mr
Taputaira to the boards and wish him a successful tenure on the
boards.
The other directors of both NMBZ Holdings Limited and NMB Bank
Limited boards remained as follows: Mr Benedict A. Chikwanha (Board
Chairman), Mr Benefit P. Washaya (Chief Executive Officer), Mr
Benson Ndachena (Chief Finance Officer), Mr Charles Chikaura
(Independent Non-Executive Director and Deputy Board Chairman), Mr
James de la Fargue (Non-Executive Director), Ms Jean Maguranyanga
(Independent Non-Executive Director), Mr Julius Tichelaar
(Non-Executive Director) and Ms Sabinah Chitehwe (Independent
Non-Executive Director).
SUSTAINABILITY REPORTING
The Board is charged with the responsibility of ensuring that
management executes its mandate in a sustainable manner to ensure
the Group attains its short and long-term growth objectives. The
Board has been buttressing a culture of responsible business
practices by paying more attention to sustainability issues. The
Group is fully aware of the important role played by the financial
sector in the economy as well as the impact of its initiatives and
actions on the communities in which the Group operates. We take
this responsibility quite seriously as part of our commitment to
the environment and societies in which we operate.
The Group's banking subsidiary is compliant with all regulatory
and statutory requirements and continues with its drive to forge
partnerships and alliances with various stakeholders to ensure the
attainment of Sustainable Development Goals (SDGs). To this end,
the Bank has played a pivotal role in the financing of the
education sector, health, property and construction sectors as well
as supporting the SMEs, the youth, the disadvantaged, the
vulnerable groups, the arts, sports and support environmental
conservation initiatives.
Through advancing affordable loans, support was extended to both
educational institutions and students in pursuit of supporting the
education sector. The Bank also provided support in the
construction of dams and roads across the nation. Furthermore, the
Bank extended funding to local authorities in a bid to ensure the
provision of potable water and sanitation to residents. In a bid to
clear the national housing backlog, the Bank also continued to
advance mortgage facilities for residential accommodation. In line
with its initiatives to support business, the Bank advanced
mortgage facilities to its Corporate clients and SMEs towards the
acquisition of commercial properties.
To demonstrate the priority being given to sustainability
issues, the Group has enhanced its disclosures to include a report
on sustainability in line with best practices.
CORPORATE SOCIAL INVESTMENTS
During the period under review, the Group channeled its
Corporate Social Investments towards education, environment
conservation as well as the support of disadvantaged and vulnerable
groups. The Group donated food stuffs, blankets and clothes to the
Manicaland and Masvingo Provinces following the Cyclone Idai
disaster which occurred in March 2019. Donations were also made to
KidzCan for treatment of children living with cancer, Emerald Hill
School for the Deaf fish farming project and Emerald Hill
Children's home.
The Group also invested in the promotion of sports and extra
curriculum activities in schools through donations in support of
career fairs, Inter Schools Derby and quizzes. We also partnered
with Friends of Hwange Trust and Friend of the Environment (FOTE)
in raising awareness of the need for environment and wildlife
conservation.
CORPORATE DEVELOPMENTS
The bank continued to pursue its strategy of diversifying into
the broader market segments, particularly embracing the currently
unbanked bottom of the pyramid. Our financial inclusion strategy
was anchored on low cost accounts and mPOS deployment. The bank has
also continued to play a pivotal role in mortgage financing and
supporting corporates through working capital support and retooling
through the leasing arm.
During the period under review, the bank launched the TapCard in
collaboration with a technical partner. The product has been well
received in the market as it has brought convenience to clients
conducting low value transactions.
The bank opened the Victoria Falls service centre during the
period under review for the convenience of the Bank's Victoria
Falls customers and tourists.
The construction of our Head Office along Borrowdale Road was
successfully completed and we anticipate to occupy the building
before the end of the first half of 2020.
OUTLOOK AND STRATEGY
The operating environment continues to be challenging mainly due
to the constantly weakening exchange rate, high month-on-month
inflation, incessant power outages, fuel shortages, drought induced
food shortages and general low investor confidence in the country.
Value preservation will be the Group's key focus area in light of
the likely negative impact of inflation and the deteriorating
exchange rate.
The bank has embarked on a digitization trajectory marked by the
introduction of paperless low-cost account opening. The bank will
continue to focus on operational efficiencies and service
excellence across all market segments.
APPRECIATION
I wish to express my heartfelt appreciation to all our clients,
shareholders, regulatory authorities and all other valued
stakeholders for their continued support in this difficult
operating environment. To my fellow Board members, management and
staff, I extend my sincere gratitude for their hard work,
diligence, commitment and resilience which has underpinned the
achievement of these commendable results.
MR. B. A. CHIKWANHA
CHAIRMAN
27 April 2020
DIRECTORS' REPORT EXTRACT
for the year ended 31 December 2019
1. RESPONSIBILITY
The Directors of the Group are mandated by the Companies Act
(Chapter 24:03) of Zimbabwe to maintain adequate accounting records
and to prepare consolidated and separate financial statements that
present a true and fair view of the state of affairs of the Group
and Company at the end of each financial year. The information
contained in these consolidated and separate financial statements
has been prepared on a going concern basis and is in accordance
with the provisions of the Companies Act (Chapter 24:03) of
Zimbabwe, the Banking Act (Chapter 24:20) of Zimbabwe and
International Financial Reporting Standards (IFRSs).
2. INTERNAL FINANCIAL CONTROLS
The board is responsible for ensuring that effective internal
control systems are implemented within the Group. The Group
maintains internal controls and systems designed to provide
reasonable assurance of the integrity and reliability of its
records, safeguard the assets of the Group and prevent and detect
fraud and errors. The Audit Committee in conjunction with the
external and internal auditors of the Group reviews and assesses
the internal control systems of the Group in key risk areas.
3. GOING CONCERN
The Directors have assessed the ability of the Group and its
subsidiaries to continue operating as a going concern and believe
that the preparation of these financial statements on a going
concern is still appropriate.
4. STATEMENT OF COMPLIANCE
The condensed consolidated financial statements are prepared
with the aim of complying fully with International Financial
Reporting Standards (IFRSs) and have been prepared in the manner
required by the Companies Act (Chapter 24:03) of Zimbabwe and the
Banking Act (Chapter 24:20) of Zimbabwe. The financial statement
show the impact of the first time adoption of IFRS 16 which was
adopted by the Group effective 1 January 2019. The detailed impact
of this adoption is disclosed in note 3.12 (Changes in accounting
policy).
The Directors have been able to achieve full compliance with
IFRSs in previous reporting periods up to 31 December 2017.
However, the 31 December 2019 and the comparative period financial
reporting could only achieve partial compliance to the IFRS
reporting framework due to developments detailed below.
The IFRS Conceptual Framework states that to achieve fair
presentation to the financial statements, companies should consider
the underlying economic substance of the transaction over and above
the legal form. International Accounting Standard (IAS 21) "The
Effects of Changes in Foreign Exchange Rates" requires the
Directors to determine the functional currency of the reporting
entity in preparing the entity's financial statements. In arriving
at this conclusion, the entity is required to apply certain
parameters which the Directors duly applied in their judgement.
Furthermore, IAS 21 also requires the reporting entity to make
certain judgements in determining the appropriate exchange rates to
apply for certain transactions conducted in currencies other than
the functional currency of the reporting entity.
As explained in Note 2.4.6, "Determination of the functional
currency", it is our opinion that following the Monetary Policy
pronouncements of 1 October 2018 and 20 February 2019, as well as
the issuance of Exchange Control Directive RU 28 of 2019 on 22
February 2019, the country's functional currency appeared to have
changed from the United States Dollar in terms of the IAS 21
considerations. However, the Government of Zimbabwe issued
Statutory Instrument (SI 33) of 2019 on 22 February 2019, which
prescribes the rate of USD1:RTGS$1 in accounting for all
transactions and events before the effective date of the statutory
instrument.
Furthermore, it is our interpretation that the SI 33 of 2019
issued in terms of the Presidential Powers Temporary Measures Act
[Chapter 10:20], ranks supreme to any contrary legislation
including quasi-legislations, which therefore implies that in
preparing the financial statements, we sought to comply with the
provisions of SI 33 of 2019 ahead of the IAS 21 requirements;
consequently, the Group could not fully apply the requirements of
IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors".
This, in our opinion resulted in non-compliance with IAS 21 and
IAS 8 and that non-compliance had a significant impact on the true
and fair presentation of the Group's financial position and would
therefore urge users of the financial statements to exercise due
caution.
The consolidated and separate financial statements were approved
by the Board of Directors on 27 April 2020.
..................................................
...................................
MR B. A. CHIKWANHA MR B. P. WASHAYA
CHAIRMAN CHIEF EXECUTIVE OFFICER
27 APRIL 2020 27 APRIL 2020
AUDITOR'S STATEMENT
These abridged financial statements have been audited by Ernst
& Young Chartered Accountants (Zimbabwe) and an adverse audit
opinion issued thereon due to non-compliance with International
Accounting Standard 21, "The Effects of Changes in Foreign Exchange
Rates"and non-compliance with International Accounting Standard 8,
"Accounting Polices, Changes in Accounting Estimates and Errors".
There are no key audit matters communicated in the auditor's
report. The Auditor's report is available for inspection at the
Holding Company's registered office. The Audit Partner for this
engagement was Mr David Marange.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2019
Inflation adjusted Historical Cost*
31 Dec 31 Dec 31 Dec 31 Dec
------- ------------------- --------------------- ------------------- ------------------
Note 2019 2018 2019 2018
------- ------------------- --------------------- ------------------- ------------------
ZWL ZWL ZWL ZWL
------- ------------------- --------------------- ------------------- ------------------
Restated
------- ------------------- --------------------- ------------------- ------------------
180 212 323 330
Interest income 4 444 808 70 557 190 39 333 178
------- ------------------- --------------------- ------------------- ------------------
(51 695 (72 131 (16 894
746) 939) 088) (8 865 016)
Interest expense ---------------- ---------------- ---------------- ----------------
------- ------------------- --------------------- ------------------- ------------------
128 516 251 198
Net interest income 698 869 53 663 102 30 468 162
------- ------------------- --------------------- ------------------- ------------------
Fee and commission 183 203 233 280
income 5.1 638 093 87 242 303 28 539 376
------- ------------------- --------------------- ------------------- ------------------
Net foreign exchange 254 811
gains 445 15 660 953 99 863 112 1 899 670
------- ------------------- --------------------- ------------------- ------------------
----------------- ----------------- ---------------- ----------------
------- ------------------- --------------------- ------------------- ------------------
566 531 500 139 240 768
Revenue 781 915 517 60 907 208
------- ------------------- --------------------- ------------------- ------------------
112 606 39 049 206 622
446 600 639 4 968 447
Other income 5.2 ---------------- ----------------- ---------------- ---------------
------- ------------------- --------------------- ------------------- ------------------
679 138 539 189 447 391
Operating income 227 515 156 65 875 655
------- ------------------- --------------------- ------------------- ------------------
(240 539 (289 533 (105 937 (34 720
828) 595) 502) 428)
Operating expenditure 6 ---------------- ----------------- ---------------- ----------------
------- ------------------- --------------------- ------------------- ------------------
Operating income before
impairment
charge and loss on monetary 438 598 249 655 341 453
position 399 920 654 31 155 227
------------------- --------------------- ------------------- ------------------
Impairment losses on
financial
assets measured at
amortised (11 048 (24 920 (11 048
cost 16.3 567) 236) 567) (4 011 952)
------- ------------------- --------------------- ------------------- ------------------
Loss on net monetary (273 439 (78 844
position 254) 723) - -
------- ------------------- --------------------- ------------------- ------------------
---------------- ---------------- ----------------
Profit before 154 110 145 890 330 405 ---------------
taxation 578 961 087 27 143 275
------- ------------------- --------------------- ------------------- ------------------
(70 019 (51 106 (44 504
548) 027) 548) (5 922 074)
Taxation charge 7 ---------------- ---------------- ---------------- ----------------
------- ------------------- --------------------- ------------------- ------------------
285 900
Profit for the period 84 091 030 94 784 934 539 21 221 201
------- ------------------- --------------------- ------------------- ------------------
Other comprehensive
income
------- ------------------- --------------------- ------------------- ------------------
Items that will not be reclassified to
profit or loss
--------------------- ------------------- ------------------
Revaluation of land and 108 586 175 943
buildings, net of tax 781 - 209 46 431
------- ------------------- --------------------- ------------------- ------------------
Translation gain on
change
in functional
currency, 64 096 897 - 11 619 648 -
net of tax ---------------- ---------------- ---------------- ---------------
------- ------------------- --------------------- ------------------- ------------------
Total comprehensive income for 256 774 94 784 934 473 463 21 267 632
the year 708 ========= 396 =========
========= =========
------------------- --------------------- ------------------- ------------------
Earnings/(losses) per share
(ZWL cents)
------------------- --------------------- ------------------- ------------------
- Basic 9.3 21.05 24.24 71.56 5.43
------- ------------------- --------------------- ------------------- ------------------
- Diluted 9.3 19.86 22.85 67.52 5.11
------- ------------------- --------------------- ------------------- ------------------
- Headline 9.3 (18.66) 18.76 7.78 4.70
------- ------------------- --------------------- ------------------- ------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary
Economies" . The Auditors have not expressed an opinion on the
Historical Cost information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2019
Inflation adjusted Historical Cost*
31 Dec 31 Dec 31 Dec 31 Dec
------- -------------------- ------------------- ------------------- -------------------
Note 2019 2018 2019 2018
------- -------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------- -------------------- ------------------- ------------------- -------------------
Restated
------- -------------------- ------------------- ------------------- -------------------
SHAREHOLDERS' FUNDS
------- -------------------- ------------------- ------------------- -------------------
Share capital 10.2.1 796 878 769 225 84 116 80 975
------- -------------------- ------------------- ------------------- -------------------
168 646 156 817
Capital reserves 241 823 19 184 170 16 526 297
------- -------------------- ------------------- ------------------- -------------------
Functional currency
translation
reserve 64 096 897 - 11 619 648 -
------- -------------------- ------------------- ------------------- -------------------
108 586 176 079
Revaluation reserves 781 - 950 136 741
------- -------------------- ------------------- ------------------- -------------------
323 030 258 875 329 505
939 925 569 47 377 400
Retained earnings ----------------- ---------------- ---------------- ----------------
------- -------------------- ------------------- ------------------- -------------------
665 157 416 462 536 473
Total equity 736 973 453 64 121 413
------- -------------------- ------------------- ------------------- -------------------
Redeemable ordinary
shares 11 14 335 253 89 043 407 14 335 253 14 335 253
------- -------------------- ------------------- ------------------- -------------------
Subordinated term loan 12 28 360 340 9 352 327 28 360 340 1 505 647
------- -------------------- ------------------- ------------------- -------------------
----------------- ---------------- ---------------- ----------------
------- -------------------- ------------------- ------------------- -------------------
Total shareholders'
funds 707 853 514 858 579 169
and shareholders' 329 707 046 79 962 313
liabilities ----------------- ---------------- ---------------- ----------------
------- -------------------- ------------------- ------------------- -------------------
LIABILITIES
------- -------------------- ------------------- ------------------- -------------------
Deposits and other 1 268 146 2 779 432 1 268 146 447 105
liabilities 13.1 016 563 016 283
------- -------------------- ------------------- ------------------- -------------------
Deferred tax 112 687
liabilities 043 - 97 653 191 -
------- -------------------- ------------------- ------------------- -------------------
624 937 - 624 937 -
Current tax liabilities ----------------- ----------------- ----------------- ----------------
------- -------------------- ------------------- ------------------- -------------------
Total shareholders' funds and 2 089 311 3 294 291 1 945 593 527 067
liabilities 325 270 190 596
========== ========== ========== =========
-------------------- ------------------- ------------------- -------------------
ASSETS
------- -------------------- ------------------- ------------------- -------------------
Cash and cash 492 304 698 426 492 304 112 440
equivalents 15 267 589 267 912
------- -------------------- ------------------- ------------------- -------------------
Current tax assets - 1 775 387 - 285 822
------- -------------------- ------------------- ------------------- -------------------
107 166 728 294 107 166 117 249
Investment securities 14.1 155 724 155 434
------- -------------------- ------------------- ------------------- -------------------
Loans, advances and
other 852 557 1 581 873 817 960 254 202
assets 16 453 937 242 945
------- -------------------- ------------------- ------------------- -------------------
Non-current assets held
for sale 17 - 223 614 - 36 000
------- -------------------- ------------------- ------------------- -------------------
Trade and other
investments 1 612 131 698 799 1 612 131 112 501
------- -------------------- ------------------- ------------------- -------------------
229 867 130 134 229 867
Investment properties 982 664 982 20 950 606
------- -------------------- ------------------- ------------------- -------------------
Intangible assets 18 11 613 782 17 333 130 1 397 186 2 036 775
------- -------------------- ------------------- ------------------- -------------------
394 189 128 300 295 285
Property and equipment 19 555 867 227 17 844 069
------- -------------------- ------------------- ------------------- -------------------
Deferred tax assets - 7 229 559 - 1 908 532
------- -------------------- ------------------- ------------------- -------------------
----------------- ----------------- ----------------- ----------------
Total assets 2 089 311 3 294 291 1 945 593 527 067
325 270 190 596
========== ========== ========== =========
------- -------------------- ------------------- ------------------- -------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Inflation adjusted
Functional
Currency
Translation Share Option Revaluation Retained
Share Capital Share Premium Reserve Reserve Reserve Earnings Total
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Balances at
1 January 150 017 172 699 324 062
2018 749 637 691 - 595 723 - 567 619
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Profit for
the year - - - - - 94 784 934 94 784 934
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Share based
payments -
share
options
exercised 19 588 6 204 409 - - - - 6 223 997
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Dividends - - - - - (8 608 577) (8 608 577)
paid ---------------- ---------------- ---------------- ---------------- --------------- ---------------- ----------------
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Restated
balances at
31 December 156 222 258 875 416 462
2018 769 225 100 - 595 723 - 925 973
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Translation
gain on
change in
functional
currency,
net of
tax - - 64 096 897 - - - 64 096 897
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Share issue
- scrip
dividend 27 653 11 828 418 - - - - 11 856 071
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Profit for
the year - - - - - 84 091 030 84 091 030
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Revaluation
of land and
buildings, 108 586 108 586
net of tax - - - - 781 - 781
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
(19 936 (19 936
Dividend - - - - - 016) 016)
paid ---------------- ----------------- ----------------- ----------------- --------------- ---------------- ----------------
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
Balances at 796 878 168 050 64 096 897 595 723 108 586 323 030 665 157
31 December ========== 518 ========== ========== 781 939 736
2019 ========== ========= ========= =========
----------------- ------------------ ------------------ ------------------ ---------------- ------------------ ------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Historical Cost*
Functional
Currency
Share Option Translation Revaluation Retained
Share Capital Share Premium Reserve Reserve Reserve Earnings Total
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balances at
1 January
2018 78 751 15 759 282 62 563 - 90 310 27 542 109 43 533 015
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Profit for
the year - - - - - 21 221 201 21 221 201
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Revaluation
of land and
buildings,
net of tax - - - - 46 431 - 46 431
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Share based
payments -
share
options
exercised 2 224 704 452 - - - - 706 676
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Dividends - - - - - (1 385 910) (1 385 910)
paid ---------------- ---------------- ---------------- ---------------- ----------------- ---------------- ----------------
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balances at
31 December
2018 80 975 16 463 734 62 563 - 136 741 47 377 400 64 121 413
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Share issue
- scrip
dividend 3 141 2 657 873 - - - - 2 661 014
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Profit for 285 900 285 900
the year - - - - - 539 539
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Revaluation
of land and
buildings, 175 943 175 943
net of tax - - - - 209 - 209
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Translation
gain on
change in
functional
currency,
net of
tax - - - 11 619 648 - - 11 619 648
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Dividend - - - - - (3 772 370) (3 772 370)
paid ---------------- ----------------- ----------------- ----------------- ----------------- --------------- ---------------
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Balances at 84 116 19 121 607 62 563 11 619 648 176 079 329 505 536 473
31 December ========== ========== ========== ========== 950 569 453
2019 ========== ========= =========
----------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2019
Inflation adjusted Historical Cost *
31 Dec 31 Dec 31 Dec 31 Dec
---------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
---------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
---------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
-------------------- -------------------- --------------------
154 110 145 890 330 405
Profit before taxation 578 961 087 27 143 275
---------------------- -------------------- -------------------- --------------------
Non-cash items:
---------------------- -------------------- -------------------- --------------------
- Depreciation(excluding right
of use assets) 15 427 213 11 991 839 2 307 360 1 370 312
---------------------- -------------------- -------------------- --------------------
- Depreciation - Right of use
assets 3 088 496 - 1 310 867 -
---------------------- -------------------- -------------------- --------------------
- Amortisation of intangible
assets 6 356 249 7 882 765 733 909 879 376
---------------------- -------------------- -------------------- --------------------
* Impairment losses on financial assets measured at
amortised costs 11 048 567 24 920 236 11 048 567 4 011 952
---------------------- -------------------- -------------------- --------------------
(93 624 (19 523 (194 387
* Investment properties fair value gains 006) 429) 322) (2 551 436)
---------------------- -------------------- -------------------- --------------------
* Trade and other investments fair value adjustment (913 332) 316 323 (1 499 630) (10 154)
---------------------- -------------------- -------------------- --------------------
* (Profit)/loss on disposal of property and equipment - (139 122) - (22 396)
---------------------- -------------------- -------------------- --------------------
- Profit on disposal of investment
properties (584 149) (4 395 908) (584 149) (567 032)
---------------------- -------------------- -------------------- --------------------
- Loss on disposal of quoted
investments - 132 802 - 15 074
---------------------- -------------------- -------------------- --------------------
- Interest capitalised on subordinated
term loan 3 779 812 1 065 166 1 151 954 171 483
---------------------- -------------------- -------------------- --------------------
- Impairment reversal on land
and building - - (40 600) (76 661)
---------------------- -------------------- -------------------- --------------------
(92 386 (92 386
- Unrealised foreign exchange 267) 128 510 267) 20 689
loss/(gain) ------------------ ---------------- -------------- ----------------
---------------------- -------------------- -------------------- --------------------
Operating cash flows before changes 168 270
in operating assets and liabilities 6 303 161 142 58 059 776 30 384 482
---------------------- -------------------- -------------------- --------------------
Changes in operating assets and
liabilities
---------------------- -------------------- -------------------- --------------------
(Decrease)/increase in deposits (1 875 561 582 831 552 444
and other liabilities 738) 246 546 90 105 608
---------------------- -------------------- -------------------- --------------------
939 229 (348 675 (326 882 (56 133
Decrease/(increase) in loans, 952 547) 932) 883)
advances and other assets ------------------- ---------------- ----------------- -----------------
---------------------- -------------------- -------------------- --------------------
(886 621 402 425 283 621
Net cash (used)/ generated from 269) 842 390 64 356 207
operations ------------------ ------------------ ------------------ ------------------
---------------------- -------------------- -------------------- --------------------
TAXATION
-------------------- -------------------- --------------------
Tax on dividends paid (1 240 750) (604 341) (247 740) (97 294)
---------------------- -------------------- -------------------- --------------------
(14 520 (27 881
Corporate tax paid 794) 907) (9 079 118) (4 488 757)
---------------------- -------------------- -------------------- --------------------
------------------- ----------------- -----------------
(902 382 373 939 274 294 -----------------
Net cash (outflow)/inflow from 813) 541 532 59 770 156
operations ------------------- ----------------- ----------------- ----------------
---------------------- -------------------- -------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
-------------------- -------------------- --------------------
Acquisition of intangible assets (636 901) (4 501 240) (94 320) (535 971)
---------------------- -------------------- -------------------- --------------------
Disposal/(acquisition) of investment 621 128 (155 312 (25 004
securities 569 347) 10 083 280 005)
---------------------- -------------------- -------------------- --------------------
Proceeds on disposal of property
and equipment - 139 122 - 22 396
---------------------- -------------------- -------------------- --------------------
(35 323 (58 952 (24 308
Acquisition of property and equipment 914) 339) 497) (9 490 840)
---------------------- -------------------- -------------------- --------------------
Proceeds on disposal of investment
properties 5 888 719 29 826 660 5 888 719 4 801 846
---------------------- -------------------- -------------------- --------------------
(37 784
Acquisition of investment properties (1 939 045) 075) (351 515) (6 082 924)
---------------------- -------------------- -------------------- --------------------
Proceeds on disposal of quoted - 4 035 - 458
investments ---------------- ---------------- ----------------- ----------------
---------------------- -------------------- -------------------- --------------------
589 117 (226 580 (36 289
Net cash generated/(used) in 428 236) (8 782 333) 040)
investing activities ---------------- ---------------- ---------------- ----------------
---------------------- -------------------- -------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------ ------------------ ------------------ ------------------
Payment of interest on subordinated
term loan (803 062) (507 728) (180 450) (81 740)
------------------ ------------------ ------------------ ------------------
Repayment of lease liabilities (4 186 976) - (1 276 043) -
------------------ ------------------ ------------------ ------------------
Cash dividend paid (4 400 391) (5 048 727) (832 659) (573 719)
------------------ ------------------ ------------------ ------------------
(137 773) (72 427) (30 958) (8 221)
Share issue costs - scrip dividend ---------------- ---------------- -------------- ----------------
------------------ ------------------ ------------------ ------------------
Net cash outflow from financing (9 528 202) (5 628 882) (2 320 110) (663 680)
activities ---------------- ---------------- ---------------- ----------------
------------------ ------------------ ------------------ ------------------
Net increase in cash and cash (322 793 141 730 263 192
equivalents 586) 476 089 22 817 436
------------------ ------------------ ------------------ ------------------
Net foreign exchange and monetary
adjustments on cash and cash 116 671 116 671
equivalents 264 436 508 266 70 274
------------------ ------------------ ------------------ ------------------
698 426 556 259 112 440
Cash and cash equivalents at 589 605 912 89 553 202
beginning of the year ---------------- ---------------- -------------- ----------------
------------------ ------------------ ------------------ ------------------
Cash and cash equivalents at 492 304 698 426 492 304 112 440
the end of the year 267 589 267 912
========= ========= ========== =========
------------------ ------------------ ------------------ ------------------
ADDITIONAL INFORMATION ON OPERATIONAL
CASH FLOWS FROM INTEREST
------------------ ------------------ ------------------ ------------------
168 852 199 550
Interest received 277 036 65 548 752 38 318 561
------------------ ------------------ ------------------ ------------------
Interest paid (including interest (48 055 (63 651 (15 089
on lease liability) 909) 654) 895) (7 548 415)
------------------ ------------------ ------------------ ------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2019
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe
and is an investment holding company. Its registered office address
is 64 Kwame Nkrumah Avenue, Harare. Its principal operating
subsidiary is engaged in commercial and retail banking. NMB Bank
Limited is a registered commercial bank and was incorporated in
Zimbabwe on 16 October 1992 and commenced trading on 1 June 1993.
The Bank operated as an Accepting House until 6 December 1999 when
the licence was converted to that of a Commercial Bank. The Bank is
exposed to the following risks in its operations: liquidity risk,
credit risk, market risk, operational risk, foreign currency
exchange rate risk and interest rate risk.
2. ACCOUNTING CONVENTION
Statement of compliance
The condensed consolidated financial statements are prepared and
presented on the basis that they reflect the information necessary
to be a fair summary of the annual financial statements from which
they are derived. This includes financial results that agree with
or can be recalculated from the related information in the audited
consolidated financial statements and that contain the information
necessary so as not to be misleading in the circumstances. The
information contained in these consolidated financial results does
not contain all the disclosures required by International Financial
Reporting Standards, the Companies Act (Chapter 24:03) of Zimbabwe
and the Banking Act (Chapter 24:20) of Zimbabwe, which are
disclosed in the full consolidated annual financial statements from
which this set of condensed financial statements were derived. For
a better understanding of the Group`s financial position, its
financial performance and cash flows for the year, these condensed
financial statements should be read in conjunction with the audited
consolidated annual financial statements.
2.1 Basis of preparation
The condensed consolidated financial statements including
comparatives, have been prepared under the inflation adjusted
accounting basis to account for changes in the general purchasing
power of the ZWL. The restatement is based on the Consumer Price
Index at the statement of financial position date. The Public
Accountants and Auditors Board (PAAB) issued a pronouncement on 11
October 2019 indicating the economy had become hyper-inflationary.
The Directors have thus prepared the accompanying financial
statements using the hyperinflationary statements using the
hyper-inflationary accounting basis. The indices are derived from
the monthly inflation rates which are issued by the Zimbabwe
National Statistics Agency (ZIMSTAT). As a result of the change in
the Group's functional currency on 22 February 2019, the CPI
indices for the prior periods are in respect of the USD functional
currency which was prevailing at the time. The indices used are
shown below. These condensed consolidated financial statements are
reported in Zimbabwean dollars and rounded to the nearest
dollar.
Indices Conversion factor
Dates
31 December 2017 61.13 9.0232
31 December 2018 88.81 6.2115
31 December 2019 551.63 1.0000
The indices have been applied to the historical costs of
transactions and balances as follows:
-- All comparative figures as of and for the periods ended 31
December 2017, 31 December 2018 and 31 December 2019 have been
restated by applying the change in the index from the date of last
re-measurement to 31 December 2019;
-- Income statement transactions have been restated by applying
the change in the index from the approximate date of the
transactions to 31 December 2019;
-- Gains and losses arising from the monetary assets or
liability positions have been included in the income statement;
-- Non-monetary assets and liabilities have been restated by
applying the change in the index from the date of the transaction
to 31 December 2019;
-- Property and equipment and accumulated depreciation have been
restated by applying the change in the index from the earlier of
February 2009 and date of their purchase or re-assessment to 31
December 2019;
-- Equity has been restated by applying the change in index from
the date of issue to 31 December 2019;
The net impact of applying the procedures above is shown in the
statement of comprehensive income as the gain or loss on net
monetary position.
IAS 29 discourages the publication of historical results as a
supplement to the inflation adjusted results. However, historical
results have been published to allow comparability of the results
during the transitional phase in applying the Standard.
2.2 Basis of consolidation
The Group financial results incorporate the financial results of
the Company and its subsidiaries. Subsidiaries are investees
controlled by the Group. The Group controls an investee if it is
exposed to, or has rights to, variable returns from its involvement
with the investee. The financial statements of subsidiaries are
included in the consolidated financial statements from the date on
which control commences until date when control ceases. The
financial results of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting
policies. All intra-group balances, transactions, income and
expenses; profits and losses resulting from intra-group
transactions that are recognised in assets and liabilities are
eliminated in full. When the Group loses control over a subsidiary,
it derecognises the assets and liabilities of the subsidiary, and
any related non-controlling interest and other components of
equity. Any resulting gain or loss is recognised in profit or loss.
Any interest retained in the former subsidiary is measured at fair
value when control is lost.
2.3 Comparative financial information
The comparative information covers a period of twelve
months.
2.4 Use of estimates and judgements
In preparation of the Group financial statements, Directors have
made judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment in
the year ended 31 December 2019 is included in the following
notes:
2.4.1 Deferred tax
Deferred taxation is recognised in respect of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation
purposes. Temporary differences arising out of the initial
recognition of assets or liabilities and temporary differences on
initial recognition of business combinations that affect neither
accounting nor taxable profit are not recognised. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the reporting date. Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
2.4.2 Valuation of properties
Significant judgements and estimates have been applied as
detailed below for the valuation of Investment Properties and of
Land and Buildings held under Property, Plant and Equipment:
Statutory Instrument 142 of 2019 introduced the Zimbabwe Dollar
(ZWL) as the sole legal tender effective 24 June 2019. This appears
to have been a follow up measure to the Monetary Policy Statement
(MPS) of 22 February 2019 which added the RTGS$ to the then basket
of currencies. The MPS established an Inter-Bank Foreign Exchange
market which continued to function up to the reporting year end
date. These events have created complex valuation challenges for
the short term.
Valuations rely on historical market evidence for calculation
inputs. This includes transaction prices for comparable properties,
rents and capitalisation rates. Such market evidence does not exist
at present to calculate ZWL values. Therefore, valuers have adopted
the approach for the meanwhile of converting USD valuation inputs
at the Inter-Bank Foreign Exchange Auction Rate of the day to
calculate ZWL property values.
This approach, however, presents a multitude of risks to the
users of the valuation reports. These are detailed below:
Overstating the property values
The key inputs for the valuation of non-residential investment
property are the rent income and the capitalisation rate. No trends
for ZWL rents have yet been established neither is there easily
verifiable market evidence of ZWL transactions to enable analysis
of the yields. It is unlikely that ZWL rent movements will mirror
the activity on the Inter-Bank Foreign Exchange market. In
addition, the property market will price the risk associated with
the ZWL which is not a fully convertible currency, and this will be
reflected through the capitalisation rates.
Therefore, a direct conversion of USD valuation inputs likely
results in overstated ZWL property values.
Property sub-sectors will respond differently to the new
currency
To use a single conversion rate for different property
sub-sectors does not recognise the fact that each will respond
differently to the reintroduced ZWL. Non-residential property is
likely to lag behind the economic cycle quite considerably. Whereas
residential property which is more sentiment driven, is likely to
respond positively quicker.
Ignoring market dynamics (supply and demand)
Applying a conversion rate to USD valuation inputs to calculate
ZWL property values is not an accurate reflection of market
dynamics. Risks associated with currency trading do not reflect the
risks associated with property trading. The two markets perceive
and price their respective risks quite differently.
It is, therefore, unlikely that property values will strictly
track the movement in the Inter-Bank Foreign Exchange Rate.
2.4.3 Investment securities
The Group has Treasury Bills and Government Bonds for which
there is currently no market information to facilitate the
application of fair value principles in determining fair value
disclosures. Directors have made a significant judgment in
determining that the carrying amount approximates fair value.
(refer to note 14.1).
2.4.4 Impairment losses on loans and advances
The Bank adopted IFRS 9 with effect from 1 January 2018.
The Bank recognises loss allowances for Expected Credit Losses
(ECLs) on the following financial
instruments that are not measured at Fair Value through Profit
or Loss (FVTPL):
-- loans and advances to banks;
-- loans and advances to customers;
-- debt investment securities;
-- lease receivables;
-- loan commitments issued; and
-- financial guarantee contracts issued.
No impairment loss is recognised on equity investments.
With the exception of purchased or originated credit-impaired
(POCI) financial assets (which are considered separately below),
ECLs are measured through a loss allowance at an amount equal
to:
-- 12-month ECL, i.e. lifetime ECL that result from those
default events on the financial instrument that are possible within
12 months after the reporting date, (referred to as Stage 1);
or
-- Full lifetime ECL, i.e. lifetime ECL that result from all
possible default events over the life of the
financial instrument, (referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a
financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition.
For all other financial instruments, ECLs are measured at an amount
equal to the 12-month ECL.
The impairment loss on loans and advances is disclosed in more
detail under note 8 and note 16.3.
2.4.5 Non-current assets held for sale
Non-current assets were valued by an independent professional
valuer. All non-current assets held for sale are measured at their
fair values. The determined fair value of non-current assets held
for sale is most sensitive to significant unobservable inputs. In
addition, the property market is currently not stable due to
liquidity and other market constraints and hence comparable values
are also not stable.
2.4.6 Determination of the functional currency
The Government of Zimbabwe adopted a multi-currency regime in
2009. The British Pound, Euro, United States Dollar (USD), South
African Rand (ZAR) and Botswana Pula were adopted as the
multi-currency basket in February 2009. In January 2014, the
Reserve Bank of Zimbabwe (RBZ) issued a Monetary Policy Statement
which added the Chinese Yuan, Australian Dollar, Indian Rupee,
Japanese Yen into the basket of multi-currencies. At the onset, the
USD and the ZAR were the commonly used currencies, with the USD
eventually gaining prominence resulting in it being designated as
the functional and presentation currency by the transacting public
and the Monetary Authorities, including the Group.
Between 2014 and 2016, the Zimbabwean economy experienced a
massive liquidity crisis which eventually prompted the Monetary
Authorities to introduce the bond notes in November 2016 whilst
encouraging the public to continue using the other currencies in
the multi-currency basket. The bond notes were introduced at an
official fixed exchange rate of 1:1 with the USD and the Monetary
Authorities specifically directed financial institutions not to
open separate vault and cash accounts for the USD and the bond
notes. The introduction of the bond notes gave rise to a three (3)
tier pricing system wherein sellers and service providers would
quote three (3) separate prices (USD, bond notes and
RTGS/electronic transfers) for their merchandise and services
respectively. Significant discounts were being offered for USD
payments whilst a premium would be added for prices quoted in bond
notes or electronic settlement via the Real Time Gross Settlement
System (RTGS). These developments triggered a debate around the
functional currency of Zimbabwe. It should be noted that the Group
never participated in the three tier pricing and none of its
products had multiple prices during the same period.
In October 2018, the Monetary Authorities instructed financial
institutions to separate bond notes and USD accounts and indicated
that corporates and individuals could proceed to open Nostro
Foreign Currency Accounts (FCA), for foreign currency holdings,
which were now being exclusively distinguished from the existing
RTGS based accounts. However, it should be noted that at the time
of this policy pronouncement, the Monetary Authorities did not
state that they had introduced a new currency for Zimbabwe, which
actually meant that the USD remained as the currency of reference.
By 31 December 2018, there had been no pronouncement by the
Monetary Authorities to the effect that there had been a new
currency introduced, which could be considered as the country's
functional currency.
On 22 February 2019, the Reserve Bank of Zimbabwe (RBZ) issued
an Exchange Control Directive, RU 28 of 2019 which established an
interbank foreign exchange market to formalise the buying and
selling of foreign currency through the Banks and Bureaux de
change. In order to establish an exchange rate between the current
monetary balances and foreign currency, the Monetary Authorities
denominated the existing RTGS balances in circulation as RTGS
Dollars. Initial trades on 22 February 2019 were at USD1: RTGS$2.5.
On the same date, Statutory Instrument 33 of 2019 was also issued
and it specified that for accounting and other purposes, all assets
and liabilities that were in USD immediately before the 22(nd) of
February 2019 were deemed to have been valued in RTGS Dollars at a
rate of 1:1 with the USD.
On 24 June 2019, the Monetary Authorities announced that the
multi-currency regime, which the country was operating in since
February 2009 had been discontinued and the country had adopted a
mono-currency regime meaning that the sole legal tender would be
the Zimbabwe Dollar (ZWL). In light of the developments summarised
above, the Directors concluded that the Group's functional currency
changed from US$ to ZWL with effect from 22 February 2019.
2.4.6 Determination of functional currency
The opening balances at 1 January 2019 are carried at
USD/RTGS$1:1 in compliance with Statutory Instrument 33 (SI 33) of
2019. The Group used this fixed exchange rate at 1 January 2019 and
thus did not comply with the requirements of International
Accounting Standard 21 (IAS21), "The Effects of Changes in Foreign
Exchange Rates", as doing so would have been in contravention of SI
33 of 2019. The financial statements were restated using the first
available interbank mid-rate on 22 February 2019 of USD/RTGS$1:2.5,
giving rise to the Functional Currency Translation Reserve of ZWL11
619 648. The International Financial Reporting Standards (IFRS) do
not prescribe clear guidance on the treatment of the movements
arising on the translation of foreign currencies on the date of
change in functional currency. As such, the Directors had to apply
their judgement on the treatment of these translation gains and
losses in a manner that most faithfully represents the substance of
the event and related transactions.
The Directors had to apply judgement in determining the rates at
which the comparative information for the twelve months ended 31
December 2018 would be restated. The currency conversion challenge
emanates from the existence of a 3-tier pricing structure during
the comparative period depending on mode of settlement and the
challenge was compounded by the fact that the official exchange
rate between USD and the bond note/electronic balances was pegged
at 1:1 and there was no orderly, functional market where foreign
currency transactions were being conducted in order to establish
credible foreign currency conversion rates. On that basis, the
Directors have restated the comparative information at the official
rate of USD/RTGS$(ZWL)1:1 as the cost and effort of restating the
comparative information using any other rate outweighs the benefits
that may arise from the exercise and would contravene the country's
laws and regulations.
2.4.7 Lease arrangements
The Group adopted IFRS 16, Leases, on 1 January 2019. As
permitted by the IFRS 16 transitional provisions, the Group elected
not to restate comparative figures. The Directors exercised
significant judgement on determining whether the various
contractual relationships which the Group is party to, contain
lease arrangements which fall into the scope of IFRS 16.
Significant judgement was also exercised in determining whether the
Group is reasonably certain that it will exercise extension options
present in lease contracts as well as the determination of
incremental borrowing rates applied in determining the lease
liability.
2.5 Going concern
The Directors have assessed the ability of the Group to continue
operating as a going concern and believe that the preparation of
these condensed consolidated financial statements on a going
concern basis is still appropriate.
3. ACCOUNTING POLICIES
The selected principal accounting policies applied in the
preparation of these condensed consolidated financial statements
are set out below. These policies have been consistently applied
unless otherwise stated.
3.1 Fair value measurement principles
The fair value of financial instruments is based on their quoted
market price at the reporting date without any deduction for
transaction costs. If a quoted market price is not available, the
fair value of the instrument is estimated using pricing models or
discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future
cash flows are based on management's best estimates and the
discount rate is a market related rate at the reporting date for an
instrument with similar terms and conditions. Where pricing models
are used, inputs are based on market related measures at the
reporting date.
3.2 Investment properties
Investment properties are measured at fair value. Gains and
losses arising from a change in fair value of investment properties
are recognised in the statement of comprehensive income. The fair
value is determined at the end of each reporting period, by a
registered professional valuer.
3.3 Share based payments
The Group issues share options to certain employees in terms of
the Employee Share Option Scheme. Share options are measured at
fair value at the date of grant. The fair value determined at the
date of grant of the options is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of shares
that will eventually vest. Fair value is measured using the
Black-Scholes option pricing model. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and other
behavioural considerations.
3.4 Property and equipment
The residual value and the useful life of property and equipment
are reviewed at least each financial year-end. If the residual
value of an asset increases by an amount equal to or greater than
the asset's carrying amount, then the depreciation of the asset
ceases. Depreciation will resume only when the residual value
decreases to an amount below the asset's carrying amount.
3.5 Intangible assets
Intangible assets are initially recognised at cost.
Subsequently, the assets are measured at cost less accumulated
amortisation and any accumulated impairment losses.
3.6 Taxation
Income tax
Income tax expenses comprise current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to items recognised directly in equity or in other comprehensive
income.
Current tax
Current tax comprises expected tax payable or receivable on the
taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. It is measured
using rates enacted or substantively enacted at the reporting date
in the country where the Bank operates and generates taxable income
and any adjustment to tax payable in respect of previous years.
Current income tax assets and liabilities for the current period
are measured at the amount expected to be recovered from or paid to
the taxation authorities.
Deferred taxation
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries
to the extent that it is probable that they will not reverse in the
foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow the manner in which the Group expects, at the
reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Group has not rebutted this
presumption. Deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to taxes levied by the same
tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be
realised simultaneously.
Additional taxes that arise from the distribution of dividends
by the Group are recognised at the same time as the liability to
pay the related dividend is recognised. These amounts are generally
recognised in profit or loss because they generally relate to
income arising from transactions that were originally recognised in
profit or loss.
3.7 Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances, and
short term highly liquid investments with maturities of three
months or less when purchased. Cash and cash equivalents are
measured at amortised cost in the statement of financial
position.
3.8 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received
or receivable, taking into account contractually defined terms of
payment and excluding taxes or duty. The specific recognition
criteria described below must also be met before revenue is
recognised.
3.9 Interest income
For all financial instruments measured amortised cost, interest
income or expense is recorded using the effective interest rate
(EIR), which is the rate that exactly discounts the estimated
future cash payments or receipts through the expected life of the
financial instrument or a shorter period, where appropriate, to the
net carrying amount of the financial asset or liability. Interest
income includes income arising out of the banking activities of
lending and investing.
3.10 Interest expense
Interest expense arises from deposit taking. The expense is
recognised in profit or loss as it accrues, taking into account the
effective interest cost of the liability.
3.11 Shareholders' funds and shareholders' liabilities
Shareholders' funds and shareholders' liabilities refer to the
investment made by the shareholders in the Group and it consists of
share capital, share premium, share options reserve, retained
earnings, revaluation reserve, functional currency translation
reserve, redeemable ordinary shares and subordinated term
loans.
3.12 Changes in accounting policy
On 1 January 2019, the Group adopted IFRS 16, "Leases" as issued
by the International Accounting Standards Board (IASB) in January
2016 with a date of transition of 1 January 2019, which resulted in
changes in accounting policy and adjustments to the amounts
previously recognised in the financial statements.
As permitted by the transitional provisions of IFRS 16, the
Group elected not to restate comparative figures. The Group changed
its accounting policy for leases where the Group is the lessee.
Prior to the change in accounting policy leases in which a
significant portion of the risks and rewards of ownership were not
transferred to the Group as lessee were classified as operating
leases. Payments made under operating leases were charged to profit
or loss on a straight-line basis over the period of the lease.
Lease income from operating leases where the Group is a lessor
is recognised in income on a straight-line basis over the lease
term. The respective leased assets are included in the statement of
financial position based on their nature. The Group did not need to
make any adjustments to the accounting for assets held as lessor as
a result of adopting the new leasing standard. Upon adoption of
IFRS 16, Leases, on 1 January 2019, the Group did not restate
comparatives for the 2018 reporting period, as permitted under the
specific transition provisions in the standard. The
reclassifications and the adjustments arising from the new leasing
rules are therefore recognised in the opening statement of
financial position on 1 January 2019.
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17, Leases. On date
of adoption, these liabilities were measured at the present value
of the remaining lease payments, discounted using the Group's
incremental borrowing rate as of 1 January 2019. The weighted
average incremental borrowing rate applied to the lease liabilities
on 1 January 2019 was 12.35%.
The Group has also elected not to reassess whether other
contracts not previously classified as leases are, or contains a
lease at the date of initial application. Instead, for contracts
entered into before the transition date the Group relied on its
assessment made by applying IAS 17, Leases, and Interpretation 4,
Determining whether an Arrangement contains a Lease.
Lease accounting
Measurement of right-of-use assets
The associated right-of-use assets for property leases were
measured on a prospective basis. The right-of-use assets were
measured at the amount equal to the lease liability at the date of
initial adoption, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the
consolidated statement of financial position as at 31 December
2018.
3.12 Changes in accounting policy
Adjustments recognised in the statement of financial position on
1 January 2019
The change in accounting policy affected the following items in
the statement of financial position on 1 January 2019:
-- Right-of-Use assets - Increased by ZWL3 078 687.
-- Lease liabilities - Increased by ZWL3 078 687.
-- There was no impact on Retained earnings on 1 January 2019.
The impact of the first time adoption of IFRS 16 on 1 January
2019 is shown below:
IAS 17 Change IFRS 16
Statement of financial position ZWL ZWL ZWL
(extract)
-------------------- ------------------- -------------------
- 3 078 687 3 078 687
Right-of-use assets ----------------- ----------------- -----------------
-------------------- ------------------- -------------------
- 3 078 687 3 078 687
Total assets impact ----------------- ----------------- -----------------
-------------------- ------------------- -------------------
Liabilities
-------------------- ------------------- -------------------
- 3 078 687 3 078 687
Lease liabilities ----------------- ----------------- -----------------
-------------------- ------------------- -------------------
- 3 078 687 3 087 687
Total liabilities impact ----------------- ----------------- -----------------
-------------------- ------------------- -------------------
Retained earnings - - -
========== =========== ==========
-------------------- ------------------- -------------------
Reconciliation of IAS 17 Operating Lease commitments to IFRS 16
Lease liability
ZWL
Lease commitments (up to 1 year at 31 December
2018 1 343 715
--------------------
2 769 694
Add extension period lease costs -----------------
--------------------
Total IAS 17 undiscounted lease commitments 4 113 409
--------------------
(1 034 722)
Discounting Group's incremental borrowing rate ------------------
--------------------
IFRS 16 Lease liability at 1 January 2019 3 078 687
==========
--------------------
The adoption of IFRS 16 has resulted in changes in the Group's
accounting policies for recognition, classification and measurement
of lease arrangements in which the Group is a party. Lease payments
are allocated between principal and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. In circumstances where the Group is reasonably certain to
exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life. The Group revalues its
land and buildings that are presented within property and equipment
and it has elected not to do so for the right-of-use buildings held
by the Group.
Lessor accounting
The Group did not need to make any adjustments to the accounting
for lease contracts in which the Group is the lessor under
operating leases as a result of the adoption of IFRS 16.
3.13 FINANCIAL INSTRUMENTS
Measurement methods
Amortised cost and effective interest rates
The amortised cost is the amount at which the financial asset or
financial liability is measured at initial recognition minus the
principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between that
initial amount and the maturity amount and, for financial assets,
an adjustment for any loss allowance.
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial asset or financial liability to the gross
carrying amount of a financial asset (i.e. its amortised cost
before any impairment allowance) or to the amortised cost of a
financial liability. The calculation does not consider expected
credit losses and includes transaction costs, premiums or discounts
and fees and points paid or received that are integral to the
effective interest rate, such as origination fees. For purchased or
originated credit-impaired ('POCI') financial assets - assets that
are credit-impaired at initial recognition - the Bank calculates
the credit-adjusted effective interest rate, which is calculated
based on the amortised cost of the financial asset instead of its
gross carrying amount and incorporates the impact of expected
credit losses in estimated future cash flows.
When the Bank revises the estimates of future cash flows, the
carrying amount of the respective financial assets or financial
liability is adjusted to reflect the new estimate discounted using
the original effective interest rate. Any changes are recognised in
profit or loss.
Interest Income
Interest income is calculated by applying the effective interest
rate to the gross carrying amount of financial assets, except
for:
a) Purchased or originated credit-impaired (POCI) financial
assets, for which the original credit-adjusted effective interest
rate is applied to the amortised cost of the financial asset.
b) Financial assets that are not 'POCI' but have subsequently
become credit-impaired (or 'stage 3'), for which interest revenue
is calculated by applying the effective interest rate to their
amortised cost (i.e. net of the expected credit loss
provision).
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the entity becomes a party to the contractual provisions of the
instrument. Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the Bank commits to
purchase or sell the asset.
At initial recognition, the Bank measures a financial asset or
financial liability at its fair value plus or
minus, in the case of a financial asset or financial liability
not at fair value through profit or loss; transaction costs that
are incremental and directly attributable to the acquisition or
issuance of the financial asset or financial liability
respectively, such as fees and commissions. Transaction costs of
financial assets and financial liabilities carried at fair value
through profit or loss are expensed in profit or loss. Immediately
after initial recognition, an expected credit loss allowance (ECL)
is recognised for financial assets measured at amortised cost and
investments in debt instruments measured at FVOCI, which results in
an accounting loss being recognised in profit or loss when an asset
is newly originated.
When the fair value of financial assets and liabilities differs
from the transaction price on initial recognition, the entity
recognises the difference as follows:
(a) When the fair value is evidenced by a quoted price in an
active market for an identical asset or liability (i.e. a Level 1
input) or based on a valuation technique that uses only data from
observable markets, the difference is recognised as a gain or
loss.
(b) In all other cases, the difference is deferred and the
timing of recognition of deferred day one profit or loss is
determined individually. It is either amortised over the life of
the instrument, deferred until the instrument's fair value can be
determined using market observable inputs, or realised through
settlement.
3.13.1 Financial Assets
(i) Classification and subsequent measurement
From 1 January 2018, the Group has applied IFRS 9 and classifies
its financial assets in the
following measurement categories:
-- Fair value through profit or loss (FVPL);
-- Fair value through other comprehensive income (FVOCI); or
-- Amortised cost.
The classification requirements for debt and equity instruments
are described below:
(i) Classification and subsequent measurement (continued)
Debt instruments
Debt instruments are those instruments that meet the definition
of a financial liability from the issuer's perspective, such as
loans, government and corporate bonds and trade receivables
purchased from clients in factoring arrangements without
recourse.
Classification and subsequent measurement of debt instruments
depend on:
-- the Bank's business model for managing the asset; and
-- the cash flow characteristics of the asset.
Based on these factors, the Bank classifies its debt instruments
into one of the following three measurement categories:
-- Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent solely
payments of principal and interest ('SPPI'), and that are not
designated at FVPL, are measured at amortised cost. The carrying
amount of these assets is adjusted by any expected credit loss
allowance. Interest income from these financial assets is included
in interest and similar income using the effective interest rate
method
-- Fair value through other comprehensive income (FVOCI):
Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets' cash flows
represent solely payments of principle and interest and that are
not designated at FVPL, are measured at fair value through other
comprehensive income (FVOCI). Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains
or losses, interest revenue and foreign exchange gains and losses
on the instrument's amortised cost which are recognised in profit
or loss. When the financial asset is derecognised, the cumulative
gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in "Other Income'. Interest
income from these financial assets is included in 'Interest Income'
using the effective interest rate method.
-- Fair value through profit or loss: Assets that do not meet
the criteria for amortised cost or FVOCI are measured at fair value
through profit or loss. A gain or loss on a debt investment that is
subsequently measured at fair value through profit or loss and is
not part of a hedging relationship is recognised in profit or loss
and presented in the profit or loss statement within 'Net Trading
Income" in the period in which it arises, unless it arises from
debt instruments that were designated at fair value or which are
not held for trading, in which case they are presented separately
in 'Other Income'. Interest income from these financial assets is
included in "Interest income" using the effective interest rate
method.
(i) Classification and subsequent measurement (continued)
Business model: the business model reflects how the Bank manages
the assets in order to generate cash flows. That is, whether the
Bank's objective is solely to collect the contractual cash flows
from the assets or is to collect both the contractual cash flows
and cash flows arising from the sale of assets. If neither of these
is applicable (e.g. financial assets are held for trading
purposes), then the financial assets are classified as part of
'other' business model and measured at FVPL. Factors considered by
the Bank in determining the business model for a group of assets
include past experience on how the cash flows for these assets were
collected, how the asset's performance is evaluated and reported to
key management personnel, how risks are assessed and managed and
how managers are compensated. Securities held for trading are held
principally for the purpose of selling in the near term or are part
of a portfolio of financial instruments that are managed together
and for which there is evidence of a recent actual pattern of
short-term profit-taking. These securities are classified in the
'other' business model and measured at FVPL.
Where the business model is to hold assets to collect
contractual cash flows or to collect contractual cash flows and
sell, the Bank assesses whether financial instruments' cash flows
represent solely payments of
principal and interest (the "SPPI" test). In making this
assessment, the Bank considers whether the
contractual cash flows are consistent with a basic lending
arrangement i.e. interest includes only consideration for the time
value of money, credit risk, other basic lending risks and a profit
margin that is consistent with a basic lending arrangement. Where
the contractual terms introduce exposure to risk or volatility that
are inconsistent with a basic lending arrangement, the related
financial asset is classified and measured at fair value through
profit or loss.
The Bank reclassifies debt investments when and only when its
business model for managing those assets changes. The
reclassification takes place from the start of the first reporting
period following the change. Such changes are expected to be very
infrequent and none occurred during the period.
Equity instruments
Equity instruments are instruments that meet the definition of
equity from the issuer's perspective; that is, instruments that do
not contain a contractual obligation to pay and that evidence a
residual interest in the issuer's net assets. Examples of equity
instruments include basic ordinary shares.
The Bank subsequently measures all equity investments at fair
value through profit or loss, except where the Bank's management
has elected, at initial recognition, to irrevocably designate an
equity investment at fair value through other comprehensive income.
The Bank policy is to designate equity investments as FVOCI when
those investments are held for purposes other than to generate
investment returns. When this election is used, fair value gains
and losses are recognised in OCI and are not subsequently
reclassified to profit or loss, including on disposal. Impairment
losses (and reversal of impairment losses) are not reported
separately from other changes in fair value. Dividends, when
representing a return on such investments, continue to be
recognised in profit or loss as other income when the Bank's right
to receive payments is established.
Gains and losses on equity investments at FVPL are included in
the 'Other Income' line in the statement of profit or loss.
(ii) Impairment
The Bank recognises loss allowances for Expected Credit Losses
(ECLs) on the following financial instruments that are not measured
at Fair Value through Profit or Loss (FVTPL):
-- cash and cash equivalents;
-- loans and advances to customers;
-- investment securities;
-- lease receivables;
-- facilities approved but not drawn down; and
-- financial guarantee contracts issued.
No impairment loss is recognised on equity investments.
With the exception of POCI financial assets (which are
considered separately below), ECLs are measured through a loss
allowance at an amount equal to:
-- 12-month ECL, i.e. lifetime ECL that result from those
default events on the financial instrument that are possible within
12 months after the reporting date, (referred to as Stage 1);
or
-- Full lifetime ECL, i.e. lifetime ECL that result from all
possible default events over the life of the financial instrument,
(referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a
financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition.
For all other financial instruments, ECLs are measured at an amount
equal to the 12-month ECL.
Expected Credit Losses
ECLs are a probability-weighted estimate of the present value of
credit losses. These are measured as the present value of the
difference between the cash flows due to the Bank under the
contract and the cash flows that the Bank expects to receive
arising from the weighting of multiple future economic scenarios,
discounted at the asset's EIR.
For undrawn loan commitments, the ECL is the difference between
the present value of the difference between the contractual cash
flows that are due to the Bank if the holder of the commitment
draws down the loan and the cash flows that the Bank expects to
receive if the loan is drawn down; and
For financial guarantee contracts, the ECL is the difference
between the expected payments to reimburse the holder of the
guaranteed debt instrument less any amounts that the Bank expects
to receive from the holder, the debtor or any other party.
The Bank measures ECL on an individual basis, or on a collective
basis for portfolios of loans that share similar economic risk
characteristics. The measurement of the loss allowance is based on
the present value of the asset's expected cash flows using the
asset's original EIR, regardless of whether it is measured on an
individual basis or a collective basis.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows
of that financial asset have occurred. Evidence that a financial
asset is credit-impaired include observable data about the
following events:
(a) significant financial difficulty of the issuer or the
borrower;
(b) a breach of contract, such as a default or past due
event;
(c) the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower's financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would
not otherwise consider;
(d) it becoming probable that the borrower will enter bankruptcy
or other financial reorganisation;
(e) the disappearance of an active market for that financial
asset because of financial difficulties; or
(f) the purchase or origination of a financial asset at a deep
discount that reflects the incurred credit losses.
It may not be possible to identify a single discrete event -
instead, the combined effect of several events may have caused
financial assets to become credit-impaired.
Purchased or originated credit-impaired (POCI) financial
assets
For POCI the Bank only recognises the cumulative changes in
lifetime expected credit losses since initial recognition. At each
reporting date, the Bank recognises in profit or loss the amount of
the change in lifetime expected credit losses as an impairment gain
or loss. The Bank recognises favourable changes in lifetime
expected credit losses as an impairment gain, even if the lifetime
expected credit losses are less than the amount of expected credit
losses that were included in the estimated cash flows on initial
recognition.
The Bank assesses on a forward-looking basis the expected credit
losses ('ECL') associated with its debt instrument assets carried
at amortised cost and FVOCI and with the exposure arising from loan
commitments and financial guarantee contracts. The Bank recognises
a loss allowance for such losses at each reporting date. The
measurement of ECL reflects:
-- An unbiased and probability-weighted amount that is
determined by evaluating a range of possible outcomes;
-- The time value of money; and
-- Reasonable and supportable information that is available
without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic
conditions.
For loan commitments and financial guarantee contracts, the loss
allowance is recognised as a provision. The Bank keeps track of the
changes in the loss allowance for financial assets separately from
those for loan commitments and financial guarantee contracts.
However, if a financial instrument includes both a loan (i.e.
financial asset) and an undrawn commitment (i.e. loan commitment)
component and the Bank does not separately identify the expected
credit losses on the loan commitment component from those on the
financial asset component, the expected credit losses on the loan
commitment is recognised together with the loss allowance for the
financial asset. To the extent that the combined expected credit
losses exceed the gross carrying amount of the financial asset, the
expected credit losses is recognised as a provision.
Definition of default
Critical to the determination of ECL is the definition of
default. The definition of default is used in measuring the amount
of ECL and in the determination of whether the loss allowance is
based on 12-month or lifetime ECL, as default is a component of the
probability of default (PD) which affects both the measurement of
ECLs and the identification of a significant increase in credit
risk.
The Bank considers the following as constituting an event of
default:
-- The borrower is past due more than 90 days on any material credit obligation to the Bank or;
-- The borrower is unlikely to pay its credit obligations to the Bank in full.
The definition of default is appropriately tailored to reflect
different characteristics of different types of assets. Overdrafts
are considered as being past due once the customer has breached an
advised limit or has been advised of a limit smaller than the
current amount outstanding.
When assessing if the borrower is unlikely to pay its credit
obligation, the Bank takes into account both qualitative and
quantitative indicators. The information assessed depends on the
type of the asset, for example in corporate lending a qualitative
indicator used is the breach of covenants, which is not relevant
for retail lending. Quantitative indicators, such as overdue status
and non-payment on another obligation of the same counterparty are
key inputs in this analysis. The Bank uses a variety of sources of
information to assess default which are either developed internally
or obtained from external sources.
Significant increase in credit risk
The Bank monitors all financial assets, undrawn loan commitments
and financial guarantee contracts that are subject to the
impairment requirements to assess whether there has been a
significant increase in credit risk since initial recognition. If
there has been a significant increase in credit risk the Bank will
measure the loss allowance based on lifetime rather than 12-month
ECL. The Bank's accounting policy is not to use the practical
expedient that financial assets with 'low' credit risk at the
reporting date are deemed not to have had a significant increase in
credit risk. As a result the Bank monitors all financial assets,
undrawn loan commitments and financial guarantee contracts that are
subject to impairment for significant increase in credit risk.
In assessing whether the credit risk on a financial instrument
has increased significantly since initial recognition, the Bank
compares the risk of a default occurring on the financial
instrument at the reporting date based on the remaining maturity of
the instrument with the risk of a default occurring that was
anticipated for the remaining maturity at the current reporting
date when the financial instrument was first recognised. In making
this assessment, the Bank considers both quantitative and
qualitative information that
is reasonable and supportable, including historical experience
and forward-looking information that is available without undue
cost or effort, based on the Bank's historical experience and
expert credit assessment including forward-looking information.
Multiple economic scenarios form the basis of determining the
probability of default at initial recognition and at subsequent
reporting dates. Different economic scenarios will lead to a
different probability of default. It is the weighting of these
different scenarios that forms the basis of a weighted average
probability of default that is used to determine whether credit
risk has significantly increased.
For corporate lending, forward-looking information includes the
future prospects of the industries in which the Bank's lenders
operate, obtained from economic expert reports, financial analysts,
governmental bodies and other similar organisations, as well as
consideration of various internal and external sources of actual
and forecast economic information. For the retail portfolio,
forward looking information includes the same economic forecasts as
the corporate portfolio with additional forecasts of local economic
indicators, particularly for regions with a concentration to
certain industries, as well as internally generated information of
customer payment behaviour. The Bank allocates its counterparties
to a relevant internal credit risk grade depending on their credit
quality. The quantitative information is a primary indicator of
significant increase in credit risk and is based on the change in
lifetime PD by comparing:
-- the remaining lifetime PD at the reporting date; with
-- the remaining lifetime PD for this point in time that was
estimated based on facts and circumstances at the time of initial
recognition of the exposure .
The PDs used are forward looking and the Bank uses the same
methodologies and data used to measure the loss allowance for
ECL.
The qualitative factors that indicate significant increase in
credit risk are reflected in PD models on a timely basis. However,
the Bank still considers separately additional qualitative factors
to assess if credit risk has increased significantly. For corporate
lending there is particular focus on assets that are included on
the Bank's 'watch list' and for the retail portfolio the Bank
considers the expectation of forbearance and payment holidays,
credit scores and any other changes in the borrower's circumstances
which are likely to adversely affect one's ability to meet
contractual obligations.
Given that a significant increase in credit risk since initial
recognition is a relative measure, a given change, in absolute
terms, in the PD will be more significant for a financial
instrument with a lower initial PD than compared to a financial
instrument with a higher PD.
The Bank assumes that when an asset becomes 30 days past due,
the Bank considers that a significant increase in credit risk has
occurred and the asset is in stage 2 of the impairment model, i.e.
the loss allowance is measured as the lifetime ECL.
(iii) Modification of loans
The Bank sometimes renegotiates or otherwise modifies the
contractual cash flows of loans to customers. When this happens,
the Bank assesses whether or not the new terms are substantially
different to the
original terms. The Bank does this by considering, among others,
the following factors:
-- If the borrower is in financial difficulty, whether the
modification merely reduces the contractual cash flows to amounts
the borrower is expected to be able to pay.
-- Whether any substantial new terms are introduced, such as a
profit share/equity-based return that substantially affects the
risk profile of the loan.
-- Significant extension of the loan term when the borrower is
not in financial difficulty. Significant change in the interest
rate.
-- Change in the currency the loan is denominated in.
-- Insertion of collateral, other security or credit
enhancements that significantly affect the credit risk associated
with the loan.
3.13.2 Financial Liabilities
If the terms are substantially different, the Bank derecognises
the original financial asset and recognises a 'new' asset at fair
value and recalculates the new effective interest rate for the
asset. The date of renegotiation is consequently considered to be
the date of initial recognition for impairment calculation
purposes, including for the purpose of determining whether a
significant increase in credit risk has occurred. However, the Bank
also assesses whether the new financial asset recognised is deemed
to be credit-impaired at initial recognition, especially in
circumstances where the renegotiation was driven by the debtor
being unable to make the originally agreed payments. Differences in
the carrying amount are also recognised in profit or loss as a gain
or loss on derecognition.
If the terms are not substantially different, the renegotiation
or modification does not result in derecognition, and the Bank
recalculates the gross carrying amount based on the revised cash
flows of the financial asset and recognises a modification gain or
loss in profit or loss. The new gross carrying amount is
recalculated by discounting the modified cash flows at the original
effective interest rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired financial assets).
(iv) Derecognition other than on a modification
Financial assets, or a portion thereof, are derecognised when
the contractual rights to receive the cash flows from the assets
have expired, or when they have been transferred and either
-- the Bank transfers substantially all the risks and rewards of ownership, or
-- the Bank neither transfers nor retains substantially all the
risks and rewards of ownership and the Bank has not retained
control.
The Bank enters into transactions where it retains the
contractual rights to receive cash flows to other entities and
transfers substantially all of the risks and rewards. These
transactions are accounted for as 'pass through' transfers that
result in derecognition if the Bank:
(i) Has no obligation to make payments unless it collects equivalent amounts from the assets;
(ii) Is prohibited from selling or pledging the assets; and
(iii) Has an obligation to remit any cash it collects from the assets without material delay.
3.13.3 Financial guarantee contracts and loan commitments
Collateral (shares and bonds) furnished by the Bank under
standard repurchase agreements and securities lending and borrowing
transactions are not derecognised because the Bank retains
substantially all the risks.
i) Classification and subsequent measurement
In both the current and prior period, financial liabilities are
classified as subsequently measured at amortised cost, except
for:
-- Financial liabilities at fair value through profit or loss:
this classification is applied to financial liabilities held for
trading (e.g. short positions in the trading booking) and other
financial liabilities designated as such at initial recognition.
Gains or losses on financial liabilities designated at fair value
through profit or loss are presented partially in other
comprehensive income (the amount of change in the fair value of the
financial liability that is attributable to changes in the credit
risk of that liability, which is determined as the amount that is
not attributable to changes in market conditions that give rise to
market risk) and partially profit or loss (the remaining amount of
change in the fair value of the liability). This is unless such a
presentation would create, or enlarge, an accounting mismatch, in
which case the gains and losses attributable to changes in the
credit risk of the liability are also presented in profit or
loss;
-- Financial liabilities arising from the transfer of financial
assets which did not qualify for derecognition, whereby a financial
liability is recognised for the consideration received for the
transfer. In subsequent periods, the Bank recognises any expense
incurred on the financial liability.
(ii) Derecognition
Financial liabilities are derecognised when they are
extinguished (i.e. when the obligation specified in the contract is
discharged, cancelled or expires).
The exchange between the Bank and its original lenders of debt
instruments with substantially different terms, as well as
substantial modifications of the terms of existing financial
liabilities, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial
liability. The terms are substantially different if the discounted
present value of the cash flows under the new terms, including any
fees paid net of any fees received and discounted using the
original effective interest rate, is at least 10% different from
the discounted present value of the remaining cash flows of the
original financial liability. In addition, other qualitative
factors, such as the currency that the instrument is denominated
in, changes in the type of interest rate, new conversion features
attached to the instrument and change in covenants are also taken
into consideration. If an exchange of debt instruments or
modification of terms is accounted for as an extinguishment, any
costs or fees incurred are recognised as part of the gain or loss
on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred
adjust the carrying amount of the liability and are amortised over
the remaining term of the modified liability.
Financial guarantee contracts are contracts that require the
issuer to make specified payments to reimburse the holder for a
loss it incurs because a specified debtor fails to make payments
when due, in accordance with the terms of a debt instrument. Such
financial guarantees are given to banks, financial institutions and
others on behalf of customers to secure loans, overdrafts and other
banking facilities.
3.13.4 Critical accounting estimates and judgements
Financial guarantee contracts are initially measured at fair
value and subsequently measured at the higher of:
-- The amount of the loss allowance; and
-- The premium received on initial recognition less income
recognised in accordance with the principles of IFRS 15.
Loan commitments provided by the Bank are measured as the amount
of the loss allowance. The Bank has not provided any commitment to
provide loans at below-market interest rate, or that can be settled
net in cash or by delivering or issuing another financial
instrument.
For loan commitments and financial guarantee contracts, the loss
allowance is recognised as a provision. However, for contracts that
include both a loan and an undrawn commitment and the Bank cannot
separately identify the expected credit losses on the undrawn
commitment component from those on the loan component, the expected
credit losses on the undrawn commitment are recognised together
with the loss allowance for the loan. To the extent that the
combined expected credit losses exceed the gross carrying amount of
the loan, the expected credit losses are recognised as a
provision.
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in
applying the Bank's accounting policies.
Note 2.4 (Use of estimates and judgements) provides an overview
of the areas that involve a higher degree of judgement or
complexity, and major sources of estimation uncertainty that have a
significant risk of resulting in a material adjustment within the
next financial year. Detailed information about each of these
estimates and judgements is included in the related notes together
with information about the basis of calculation for each affected
line item in the financial statements.
3.13.5 Measurement of the expected credit loss allowance
The measurement of the expected credit loss allowance for
financial assets measured at amortised cost and FVOCI is an area
that requires the use of complex models and significant assumptions
about future economic conditions and credit behaviour (e.g. the
likelihood of customers defaulting and the resulting losses). A
number of significant judgements are also required in applying the
accounting requirements for measuring ECL, such as:
-- Determining criteria for significant increase in credit risk;
-- Choosing appropriate models and assumptions for the measurement of ECL;
-- Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and
-- Establishing groups of similar financial assets for the purposes of measuring ECL.
The Bank evaluates ECLs for 7 portfolios of audited corporates
with overdraft limits, audited corporates without overdraft limits,
unaudited corporates with overdraft limits, unaudited corporates
without overdraft limits, SMEs with limits, SMEs without limits and
Retail loans.
The guiding principle of the Expected Credit Loss evaluation is
to reflect the general pattern of
deterioration or improvement in the credit quality of financial
instruments and allocate commensurate loss provisions. Under the
general approach, there are two measurement bases:
-- 12-month ECLs (Stage 1 ECLs) that is evaluated for all
financial instruments with no significant deterioration in credit
quality since initial recognition.
-- Lifetime ECLs (Stages 2 and 3 ECLs) that is evaluated for
financial instruments for which significant increase in credit risk
or default has occurred on an individual or collective basis.
Probability of Default (PD)
The Bank defines Probability of Default as the likelihood that a
borrower will fail to meet their contractual obligations in the
future. The Bank's PD models have been built using historical
credit default experience, present credit information as well as
forward looking factors which affect the capacity of borrowers to
meet their contractual obligations. The Bank used the logistic
regression approach to construct PD models for Corporate, SME,
Retail and Treasury Bills portfolios while the Merton model was
adopted for Interbank Placements. The PD models are used at entity
level to evaluate 12-month PDs for Day 1 losses and for financial
instruments with no significant deterioration in credit risk since
initial recognition, whilst lifetime PD is used for financial
instruments for which significant increase in credit risk or
default has occurred. 12 - month PDs are derived using borrower
present risk characteristics while lifetime PDs are derived using a
combination of 12-month PDs, present borrower behaviour and forward
looking macroeconomic factors.
Exposure at Default (EAD)
The Bank defines Exposure at Default as an estimation of the
extent to which the Bank will be exposed to a counterparty in the
event of a default. The Bank's EAD models have been built using
historical experience of debt instruments that defaulted. The Bank
used the linear regression approach to construct EAD models for
Corporate, SME and Retail portfolios. For TBs and Interbank
Placements, the Bank took a conservative approach of considering
the full outstanding balance as the EAD at any given point in the
lifetime of an instrument. The Bank's EAD models that use Credit
Conversion Factors (CCFs) are applied on fully drawn down
instruments while models that use Loan Equivalents (LEQs) are
applied on partly drawn instruments. The EAD models are used at
entity level to evaluate the proportion of the exposure that will
be outstanding at the point of default.
Loss Given Default (LGD)
The Bank defines Loss Given Default as an estimate of the
ultimate credit loss in the event of a default. The Bank's LGD
models were built using historical experience of defaulted debt
instruments and observed recoveries. The Bank used the linear
regression approach to construct LGD models for Corporate, SME and
Retail portfolios. For Treasury Bills and Interbank Placements, the
Bank took a conservative approach of taking a fixed 100% as the LGD
at any given point in the lifetime of an instrument. The LGD models
are used at portfolio level to evaluate 12-month LGDs for financial
instruments with no significant increase in credit risk since
initial recognition and lifetime is applied LGDs for financial
instruments for which significant increase in credit risk has
occurred. 12-month LGDs were derived as historical loss rates while
lifetime LGDs were derived using a combination of 12-month LGDs and
forward looking macroeconomic factors such as GDP and
Inflation.
The Bank's ECL model combines the output of the PD, EAD and LGD
and computes an Expected Credit
Loss that takes into account time value of money using the
Effective Interest Rates (EIR) and time to maturity of the debt
instruments. The final ECL is a probability-weighted amount that is
determined by evaluating three (3) possible outcomes of Best Case
ECL, Baseline Case ECL, and Worst Case ECL. The Bank has modelled
these three cases in such a way that the Best Case represents a
scenario of lower than market average default rates, the Base Case
represents scenarios of comparable market average default rates and
the Worst Case represent scenarios of higher than market average
default rates.
3.13.6 Regulatory guidelines and International Financial
Reporting Standards requirements in respect of the Bank's
activities
Renegotiated loans and advances
Where possible, the Bank seeks to restructure loans rather than
to take possession of collateral. This may involve extending the
payment arrangements and the agreement of new loan conditions. Once
the terms have been re-negotiated, any impairment is measured using
the original effective interest rate (EIR) as calculated before the
modification of terms and the loan is no longer considered past
due. Management continuously renews re-negotiated loans to ensure
that all criteria are met and that future payments are likely to
occur. The loans continue to be subject to an individual or
collective impairment assessment, calculated using the loans
original EIR.
Collateral valuation
The Bank seeks to use collateral, where possible, to mitigate
its risks on financial assets. The collateral comes in various
forms such as cash, securities, letters of credit/guarantees, real
estate, receivables, inventories, other non-financial assets and
credit enhancements such as netting agreements. The fair value of
collateral is generally assessed, at a minimum, at inception and
based on the Bank's quarterly reporting schedule, however, some
collateral, for example, cash or securities relating to margining
requirements, is valued daily. To the extent possible, the Bank
uses active market data for valuing financial assets, held as
collateral. Other financial assets which do not have a readily
determinable market value are valued using models. Non-financial
collateral, such as real estate, is valued based on data provided
by third parties such as mortgage brokers, housing price indices,
audited financial statements, and other independent sources.
Collateral repossessed
The Bank's policy is to determine whether a repossessed asset is
best used for its internal operations or should be sold. Assets
determined to be useful for the internal operations are transferred
to their relevant asset category at the lower of their repossessed
value or the carrying value of the original secured asset. Assets
that are determined better to be sold are immediately transferred
to assets held for sale at their fair value at the repossession
date in line with the Bank's policy.
4. INTEREST INCOME
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Loans and advances
to banks 4 277 927 6 893 435 2 368 733 793 220
-------------------- -------------------- -------------------- --------------------
Loans and advances
to customers 143 515 089 234 835 190 58 942 089 28 570 221
-------------------- -------------------- -------------------- --------------------
32 419 428 81 602 183 9 246 368 9 969 737
Investment securities ------------------ ------------------ ------------------ ------------------
-------------------- -------------------- -------------------- --------------------
180 212 444 323 330 808 70 557 190 39 333 178
=========== =========== =========== ===========
-------------------- -------------------- -------------------- --------------------
5. non interest income
5.1 FEE AND COMMISSION INCOME
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Retail banking customer
fees 56 804 021 89 572 472 24 101 648 11 107 290
-------------------- -------------------- -------------------- --------------------
Corporate banking credit
related fees 15 823 020 22 757 379 10 259 457 2 621 449
-------------------- -------------------- -------------------- --------------------
Financial guarantee fees 498 673 1 880 927 212 188 148 518
-------------------- -------------------- -------------------- --------------------
International banking
commissions 6 544 147 4 037 381 3 070 999 491 279
-------------------- -------------------- -------------------- --------------------
103 533 115 031
777 934 49 598 011 14 170 840
Digital banking fees ------------------ ------------------ ------------------ ------------------
-------------------- -------------------- -------------------- --------------------
183 203 233 280 87 242 303 28 539 376
638 093 ========== ===========
========== ===========
-------------------- -------------------- -------------------- --------------------
5.2 Other income
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------- -------------------- ------------------- --------------------
2019 2018 2019 2018
------------------- -------------------- ------------------- --------------------
ZWL ZWL ZWL ZWL
------------------- -------------------- ------------------- --------------------
Restated
------------------- -------------------- ------------------- --------------------
Trade and other investments
fair value adjustments 913 332 (316 323) 1 499 630 10 154
------------------- -------------------- ------------------- --------------------
Loss of disposal of quoted
investments - (132 802) - (15 074)
------------------- -------------------- ------------------- --------------------
Fair value gains on investment 194 387
properties 93 624 006 19 523 429 322 2 551 436
------------------- -------------------- ------------------- --------------------
Profit on disposal of
investment properties 584 149 4 395 908 584 149 567 032
------------------- -------------------- ------------------- --------------------
Profit on disposal of
property and equipment - 139 122 - 22 396
------------------- -------------------- ------------------- --------------------
Rental income 1 280 872 3 012 142 391 885 365 269
------------------- -------------------- ------------------- --------------------
Bad debts recovered 14 744 269 10 622 718 9 519 359 1 295 428
------------------- -------------------- ------------------- --------------------
1 459 818 1 805 406 240 294 171 806
Other net operating income ----------------- ------------------ ----------------- ------------------
------------------- -------------------- ------------------- --------------------
112 606 39 049 600 206 622 4 968 447
446 =========== 639 ===========
========== ==========
------------------- -------------------- ------------------- --------------------
6. Operating EXPITURE
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- --------------------
The operating profit is after recognising
the following:
-------------------- -------------------- --------------------
116 149 130 979
Administration costs 272 605 55 318 360 15 963 308
-------------------- -------------------- -------------------- --------------------
Audit fees:
-------------------- -------------------- -------------------- --------------------
- Current year 1 580 232 755 184 993 686 98 991
-------------------- -------------------- -------------------- --------------------
- Prior year 318 198 849 895 200 090 111 406
-------------------- -------------------- -------------------- --------------------
Impairment reversal on
land and buildings* - - (40 600) (76 661)
-------------------- -------------------- -------------------- --------------------
Depreciation - (excluding
right of use assets) 15 427 213 11 991 839 2 307 360 1 370 312
-------------------- -------------------- -------------------- --------------------
Amortisation of intangible
assets 6 356 249 7 882 765 733 909 879 376
-------------------- -------------------- -------------------- --------------------
Depreciation -right of
use assets 3 088 496 - 1 310 867 -
-------------------- -------------------- -------------------- --------------------
Directors' remuneration 6 154 500 8 147 609 2 531 536 971 121
-------------------- -------------------- -------------------- --------------------
- Fees 1 585 033 1 838 595 644 487 219 246
-------------------- -------------------- -------------------- --------------------
* Expenses 127 149 149 410 80 767 17 364
-------------------- -------------------- -------------------- --------------------
- Services rendered 4 442 318 6 159 604 1 806 282 734 511
-------------------- -------------------- -------------------- --------------------
Staff costs - salaries, 128 926
allowances and related 91 465 668 698 42 582 294 15 402 575
costs ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------
240 539 289 533 105 937 34 720 428
828 595 502 ===========
========== =========== ==========
-------------------- -------------------- -------------------- --------------------
*The impairment reversal on land and building arose due to fair
value changes in the Group's land and buildings measured using the
revaluation model.
7. taxation
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ -----------------
Income tax expense 2019 2018 2019 2018
------------------ ------------------ ------------------ -----------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ -----------------
Restated
------------------ ------------------ ------------------ -----------------
Current tax 9 989 877 27 541 426 9 989 877 4 433 942
------------------ ------------------ ------------------ -----------------
Deferred tax 60 029 671 23 564 601 34 514 671 1 488 132
------------------ ------------------ ------------------ -----------------
----------------- ----------------- ----------------- ----------------
70 019 548 51 106 027 44 504 548 5 922 074
========== ========== ========== ==========
------------------ ------------------ ------------------ -----------------
8. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment losses are calculated by estimating the expected
credit losses for all financial assets (including loan commitments
and guarantees) measured at amortised cost or fair value through
OCI (FVOCI). ECLs arising from financial assets measured at
armotised cost and at FVOCI are recognized in profit or loss.
However, the loss allowance in respect of assets measured at FVOCI
shall not reduce the carrying amount of the financial asset in the
Statement of Financial Position but will be accumulated in a
reserve through OCI. The aggregate impairment losses which are made
during the year are dealt with as per paragraph 8.3.
8.1 Lifetime expected credit losses
Lifetime ECLs are recognized where the Bank's counterparty to a
financial asset has been classified as default as defined in the
Bank's accounting and credit policies. Financial assets are written
off against lifetime ECL provisions once the probability of
recovering any significant amounts becomes remote.
8.2 Twelve month expected credit losses
The 12-Month ECL relates to the day 1 impairment provisions on
financial assets as well as financial assets which are considered
not to have had a significant increase in credit risk as defined in
the Bank's accounting and credit policies.
8.3 Regulatory guidelines and International Financial Reporting Standards requirements
The Banking Regulations 2000 gives guidance on provisioning for
doubtful debts and stipulates certain minimum percentages to be
applied to the respective categories of the loan book.
IFRS 9, Financial Instruments IFRS 9, prescribes the
provisioning for impairment losses based on the expected credit
losses from the expected cash flows from financial assets held by
the bank, including guarantees and loan commitments.
The two prescriptions are likely to give different results. The
Group has taken the view that where the IFRS 9 charge is less than
the amount provided for in the Banking Regulations, the difference
is recognised directly in equity as a transfer from retained
earnings to a regulatory reserve and where it is more, the full
amount will be charged to the profit or loss.
8.4 Suspended interest
Interest on loans and advances is accrued to income until such
time as reasonable doubt exists about its collectability,
thereafter and until all or part of the loan is written off,
interest continues to accrue on customers' accounts, but is not
included in income. Such suspended interest is deducted from loans
and advances in the statement of financial position. This policy
meets the requirements of the Banking Regulations 2000 issued by
the RBZ. Impairment losses are applied to write off loans and
advances in part or in whole when they are considered partly or
wholly irrecoverable. The aggregate impairment losses which are
made during the year are dealt with as per paragraph 8.3.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
for the year attributable to ordinary equity holders of NMBZ
Holdings Limited by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary equity holders of NMBZ Holdings Limited
adjusted for the after tax effect of: (a) any dividends or other
items related to dilutive potential ordinary shares deducted in
arriving at profit or loss attributable to ordinary equity holders
of the parent entity; (b) any interest recognised in the period
related to dilutive potential ordinary shares; (c) any other
changes in income or expense that would result from the conversion
of the dilutive potential ordinary shares; by the weighted average
number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on
the conversion of all the dilutive potential ordinary shares into
ordinary shares.
9.1 Earnings
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------- ------------ ------------ ------------
2019 2018 2019 2018
------------- ------------ ------------ ------------
ZWL ZWL ZWL ZWL
------------- ------------ ------------ ------------
Restated
------------- ------------ ------------ ------------
Profit for the year 84 091 030 94 784 934 285 900 539 21 221 201
------------- ------------ ------------ ------------
Headline earnings for
the period (74 560 459) 73 333 507 31 088 574 18 382 583
------------- ------------ ------------ ------------
9.2 Number of shares
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
--------------------- -------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
--------------------- -------------------- -------------------- -------------------- --------------------
9.2.1 Basic earnings per
share
--------------------- -------------------- -------------------- -------------------- --------------------
Weighted average number
of ordinary shares for
basic and headline earnings
per share 399 498 150 390 959 988 399 498 150 390 959 988
----------------------------- -------------------- -------------------- -------------------- --------------------
9.2.2 Diluted earnings per share
------------------------------------------- -------------------- -------------------- --------------------
Number of shares at
beginning of period 392 955 196 384 974 542 392 955 196 384 974 542
----------------------------- -------------------- -------------------- -------------------- --------------------
Effect of dilution:
--------------------- -------------------- -------------------- -------------------- --------------------
Share options - - - -
exercised
--------------------- -------------------- -------------------- -------------------- --------------------
Weighted average number
of shares issued - scrip 6 542 954 5 985 446 6 542 954 5 985 446
dividend ----------------- ----------------- ----------------- -----------------
----------------------------- -------------------- -------------------- -------------------- --------------------
404 171 689 390 959 988 404 171 689 390 959 988
----------------------------- -------------------- -------------------- -------------------- --------------------
Share options approved
but not granted 23 942 639 23 942 639 23 942 639 23 942 639
----------------------------- -------------------- -------------------- -------------------- --------------------
----------------- ----------------- ----------------- -----------------
--------------------- -------------------- -------------------- -------------------- --------------------
423 440 789 414 902 627 423 440 789 414 902 627
========== ========== ========== ==========
--------------------- -------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
--------------------- -------------------- -------------------- -------------------- --------------------
Restated
--------------------- -------------------- -------------------- -------------------- --------------------
9.2.3 Headline (losses)/
earnings
--------------------- -------------------- -------------------- -------------------- --------------------
Profit for the period 84 091 030 94 784 934 285 900 539 21 221 201
----------------------------- -------------------- -------------------- -------------------- --------------------
Add/(deduct) non-recurring items
------------------------------------------- -------------------- -------------------- --------------------
Loss on disposal of
quoted investments - 132 802 - 15 074
----------------------------- -------------------- -------------------- -------------------- --------------------
Trade investments fair
value gains (913 332) 316 323 (1 499 630) (10 154)
----------------------------- -------------------- -------------------- -------------------- --------------------
Profit on disposal of
property and equipment - (139 122) - (22 396)
----------------------------- -------------------- -------------------- -------------------- --------------------
Profit on disposal of
investment properties (584 149) (4 395 908) (584 149) (567 032)
----------------------------- -------------------- -------------------- -------------------- --------------------
Unrealised foreign exchange
revaluation gains (92 386 267) 128 510 (92 386 267) 20 689
----------------------------- -------------------- -------------------- -------------------- --------------------
Fair value gains on (194 387
investment properties (93 624 006) (19 523 429) 322) (2 551 436)
----------------------------- -------------------- -------------------- -------------------- --------------------
28 856 265 2 029 397 34 045 403 276 637
Tax thereon ----------------- ----------------- ----------------- -----------------
----------------------------- -------------------- -------------------- -------------------- --------------------
Headline (losses)/ earnings (74 560 459) 73 333 507 31 088 574 18 382 583
========== ========== ========== ==========
----------------------------- -------------------- -------------------- -------------------- --------------------
This is calculated in accordance with the Statement of
Investment Practice No. 1 issued by the former Institute of
Investment Management and Research (now the Chartered Financial
Analysts (CFA) Society of the UK).
9.3 Earnings/(losses) per share (ZWL cents)
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------ ------------ ------------ ------------
2019 2018 2019 2018
------------ ------------ ------------ ------------
ZWL ZWL ZWL ZWL
------------ ------------ ------------ ------------
Restated
------------ ------------ ------------ ------------
Basic 21.05 24.24 71.56 5.43
------------ ------------ ------------ ------------
Diluted 19.86 22.85 67.52 5.11
------------ ------------ ------------ ------------
Headline (18.66) 18.76 7.78 4.70
------------ ------------ ------------ ------------
10. SHARE CAPITAL
10.1 31 December 31 December 31 December 31 December
2019 2018 2019 2018
------------------------------ ------------- ------------- ------------- -------------
Shares Shares ZWL ZWL
million million
------------------------------ ------------- ------------- ------------- -------------
Authorised
------------------------------ ------------- ------------- ------------- -------------
Ordinary shares of ZWL0.00028
each 600 600 168 000 168 000
========== ========== ========== ==========
------------------------------ ------------- ------------- ------------- -------------
10.2 Issued and fully paid
Inflation adjusted
31 December 31 December 31 December 31 December
---------------- --------------- --------------- ------------ ------------
2019 2018 2019 2018
---------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
---------------- --------------- --------------- ------------ ------------
Restated
---------------- --------------- --------------- ------------ ------------
10.2.1 Ordinary shares
---------------- --------------- --------------- ------------ ------------
Ordinary shares 404 393 796 878 769 225
========== ========== ========== ==========
---------------- --------------- --------------- ------------ ------------
Historical Cost
31 December 31 December 31 December 31 December
---------------- --------------- --------------- ------------ ------------
2019 2018 2019 2018
---------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
---------------- --------------- --------------- ------------ ------------
Restated
---------------- --------------- --------------- ------------ ------------
Ordinary shares
---------------- --------------- --------------- ------------ ------------
Ordinary shares 404 393 84 116 80 975
========== ========== ========== ==========
---------------- --------------- --------------- ------------ ------------
Inflation adjusted
31 December 31 December 31 December 31 December
--------------------- --------------- --------------- ------------ ------------
2019 2018 2019 2018
--------------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
Restated
--------------------- --------------- --------------- ------------ ------------
10.2.2 Redeemable ordinary
shares
--------------------- --------------- --------------- ------------ ------------
Redeemable ordinary
shares 104 104 29 040 180 382
------------------------------ --------------- --------------- ------------ ------------
========== ========== ========== ==========
------------------------------ --------------- --------------- ------------ ------------
Historical Cost
31 December 31 December 31 December 31 December
--------------------- --------------- --------------- ------------ ------------
2019 2018 2019 2018
--------------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
--------------------- --------------- --------------- ------------ ------------
10.2.2 Redeemable ordinary
shares
--------------------- --------------- --------------- ------------ ------------
Redeemable ordinary
shares 104 104 29 040 29 040
------------------------------ --------------- --------------- ------------ ------------
========== ========== ========== ==========
------------------------------ --------------- --------------- ------------ ------------
A total of 11 216 493 ordinary shares were issued to existing
shareholders in June 2019 as a scrip dividend.
Of the unissued ordinary shares of 196 million shares (2018 -
207 million), options which may be granted in terms of the 2012
ESOS amount to 23 942 639 (2018 - 23 942 639). No share options
were exercised from the Scheme as at 31 December 2019. The share
option scheme expires in 2022.
Subject to the provisions of section 183 of the Companies Act
(Chapter 24:03) of Zimbabwe, the unissued shares are under the
control of the directors.
11. REDEEMABLE ORDINARY SHARES
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ -----------------
2019 2018 2019 2018
------------------ ------------------ ------------------ -----------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ -----------------
Restated
------------------ ------------------ ------------------ -----------------
Nominal value (note
10.2.2) 29 040 180 382 29 040 29 040
------------------ ------------------ ------------------ -----------------
Share premium 14 306 213 88 863 025 14 306 213 14 306 213
------------------ ------------------ ------------------ -----------------
----------------- ----------------- ----------------- ----------------
14 335 253 89 043 407 14 335 253 14 335 253
========== ========== ========== ==========
------------------ ------------------ ------------------ -----------------
On 30 June 2013, the Group received USD14 831 145 capital from
Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden
N.V. (FMO), Norwegian Investment Fund for Developing Countries
(Norfund) and AfricInvest Financial Sector Holdings (AfricInvest)
who were allocated 34 571 429 shares each (total 103 714 287) for
individually investing USD4 943 715. This amount, net of share
issue expenses, was used to recapitalise the Bank in order to
contribute towards the minimum capital requirements previously set
by the Reserve Bank of Zimbabwe of ZWL200 million by 31 December
2020. FMO and Norfund came together with Rabobank to form ARISE
which is a development finance institution primarily focusing on
investing in African financial institutions to support and enhance
financial service delivery in Africa.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back
agreement with Norfund, FMO and AfricInvest, where these three
strategic investors have a right at their own discretion at any
time after the 5(th) anniversary (30 June 2018) but before the
9(th) anniversary (30 June 2022) of its first subscription date, to
request NMBZ to buy back all or part of its NMBZ shares at a price
to be determined using the agreed terms as entailed in the share
buy-back agreement. It is a condition precedent that at any point
when the share buy-back is being considered, the proceeds used to
finance the buy-back should come from the distributable reserves
which are over and above the minimum regulatory capital
requirements. Further, no buy-back option can be exercised by any
investor after the 9(th) anniversary (30 June 2022) of the
effective date.
The share buy-back agreement creates a potential obligation for
NMBZ Holdings Limited to purchase its own instruments. The shares
issued gave rise to a potential financial liability and are
classified as redeemable ordinary shares.
12. SUBORDINATED TERM LOAN
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----------------- ----------------- -----------------
2019 2018 2019 2018
----------------- ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- -----------------
Restated
----------------- ----------------- ----------------- -----------------
At 1 January 9 352 328 12 776 031 1 505 647 1 415 904
----------------- ----------------- ----------------- -----------------
Monetary adjustment (9 851 926) (3 981 143) - -
----------------- ----------------- ----------------- -----------------
Exchange revaluation 25 883 189 - 25 883 189 -
----------------- ----------------- ----------------- -----------------
Interest capitalised 3 779 812 1 065 167 1 151 954 171 483
----------------- ----------------- ----------------- -----------------
Interest paid (803 062) (507 728) (180 450) (81 740)
----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
28 360 340 9 352 327 28 360 340 1 505 647
========== ========== ========== =========
----------------- ----------------- ----------------- -----------------
In 2013, the Group received a subordinated term loan amounting
to USD1.4 million from a Development Financial Institution which
attracts an interest rate of LIBOR plus 10% and has a seven year
maturity date (13 June 2020) from the first disbursement date.
The above liability would, in the event of the winding up of the
issuer, be subordinated to the claims of depositors and all other
creditors of the issuer. The Group defaulted on a principal
repayments with respect to this subordinated loan during the year
ended 31 December 2019 as a result of the prevailing nostro funding
challenges affecting the economy. However, there were no defaults
on interest payments. There were no breaches to the financial
covenants between the Group and the Development Financial
Institution at the reporting date of 31 December 2019.
On 22 February 2019, the Reserve Bank of Zimbabwe (RBZ) issued
an Exchange Control directive, RU 28 of 2019 which established an
interbank foreign exchange market to formalise the buying and
selling of foreign currency through the Banks and Bureaux de
change. In order to establish an exchange rate between the current
monetary balances and foreign currency, the Monetary Authorities
denominated the existing RTGS balances in circulation, as RTGS
dollars. The RBZ pegged the initial trades at US$/RTGS$1:2.5. In
order to manage the transition, the RBZ also advised on the same
date that all foreign liabilities or legacy debts due to suppliers
and service providers, declared dividends e.t.c would be treated
separately after registering such debts with the RBZ Exchange
Control Department for an orderly expunging of these debts.
Consequently, the Group registered its legacy debts, which
included the subordinated term loan and offshore lines of credit
and transferred the ZWL equivalent of these debts at a rate of
US$/ZWL1:1 to the RBZ in terms of the RBZ directive. As such, in
terms of SI 33 of 2019 and the RBZ directive. These legacy debts
and the related amounts transferred to the RBZ in terms of the RBZ
directive on the legacy debts, have been translated using the
interbank rate at reporting date. Subsequent to year end, the RBZ
approved the legacy debt in respect of the subordinated term
loan.
13. DepositS and other LIABILITIES
13.1 Deposits and other liabilities
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Deposits from banks and
other financial 309 012 460 337 309 012 74 110
institutions** 254 446 254 527
-------------------- -------------------- -------------------- --------------------
2 241 403 882 067 360 847
Current and deposit accounts 882 067 591 330 591 422
from customers* ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------
1 191 079 2 701 740 1 191 434 957
Total deposits 845 776 079 845 949
-------------------- -------------------- -------------------- --------------------
77 066 12 147
Trade and other payables* 77 066 171 77 691 787 171 334
-------------------- -------------------- -------------------- --------------------
----------------- ----------------- ----------------- -----------------
1 268 146 2 779 432 1 268 447 105
016 563 146 016 283
========== ========== ========== ===========
-------------------- -------------------- -------------------- --------------------
* The carrying amounts of current and deposit accounts and trade
and other payables approximate the related fair values due to their
short term nature .
Included in trade and other payables are lease liabilities in
respect of leased properties in which the Group is a lessee.
Also included in trade and other liabilities are ECL provisions
in respect of guarantees and facilities approved but not drawn
down.
** Included in deposits from banks and other financial
institutions are loan balances of ZWL145 815 913, ZWL73 709 541 and
ZWL20 128 080 due to Nederlandse Financierings-Maatschappij Voor
Ontiwikkelingslanden (FMO), Swedfund and Afreximbank. The carrying
amounts of deposits from other banks and other financial
institutions approximate the related fair values. All the loan
balances except for Afreximbank are part of the Group's legacy
debts which were registered with the Reserve Bank of Zimbabwe (RBZ)
for an orderly expunging of the debts. During the period under
review, the Group transferred the ZWL equivalent of the legacy
debts at a rate of US$/ZWL1:1 to the RBZ as per requirement of the
Exchange Control directive RU 28 of 2019. There were no breaches to
the financial covenants. However, the Group defaulted on the
principal repayments repayments on the FMO and Swedfund facilities
during the period under review due to the nostro-funding challenges
that were prevailing in the economy and subsequent to period end,
the above mentioned lines of credit balances have since been
transferred to the RBZ for an orderly expunging of the debts. The
Bank has been communicating with the lenders regarding these
developments.
The line of credit balances have been translated at 31 December
2019 at the closing rate of USD/ZWL1:16.77. Consequently, the
amount transferred to the RBZ for the settlement of these debts has
been translated at the same closing rate as it represents the
Bank's right to the settlement of the related lines of credit.
Subsequent to year end, the RBZ approved the legacy debt in respect
of the FMO and Swedfund lines of credit.
13.2 Maturity analysis
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2019 2018 2019 2018
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
1 044 719 2 323 856 1 044 719 374 121
Less than 1 month 581 969 581 777
------------------ ------------------ ------------------ ------------------
1 to 3 months 50 530 229 160 474 300 50 530 229 25 835 037
------------------ ------------------ ------------------ ------------------
3 to 6 months 33 694 415 46 681 277 33 694 415 7 515 300
------------------ ------------------ ------------------ ------------------
6 months to 1 year 43 929 895 73 178 050 43 929 895 11 781 062
------------------ ------------------ ------------------ ------------------
1 to 5 years 18 013 895 96 358 627 18 013 895 15 512 943
------------------ ------------------ ------------------ ------------------
Over 5 years 191 830 1 191 553 191 830 191 830
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
1 191 079 2 701 740 1 191 079 434 957
845 776 845 949
========== ========== ========== ===========
------------------ ------------------ ------------------ ------------------
13.3 Sectoral analysis of deposits
Inflation adjusted
31 December 31 December
------------------ -------- ------------------ --------
2019 2018
------------------ -------- ------------------ --------
ZWL ZWL
------------------ -------- ------------------ --------
% Restated %
------------------ -------- ------------------ --------
Agriculture 25 380 717 2 68 358 319 2
------------------ -------- ------------------ --------
Banks and other financial
institutions 309 012 254 26 460 337 446 17
------------------ -------- ------------------ --------
Distribution 119 294 305 10 261 075 456 10
------------------ -------- ------------------ --------
Individuals 103 037 176 9 172 324 302 6
------------------ -------- ------------------ --------
Manufacturing 164 249 753 14 433 554 818 16
------------------ -------- ------------------ --------
Mining companies 20 256 979 2 56 385 095 2
------------------ -------- ------------------ --------
Municipalities and parastatals 57 993 887 4 179 797 201 7
------------------ -------- ------------------ --------
Other deposits 115 811 950 10 371 331 382 14
------------------ -------- ------------------ --------
Services 216 039 339 18 608 900 962 23
------------------ -------- ------------------ --------
Transport and telecommunications 60 003 485 5 89 675 795 3
------------------ -------- ------------------ --------
----------------- ------- ----------------- -------
1 191 079 100 2 701 740 776 100
845 ==== ========== ====
==========
------------------ -------- ------------------ --------
Historical Cost
31 December 31 December
------------------ -------- ------------------ --------
2019 2018
------------------ -------- ------------------ --------
ZWL % ZWL %
------------------ -------- ------------------ --------
Agriculture 25 380 717 2 11 005 126 2
------------------ -------- ------------------ --------
Banks and other financial
institutions 309 012 254 26 74 110 527 17
------------------ -------- ------------------ --------
Distribution 119 294 305 10 42 030 992 10
------------------ -------- ------------------ --------
Individuals 103 037 176 9 27 742 789 6
------------------ -------- ------------------ --------
Manufacturing 164 249 753 14 69 798 745 16
------------------ -------- ------------------ --------
Mining companies 20 256 979 2 9 077 534 2
------------------ -------- ------------------ --------
Municipalities and parastatals 57 993 887 5 28 945 864 7
------------------ -------- ------------------ --------
Other deposits 115 811 950 10 59 781 285 14
------------------ -------- ------------------ --------
Services 216 039 339 18 98 028 025 23
------------------ -------- ------------------ --------
Transport and telecommunications 60 003 485 5 14 437 062 3
------------------ -------- ------------------ --------
----------------- ------- ----------------- -------
1 191 079 100 434 957 949 100
845 ==== ========== ====
==========
------------------ -------- ------------------ --------
14. FINANCIAL INSTRUMENTS
14.1 Investment securities
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----- ----------------- ----------------- ----------------- -----------------
Note 2019 2018 2019 2018
----- ----------------- ----------------- ----------------- -----------------
ZWL ZWL
----- ----------------- ----------------- ----------------- -----------------
Restated
----- ----------------- ----------------- ----------------- -----------------
Amortised cost 107 568 731 055 107 568 117 693
- Gross 657 055 657 824
----- ----------------- ----------------- ----------------- -----------------
Impairment allowance 16.3 (402 502) (2 760 331) (402 502) (444 390)
----- ----------------- ----------------- ----------------- -----------------
- ECL at 1 January
2018 (2 760 331) (3 375 428) (444 390) (374 082)
----- ----------------- ----------------- ----------------- -----------------
- Monetary adjustment 2 399 717 615 097 - -
----- ----------------- ----------------- ----------------- -----------------
* ECL charged through profit and loss (41 888) (436 718) 41 888 (70 308)
----- ----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
107 166 728 294 107 166 117 249
155 724 155 434
========= ========= ========= =========
----------------- ----------------- ----------------- -----------------
The Group holds treasury bills and government bonds amounting to
ZWL107 568 657 with interest rates ranging from 2% to 15%. The
Treasury Bills are measured at amortised cost in line with the
Bank's business model to collect contractual cashflows and the
contractual terms are such that the financial assets give rise to
cashflows that are solely payments of principal and interest. Of
the total Treasury Bills balance of ZWL107 568 657, a total of
ZWL83 102 011 had been pledged as security against interbank
borrowings.
14.2 Maturity analysis of investment securities - amortised cost
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ----------------- ----------------- ------------------
2019 2018 2019 2018
------------------ ----------------- ----------------- ------------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ----------------- ------------------
Restated
------------------ ----------------- ----------------- ------------------
Less than 1 month 2 500 000 - 2 500 000 -
------------------ ----------------- ----------------- ------------------
1 to 3 months 6 390 075 883 566 6 390 075 142 245
------------------ ----------------- ----------------- ------------------
3 to 6 months 19 000 000 38 101 190 19 000 000 6 133 977
------------------ ----------------- ----------------- ------------------
267 119
6 months to 1 year 54 787 417 415 54 787 417 43 004 020
------------------ ----------------- ----------------- ------------------
354 250
1 to 5 years 13 508 934 171 13 508 934 57 031 351
------------------ ----------------- ----------------- ------------------
11 382 231 70 700 713 11 382 231 11 382 231
Over 5 years ---------------- --------------- --------------- ----------------
------------------ ----------------- ----------------- ------------------
107 568 731 055 107 568 117 693
657 055 657 824
------------------ ----------------- ----------------- ------------------
Expected Credit loss
allowance (402 502) (2 760 331) (402 502) (444 390)
------------------ ----------------- ----------------- ------------------
---------------- --------------- --------------- ----------------
107 166 728 294 107 166 117 249
155 724 155 434
========== ========== ========== ===========
------------------ ----------------- ----------------- ------------------
14.5 Fair values of financial instruments
The fair values of financial assets and financial liabilities
that are traded in active markets are based on quoted market prices
or dealer price quotations. For all other financial instruments,
the Group determines fair values using other valuation
techniques.
For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity,
concentration, uncertainty of market factors, pricing assumptions
and other risks affecting the specific instrument.
Valuation models
The Group measures fair values using the following fair value
hierarchy, which reflects the significance of the inputs used in
making the measurements.
-- Level 1: inputs that are quoted market prices (unadjusted) in
active markets for identical instruments.
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes
instruments valued using: quoted market prices in active markets
for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or
other valuation techniques in which all significant inputs are
directly or indirectly observable from market data.
-- Level 3: inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the
instruments.
The objective of valuation techniques is to arrive at a fair
value measurement that reflects the price that would be received to
sell the asset or paid to transfer the liability in an orderly
transaction between market participants at the measurement
date.
14.5.1 Financial instruments measured at fair value - fair value
hierarchy
Inflation adjusted
31 Dec
-------------------- ----------------- ----------------- ----------------
2019 Level 1 Level 2 Level 3
-------------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
-------------------- ----------------- ----------------- ----------------
Trade investments 1 612 131 - - 1 612 131
-------------------- ----------------- ----------------- ----------------
----------------1 ---------------- ---------------- ---------------
612 131 - - 1 612 131
========= ========= ========= =========
-------------------- ----------------- ----------------- ----------------
31 Dec
-------------------- ----------------- ----------------- ----------------
2018 Level 1 Level 2 Level 3
-------------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
-------------------- ----------------- ----------------- ----------------
Restated
-------------------- ----------------- ----------------- ----------------
Trade investments 698 799 - - 698 799
-------------------- ----------------- ----------------- ----------------
----------------698 ---------------- ---------------- ---------------
799 - - 698 799
========= ========= ========= =========
-------------------- ----------------- ----------------- ----------------
Historical Cost
31 Dec
---------------- ----------------- ----------------- ----------------
2019 Level 1 Level 2 Level 3
---------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ----------------- ----------------- ----------------
Trade investments 1 612 131 - - 1 612 131
---------------- ----------------- ----------------- ----------------
--------------- ---------------- ---------------- ---------------
1 612 131 - - 1 612 131
========= ========= ========= =========
---------------- ----------------- ----------------- ----------------
31 Dec
---------------- ----------------- ----------------- ----------------
2018 Level 1 Level 2 Level 3
---------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ----------------- ----------------- ----------------
Trade investments 112 501 - - 112 501
---------------- ----------------- ----------------- ----------------
-------------- ---------------- ---------------- ---------------
112 501 - - 112 501
========= ========= ========= =========
---------------- ----------------- ----------------- ----------------
During the reporting periods ended 31 December 2019 and 31
December 2018, there were no transfers between Level 1 and Level 2
fair value measurements, and no transfers into and out of Level 3
fair value measurements.
Level 3 fair value measurements
Reconciliation - Trade and other investments
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2019 2018 2019 2018
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Balance at 1 January 698 799 1 015 122 112 501 102 347
------------------ ------------------ ------------------ ------------------
Gain recognised in
profit or loss 913 332 (316 323) 1 499 630 10 154
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
1 612 131 698 799 1 612 131 112 501
========== ========== ========== ===========
------------------ ------------------ ------------------ ------------------
14.5.2 Financial instruments not measured at fair value
Below is a list of the Group's financial investments not
measured at fair value, but whose carrying amounts approximate fair
value.
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2019 2018 2019 2018
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Assets
------------------ ------------------ ------------------ ------------------
492 304 492 304 112 440
Cash and cash equivalents 267 698 426 589 267 912
------------------ ------------------ ------------------ ------------------
Loans, advances and 852 557 1 581 873 817 960 254 202
other accounts 453 937 242 945
------------------ ------------------ ------------------ ------------------
107 166 107 166 117 249
Investment securities 155 728 294 724 155 434
117 249
431
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
Total 1 452 027 3 008 595 1 417 430 483 893
875 250 664 291
========== ========== ========== ===========
------------------ ------------------ ------------------ ------------------
Liabilities
------------------ ------------------ ------------------ ------------------
Deposits and other 1 268 146 2 779 432 1 268 146 447 105
liabilities 016 563 016 283
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
1 268 146 2 779 432 1 268 146 447 105
016 563 016 283
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
15. CASH AND CASH EQUIVALENTS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----------------- ----------------- ----------------
2019 2018 2019 2018
----------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- ----------------
Restated
----------------- ----------------- ----------------- ----------------
Balances with the Central 267 032 553 329 267 032
Bank 753 510 753 89 081 480
----------------- ----------------- ----------------- ----------------
Current, nostro accounts* 160 209 160 209
and cash 897 83 397 817 897 13 426 360
----------------- ----------------- ----------------- ----------------
Interbank placements
(see below) 65 000 000 62 114 988 65 000 000 10 000 000
----------------- ----------------- ----------------- ----------------
Expected Credit loss
allowance (see below) (438 383) (415 726) (438 383) (66 928)
----------------- ----------------- ----------------- ----------------
---------------- ---------------- ---------------- ---------------
492 304 698 426 492 304 112 440
267 589 267 912
========= ========= ========= =========
----------------- ----------------- ----------------- ----------------
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------- ----------------- ----------------- ----------------- ----------------
Note 2019 2018 2019 2018
------- ----------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
------- ----------------- ----------------- ----------------- ----------------
Restated
------- ----------------- ----------------- ----------------- ----------------
Interbank placements 65 500 000 62 114 988 65 500 000 10 000 000
------- ----------------- ----------------- ----------------- ----------------
Expected Credit Loss
allowance - Stage
1 16.3 (438 383) (415 726) (438 383) (66 928)
------- ----------------- ----------------- ----------------- ----------------
* ECL charged at 1 January 2018 (415 726) (241 552) (66 928) (26 770)
------- ----------------- ----------------- ----------------- ----------------
* Monetary adjustment 348 796 75 267 - -
------- ----------------- ----------------- ----------------- ----------------
* ECL charged through profit or loss (371 455) (249 441) (371 455) (40 158)
------- ----------------- ----------------- ----------------- ----------------
---------------- ---------------- ---------------- ---------------
65 061 617 61 669 262 65 061 617 9 933 072
========= ========= ========= =========
----------------- ----------------- ----------------- ----------------
*Nostro accounts are foreign domiciled bank accounts operated by
the Bank for the facilitation of offshore transactions on behalf of
clients.
Balances with the Central Bank, other banks and cash are used to
facilitate customer and the Bank's transactions which include
payments and cash withdrawals.
16. TOTAL LOANS, ADVANCES AND OTHER ASSETS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2019 2018 2019 2018
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Fixed term loans -
Corporate 264 688 911 360 494 147 264 688 911 58 036 580
------------------ ------------------ ------------------ ------------------
Fixed term loans - 481 889
Retail 94 772 446 884 94 772 446 77 580 291
------------------ ------------------ ------------------ ------------------
Mortgages 58 587 891 381 324 576 58 587 891 61 390 107
------------------ ------------------ ------------------ ------------------
Overdrafts 97 600 960 316 455 428 97 600 959 50 946 710
------------------ ------------------ ------------------ ------------------
----------------- ----------------- -----------------
515 650 1 540 164 515 650 -----------------
207 035 207 247 953 688
------------------ ------------------ ------------------ ------------------
Other assets 336 907 246 41 709 902 302 310 035 6 249 257
------------------ ------------------ ------------------ ------------------
----------------- ---------------- ---------------- ----------------
852 557 1 581 873 817 960 242 254 202 945
453 937 ========== ==========
========== ==========
------------------ ------------------ ------------------ ------------------
16.1 Maturity analysis
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- ------------------ --------------------
2019 2018 2019 2018
-------------------- -------------------- ------------------ --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- ------------------ --------------------
Restated
-------------------- -------------------- ------------------ --------------------
138 436 138 436
Less than 1 month 142 418 736 981 142 67 413 196
-------------------- -------------------- ------------------ --------------------
1 to 3 months 64 154 025 119 655 513 64 154 025 19 263 549
-------------------- -------------------- ------------------ --------------------
3 to 6 months 21 639 536 42 415 802 21 639 536 6 828 594
-------------------- -------------------- ------------------ --------------------
105 500 105 500
6 months to 1 year 893 154 585 667 893 24 887 015
-------------------- -------------------- ------------------ --------------------
153 679 153 679
1 to 5 years 923 585 389 675 923 94 242 902
-------------------- -------------------- ------------------ --------------------
49 699 770 308 710 062 49 699 770 49 699 770
Over 5 years ---------------- ---------------- ---------------- ----------------
-------------------- -------------------- ------------------ --------------------
533 110 1 629 493 533 110
Total advances 289 700 289 262 335 026
-------------------- -------------------- ------------------ --------------------
Allowances for impairment (17 115 (82 617 (17 115 (13 300
losses on loans and advance 341) 211) 341) 688)
-------------------- -------------------- ------------------ --------------------
IAS 39 impairment loss
allowance at 1 January - (49 140 224) - (5 445 968)
-------------------- -------------------- ------------------ --------------------
ECL recognized through (82 617 (13 300
retained earnings 210) (73 766 120) 688) (8 175 135)
-------------------- -------------------- ------------------ --------------------
Monetary adjustment 69 316 522 38 298 875 - -
-------------------- -------------------- ------------------ --------------------
ECL charge through profit
or loss (4 929 615) (24 234 082) (4 929 615) (3 901 487)
-------------------- -------------------- ------------------ --------------------
Bad debts written off 1 114 962 26 224 339 1 114 962 4 221 902
-------------------- -------------------- ------------------ --------------------
Suspended interest on
credit impaired financial (344 741) (6 712 454) (344 741) (1 080 650)
assets ----------------- ----------------- --------------- -----------------
-------------------- -------------------- ------------------ --------------------
515 650 1 540 164 515 650 247 953
207 035 207 688
-------------------- -------------------- ------------------ --------------------
336 907 302 310
Other assets 246 41 709 902 035 6 249 257
-------------------- -------------------- ------------------ --------------------
---------------- ---------------- ---------------- -----------------
852 557 1 581 873 817 960 254 202
453 937 242 945
========== ========== ========== ==========
-------------------- -------------------- ------------------ --------------------
The Bank is continuing recovery efforts in respect of loans
written off amounting to ZWL1 114 962.
16.2 Sectoral analysis of utilisations
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
2019 2018 2019 2018
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
ZWL % ZWL % ZWL % ZWL %
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Restated
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Agriculture
and 232 228
horticulture 96 767 992 18 415 14 96 767 992 18 37 386 857 14
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Conglomerates 2 397 398 - 66 415 845 4 2 397 398 - 10 692 402 4
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
179 525
Distribution 87 785 991 16 412 11 87 785 991 16 28 902 108 11
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Food &
beverages 29 457 868 6 39 162 651 3 29 457 868 6 6 304 863 3
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
126 212 624 331 126 212 100 512
Individuals 109 24 973 38 109 24 291 38
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Manufacturing 60 715 905 11 54 233 187 3 60 715 905 11 8 731 095 3
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Mining 1 157 120 - 4 368 507 - 1 157 120 - 703 294 -
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
128 615 429 227 128 615 69 102
Services 906 24 710 27 906 24 116 27
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
533 110 100 1 629 493 100 533 110 100 262 335 100
289 === 700 === 289 === 026 ===
========== ========== ========== ==========
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
The material concentration of loans and advances is with
individuals at 24% (2018 - 38%) and services sector at 24% (2018 -
27%).
16.3 Impairment analysis of financial assets measured at amortised cost
Inflation adjusted
Stage 1 Stage 2 Stage 3 Total
------------------ ----------------- ----------------- -----------------
Gross carrying amount at 2 312 305 156 020 120 997 2 589 322
1 January 2019 213 016 202 431
------------------ ----------------- ----------------- -----------------
(1 930 043 (140 902 (101 517 (2 172 462
Monetary adjustment 173) 082) 652) 907)
------------------ ----------------- ----------------- -----------------
Transfers
------------------ ----------------- ----------------- -----------------
(9 851 828) 11 175 756 (1 323 928)
------------------ ----------------- ----------------- -----------------
- to 12 months to ECL 1 342 842 (1 232 110) (110 732) -
------------------ ----------------- ----------------- -----------------
- to lifetime ECL not credit
impaired (10 333 912) 12 836 932 (2 503 020) -
------------------ ----------------- ----------------- -----------------
- to lifetime ECL credit
impaired (860 758) (429 066) 1 289 824 -
------------------ ----------------- ----------------- -----------------
Net movement in financial
assets 518 917 352 14 563 834 10 873 808 493 479 711
------------------ ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
Balance as at 31 December 891 327 564 11 729 856 7 281 814 910 339 235
2019 ========= ========= ========= =========
------------------ ----------------- ----------------- -----------------
Loss allowance analysis
------------------ ----------------- ----------------- -----------------
At 1 January 2019 7 749 444 853 372 5 209 190 13 812 006
------------------ ----------------- ----------------- -----------------
- ECL - Loans, advances
& guarantees 7 238 126 853 372 5 209 190 13 300 688
------------------ ----------------- ----------------- -----------------
- ECL - Investment securities 444 390 - - 444 390
------------------ ----------------- ----------------- -----------------
- ECL - Interbank placements 66 928 - - 66 928
------------------ ----------------- ----------------- -----------------
Transfers (856 306) 876 277 (10 971) -
------------------ ----------------- ----------------- -----------------
- to 12 month ECL 35 131 (32 748) (2 383) -
------------------ ----------------- ----------------- -----------------
- to lifetime ECL not credit
impaired (677 699) 1 024 067 (346 368) -
------------------ ----------------- ----------------- -----------------
- to lifetime ECL credit
impaired (222 738) (115 042) 337 780 -
------------------ ----------------- ----------------- -----------------
Net increase/(decrease) (1 216
in ECL 13 174 795 (909 955) 273) 11 048 567
------------------ ----------------- ----------------- -----------------
Loans and advances 5 940 881 (909 955) (101 311) 11 833 962
------------------ ----------------- ----------------- -----------------
Guarantees and facilities
approved not drawn down 6 904 347 - - 6 904 347
------------------ ----------------- ----------------- -----------------
Investment securities (41 888) - - (41 888)
------------------ ----------------- ----------------- -----------------
Interbank placements 371 455 - - 371 455
------------------ ----------------- ----------------- -----------------
Bad debts written off - - (1 114 962) (1 114 962)
------------------ ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
Balance as at 31 December 20 058 931 819 694 3 981 948 24 860 573
2019 ========= ========= ========= =========
------------------ ----------------- ----------------- -----------------
Loans and advances 12 313 699 819 694 3 981 948 17 115 341
------------------ ----------------- ----------------- -----------------
Guarantees and facilities
approved not drawn down 6 904 347 - - 6 904 347
------------------ ----------------- ----------------- -----------------
Investment securities 402 502 - - 402 502
------------------ ----------------- ----------------- -----------------
Interbank placements 438 383 - - 438 383
------------------ ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
20 058 931 819 694 3 981 948 24 860 573
========= ========= ========= =========
------------------ ----------------- ----------------- -----------------
16.3 Impairment analysis of financial assets measured at amortised cost
Inflation adjusted
Stage 1 Stage 2 Stage 3 Total
------------------- ----------------- ----------------- --------------------
Gross carrying amount at
------------------- ----------------- ----------------- --------------------
1 908 250 120 058 104 655 2 132 965
1 January 2018 869 774 972 616
------------------- ----------------- ----------------- --------------------
(17 657
Transfers (56 348 947) 164) 73 706 111 -
------------------- ----------------- ----------------- --------------------
- to 12 months to ECL 8 833 534 (6 811 219) (2 022 315) -
------------------- ----------------- ----------------- --------------------
- to lifetime ECL not credit
impaired (59 389 538) 64 335 897 (4 946 359) -
------------------- ----------------- ----------------- --------------------
- to lifetime ECL credit (74 881
impaired (5 792 943) 842) 80 674 785 -
------------------- ----------------- ----------------- --------------------
Net movement in financial (57 364
assets 460 403 291 53 318 406 881) 456 356 816
------------------- ----------------- ----------------- --------------------
------------------ ---------------- ---------------- -------------------
Balance as at 31 December 2 312 305 156 020 120 997 2 589 322
2018 213 016 202 432
=========== ========= ========== ===========
------------------- ----------------- ----------------- --------------------
Loss allowance analysis
------------------- ----------------- ----------------- --------------------
At 1 January 2018 (IAS 39
Provisions) - - - 33 827 627
------------------- ----------------- ----------------- --------------------
Adjustment on initial application
of IFRS 9 - - - 53 269 744
------------------- ----------------- ----------------- --------------------
ECL on 1 January 2018 56 371 366 8 293 922 22 432 083 87 097 371
------------------- ----------------- ----------------- --------------------
- ECL - Loans, advances &
guarantees 53 881 468 8 293 922 22 432 083 84 607 473
------------------- ----------------- ----------------- --------------------
- ECL - Investment securities 2 323 613 - - 2 323 613
------------------- ----------------- ----------------- --------------------
- ECL - Interbank placements 166 285 - - 166 285
------------------- ----------------- ----------------- --------------------
(20 208
Transfers (2 770 223) 639) 22 978 862 -
------------------- ----------------- ----------------- --------------------
- to 12 month ECL 186 494 (117 714) (68 780) -
------------------- ----------------- ----------------- --------------------
- to lifetime ECL not credit
impaired (1 363 101) 2 212 294 (849 193) -
------------------- ----------------- ----------------- --------------------
- to lifetime ECL credit (22 303
impaired (1 593 616) 219) 23 896 835 -
------------------- ----------------- ----------------- --------------------
Net increase/(decrease) in 17 215 13 170
ECL (5 465 471) 436 271 24 920 236
------------------- ----------------- ----------------- --------------------
Loans, advances and guarantees (6 151 630) 17 215 436 13 170 271 24 234 077
------------------- ----------------- ----------------- --------------------
Investment securities 436 718 - - 436 718
------------------- ----------------- ----------------- --------------------
Interbank placements 249 441 - - 249 441
------------------- ----------------- ----------------- --------------------
(26 224
Bad debts written off - - 339) (26 224 339)
------------------- ----------------- ----------------- --------------------
--------------- --------------- --------------- ---------------
Balance as at 31 December 48 135 672 5 300 719 32 356 85 793 268
2018 ========= ========= 877 =========
=========
------------------- ----------------- ----------------- --------------------
Loans, advances and guarantees 44 959 615 5 300 719 32 356 877 82 617 211
------------------- ----------------- ----------------- --------------------
Investment securities 2 760 331 - - 2 760 331
------------------- ----------------- ----------------- --------------------
Interbank placements 415 726 - - 415 726
------------------- ----------------- ----------------- --------------------
--------------- --------------- --------------- ---------------
48 135 672 5 300 719 32 356 85 793 268
========= ========= 877 =========
=========
------------------- ----------------- ----------------- --------------------
16.4 Credit-impaired financial assets
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
---------------- ---------------- ---------------- ----------------
2019 2018 2019 2018
---------------- ---------------- ---------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ---------------- ---------------- ----------------
Restated
---------------- ---------------- ---------------- ----------------
Total credit impaired financial 120 997
assets 7 281 814 202 7 281 814 19 479 550
---------------- ---------------- ---------------- ----------------
Expected credit losses
on credit impaired financial (32 356
assets (3 981 948) 877) (3 981 948) (5 209 190)
---------------- ---------------- ---------------- ----------------
Retail loans insurance (499 057) (3 099 890) (499 057) (499 057)
---------------- ---------------- ---------------- ----------------
Suspended interest on credit-impaired
financial assets (344 739) (6 712 456) (344 739) (1 080 650)
---------------- ---------------- ---------------- ----------------
--------------- --------------- --------------- ---------------
Net credit impaired financial 2 456 070 78 827 979 2 456 070 12 690 653
assets ========= ========== ========= ==========
---------------- ---------------- ---------------- ----------------
The net credit impaired financial assets represents recoverable
portions covered by realisable security, which includes guarantees,
cessation of debtors, mortgages over properties, equities and
promissory notes all fair valued at ZWL9 395 900 (2018 - ZWL57 221
103).
16.5 Loans to related parties (included under loans, advances and other assets)
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- ------------------ ------------------- ------------------
2019 2018 2019 2018
-------------------- ------------------ ------------------- ------------------
ZWL ZWL ZWL ZWL
-------------------- ------------------ ------------------- ------------------
Restated
-------------------- ------------------ ------------------- ------------------
Executive directors 746 174 559 259 746 174 90 036
-------------------- ------------------ ------------------- ------------------
Officers 26 946 866 75 255 339 26 946 866 12 115 488
-------------------- ------------------ ------------------- ------------------
Officers' companies - - - -
----------------- ---------------- ----------------- ----------------
-------------------- ------------------ ------------------- ------------------
27 693 040 75 816 277 27 693 040 12 205 524
-------------------- ------------------ ------------------- ------------------
ECL on staff loans -
Stage 1 (48 750) (997 126) (48 750) (160 529)
-------------------- ------------------ ------------------- ------------------
-----------------27 ---------------- ----------------27 ----------------
644 290 74 819 644 290 12 044
========== 151 ========== 995
========== =========
-------------------- ------------------ ------------------- ------------------
17. NON-CURRENT ASSETS HELD FOR SALE
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------- ----------------- ------------------ ------------------
2019 2018 2019 2018
------------------- ----------------- ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------- ----------------- ------------------ ------------------
Restated
------------------- ----------------- ------------------ ------------------
At 1 January 223 614 324 836 36 000 36 000
------------------- ----------------- ------------------ ------------------
Monetary adjustment (187 614) (101 122)
------------------- ----------------- ------------------ ------------------
Fair value adjustment 144 000 - 144 000 -
------------------- ----------------- ------------------ ------------------
Reclassifications (180 000) - (180 000) -
------------------- ----------------- ------------------ ------------------
------------------ ---------------- ----------------- -----------------
========== 223 614 - 36 000
========== ========== ==========
------------------- ----------------- ------------------ ------------------
18. INTANGIBLE ASSETS
Inflation adjusted
Work in Progress Computer
Software Total
------------------ ------------------- ----------------
ZWL ZWL ZWL
------------------ ------------------- ----------------
Cost
------------------ ------------------- ----------------
42 585
Balance at 1 January 2018 2 011 554 40 573 726 280
------------------ ------------------- ----------------
Acquisitions - 4 501 240 4 501 240
------------------ ------------------- ----------------
(2 011 554) 2 011 554 -
Capitalisation ---------------- ----------------- --------------
------------------ ------------------- ----------------
47 086
Balance at 31 December 2018 - 47 086 519 519
------------------ ------------------- ----------------
Acquisitions - 636 901 636 901
------------------ ------------------- ----------------
---------------- ---------------- --------------
Balance at 31 December 2019 - 47 723 47 723
========= 421 421
========= ========
------------------ ------------------- ----------------
Accumulated amortisation
------------------ ------------------- ----------------
21 870
Balance at 1 January 2018 - 21 870 624 624
------------------ ------------------- ----------------
- 7 882 765 7 882 765
Amortisation for the year ---------------- ---------------- --------------
------------------ ------------------- ----------------
29 753
Balance at 31 December 2018 - 29 753 389 389
------------------ ------------------- ----------------
Amortisation for the year - 6 356 249 6 356 249
------------------ ------------------- ----------------
---------------- ----------------36 --------------
Balance at 31 December 2019 - 109 639 36 109
========= ========= 639
========
------------------ ------------------- ----------------
Carrying amount
------------------ ------------------- ----------------
At 31 December 2019 - 11 613 782 11 613
========= ========== 782
========
------------------ ------------------- ----------------
Restated at 31 December 2019 - 17 333 130 17 333
========= ========= 130
========
------------------ ------------------- ----------------
At 1 January 2018 - Restated 2 011 554 18 703 102 18 703
========= ========== 102
========
------------------ ------------------- ----------------
18. INTANGIBLE ASSETS
Historical Cost
Work in Progress Computer
Software Total
------------------ ------------------- ----------------
ZWL ZWL ZWL
------------------ ------------------- ----------------
Cost
------------------ ------------------- ----------------
Balance at 1 January 2018 228 595 4 610 839 4 839 434
------------------ ------------------- ----------------
Acquisitions - 535 971 535 971
------------------ ------------------- ----------------
(228 595) 228 595 -
Capitalisation ---------------- ----------------- --------------
------------------ ------------------- ----------------
Balance at 1 January 2019 - 5 375 405 5 375 405
------------------ ------------------- ----------------
Acquisitions - 94 320 94 320
------------------ ------------------- ----------------
---------------- -----------------5 --------------
Balance at 31 December 2019 - 469 725 5 496
========= ========== 725
========
------------------ ------------------- ----------------
Accumulated amortisation
------------------ ------------------- ----------------
Balance at 1 January 2018 - 2 459 254 2 459 254
------------------ ------------------- ----------------
- 879 376 879 376
Amortisation for the year ---------------- ----------------- --------------
------------------ ------------------- ----------------
Balance at 1 January 2019 - 3 338 630 3 338 630
------------------ ------------------- ----------------
Amortisation for the year - 733 909 733 909
------------------ ------------------- ----------------
---------------- ----------------- --------------
Balance at 31 December 2019 - 4 072 539 4 072
========= ========== 539
========
------------------ ------------------- ----------------
Carrying amount
------------------ ------------------- ----------------
At 31 December 2019 - 1 397 186 1 397 186
========= ========== ========
------------------ ------------------- ----------------
At 1 January 2019 - 2 036 775 2 036 775
========= ========== ========
------------------ ------------------- ----------------
At 1 January 2018 228 595 2 151 585 2 380 180
========= ========== ========
------------------ ------------------- ----------------
19. PROPERTY AND EQUIPMENT
Inflation adjusted
Capital
work in Furniture Right of Freehold
progress Computers Motor Vehicles & Equipment Use Assets** Land & Buildings* Total
-------------------- ------------------ ------------------- ------------------- ------------------- -----------------
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Cost/Revaluation amount Restated Restated Restated Restated Restated Restated Restated
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
134 041
At 1 January 2018 - restated 7 543 367 51 159 818 11 316 290 37 574 947 - 26 446 800 217
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
58 952
Additions 44 595 731 12 286 506 765 673 1 304 428 - - 339
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Capitalisations (1 921 005) - - 1 600 244 - - (320 762)
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Revaluation gain - - - - - - -
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Disposals - - (679 532) (115 636) - - (795 168)
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Reclassification from Investment 14 286
properties 14 286 447 - - - - - 447
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
----------------- ---------------
64 504 ------------------ ----------------- ------------------ ------------------ ---------------- 206 164
At 31 December 2018 - restated 540 63 446 324 11 402 431 40 363 978 - 26 446 800 073
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
35 323
Additions 18 335 381 11 478 659 1 160 355 4 349 518 - - 914
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Initial recognition - Right 14 609
of Use Asset - - - - 14 609 335 - 335
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
(14 413
Capitalisations 772) 1 226 643 293 684 1 017 871 - 11 875 574 -
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Translation gains on change 86 325
in functional - - - - - 86 325 787 787
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
146 244
Revaluation gain - - - - - 146 244 823 823
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
----------------- ------------------ ----------------- ------------------ ------------------ ------------------ ---------------
At 31 December 2019 68 426 76 151 627 12 856 470 45 731 367 14 609 335 270 892 488 667
150 =========== =========== =========== =========== 984 932
=========== =========== ===========
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Accumulated depreciation
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
66 666
At 1 January 2018 - restated - 25 307 664 8 168 624 31 115 124 - 2 075 120 532
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
11 991
Charge for the year - 7 479 598 1 609 623 2 504 435 - 398 182 839
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Disposals - - (679 532) (115 633) - - (795 165)
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
---------------
----------------- ----------------- ----------------- ------------------ ------------------ ---------------- 77 863
At 31 December 2018 - restated - 32 787 262 9 098 715 33 503 926 - 2 473 302 206
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Charge for the year - Property 15 427
and equipment - 10 649 093 1 724 758 3 053 363 - 604 282 214
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Charge for period - Right
of Use Asset - - - - 3 088 496 - 3 088 496
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
------------------- ------------------- ----------------- ------------------ ------------------ ---------------- ----------------
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
At 31 December 2019 - 41 495 216 10 823 473 36 557 289 3 088 496 3 077 584 94 478
========== =========== ========== =========== =========== ========== 377
=========
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
Carrying amount
At 31 December 2019 68 426 34 656 411 2 032 997 9 174 077 11 520 838 267 815 394 189
150 =========== ========== =========== =========== 400 555
========== ========== =========
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
At 1 December 2018 - Restated 64 504 540 30 659 062 2 303 716 6 860 052 - 23 973 498 128 300
========== =========== ========== =========== =========== ========== 867
=========
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
At 1 January 2018 - Restated 7 543 367 28 325 456 3 147 666 6 459 818 - 21 898 381 67 374
========== =========== ========== =========== =========== ========== 688
=========
--------------------------------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- -----------------
*Assets measured using the revaluation model.
** Right-of-Use Assets recognised in respect of leased
properties in which the Group is a lessee. The Right-of-Use Assets
are depreciated over the shorter of the lease term including
extension options where the Group is certain to exercise such and
the useful life of the underlying asset.
19. PROPERTY AND EQUIPMENT
Historical Cost
Capital
work in Furniture Right of Freehold
progress Computers Motor Vehicles & Equipment Use Assets Land & Buildings Total
------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Cost/Revaluation amount ZWL ZWL ZWL ZWL ZWL ZWL ZWL
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
14 727
At 1 January 2018 293 716 5 435 325 1 255 902 4 029 210 - 3 713 804 957
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Additions 7 179 544 1 978 026 126 267 210 003 - - 9 490 840
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Capitalisations (309 266) - - 257 626 - - (51 640)
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Revaluation gain - - - - - 139 194 139 194
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Disposals - - (109 399) (18 616) - - (128 015)
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Reclassification from Investment
properties 2 300 000 - - - - - 2 300 000
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
---------------
------------------ ------------------ ----------------- ------------------ ------------------ ---------------- 26 478
At 31 December 2018 9 463 994 7 413 351 1 269 770 4 478 223 - 3 852 998 336
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
24 308
Additions 19 774 151 2 975 151 206 348 1 352 847 - - 497
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Right of Use Assets - - - - 4 096 580 - 4 096 580
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Translation gain on change 15 653
in functional currency - - - - - 15 653 157 157
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
(14 413
Capitalisations 772) 1 226 643 293 684 1 017 871 - 11 875 574 -
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
236 960 236 960
Revaluation gain - - - - - 551 551
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Reversal of impairment - - - - - 40 600 40 600
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
------------------ ------------------ ----------------- ------------------ ------------------ ---------------- ---------------
At 31 December 2019 14 824 11 615 145 1 769 802 6 848 941 4 096 580 268 382 307 537
373 =========== =========== =========== =========== 880 722
=========== =========== ===========
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Accumulated depreciation
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 1 January 2018 - 2 764 564 938 774 3 361 092 - 327 540 7 391 970
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Charge for the year - 843 339 178 887 283 982 - 64 104 1 370 312
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Disposals - - (109 399) (18 616) - - (128 015)
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
---------------
----------------- ----------------- ------------------ ------------------- ----------------- 8 634
At 31 December 2018 ------------------- 3 607 903 1 008 262 3 626 458 - 391 644 267
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Charge for the year - 1 427 692 222 449 481 383 - 175 836 2 307 360
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Charge for period - Right
of Use Asset - - - - 1 310 867 - 1 310 867
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
------------------ ------------------ ------------------ ------------------ ------------------- ------------------ ----------------
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 31 December 2019 - 5 035 595 1 230 711 4 107 841 1 310 867 567 480 12 252
=========== =========== =========== =========== =========== =========== 495
===========
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Carrying amount
At 31 December 2019 14 824 6 579 550 539 091 2 741 100 2 785 713 267 815 295 285
373 =========== =========== =========== =========== 400 227
=========== =========== ===========
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 1 December 2018 9 463 994 3 805 448 261 508 851 766 - 3 461 354 17 844
========== =========== ========== =========== =========== ========= 069
=========
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 1 January 2017 293 715 2 670 761 317 128 668 118 - 3 386 264 7 335 986
=========== =========== =========== =========== =========== =========== ===========
----------------------------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2019 on the
basis of valuations carried out by independent professional
valuers, PMA Real Estate (Private) Limited. The valuation which
conforms to International Valuation Standards, was in terms of the
policy as set out in the accounting policies section. All movable
assets are measured at their carrying amounts which are arrived at
by the application of a depreciation charge on their cost values
over the useful lives of the assets.
The valuation of land and buildings was arrived by applying
yield rates of 10% on rental levels of between ZWL48 - ZWL112 per
square metre.
Level 3
The fair value of immovable properties of ZWL267 815 400 (2018 -
ZWL3 461 354) has been categorised under level 3 in the fair value
hierarchy based on the inputs used for the valuation technique
described below.
The following shows reconciliation between the opening and
closing balances for level 3 fair values:
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- ------------------- -------------------- ------------------
2019 2018 2019 2018
-------------------- ------------------- -------------------- ------------------
ZWL ZWL ZWL ZWL
-------------------- ------------------- -------------------- ------------------
Restated
-------------------- ------------------- -------------------- ------------------
At 1 January 23 973 498 26 446 800 3 461 354 3 386 264
-------------------- ------------------- -------------------- ------------------
Translation gains on
change in functional
currency 86 325 787 - 15 649 358 -
-------------------- ------------------- -------------------- ------------------
Transfers from work
in progress 11 875 574 - 11 875 574 -
-------------------- ------------------- -------------------- ------------------
146 244 236 960
Revaluation gain 823 - 551 62 533
-------------------- ------------------- -------------------- ------------------
Impairment reversal - - 40 600 76 661
-------------------- ------------------- -------------------- ------------------
Depreciation (604 282) (2 473 302) (172 037) (64 104)
-------------------- ------------------- -------------------- ------------------
----------------267 ----------------23 ----------------267 ----------------3
Balance at 31 December 815 400 973 498 815 400 461 354
========== ========== ========== =========
-------------------- ------------------- -------------------- ------------------
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of immovable properties, as well as the
significant unobservable inputs used.
Valuation Significant Unobservable Inter-relationship between
Technique Inputs key unobservable inputs and
fair value measurement
The Direct The estimated fair value would
Comparison * Weighted average expected market rental growth (5%); increase /(decrease) if:
Method was and * expected market rental growth were higher/ (lower);
applied and
on all
residential * Average market yield of 10%.
properties * the risk adjusted discount rates were lower/
(higher).
Below is an indication of
the sensitivity analysis at
different discount rates:-
--------------------------------------------------------------- ----------------------------------------------------------
Below is an indication of the sensitivity analysis at different
discount rates:
Change in rate Change in fair value
December 2019 December 2018
-------------- --------------
ZWL ZWL
-------------- --------------
+ 5% 2 224 000 863 329
-------------- --------------
+ 3% 1 334 400 517 997
-------------- --------------
+ 1% 444 800 172 666
-------------- --------------
- 1% - 444 800 - 172 666
-------------- --------------
- 3% - 1 334 400 - 517 997
-------------- --------------
- 5% -2 224 400 - 868 329
-------------- --------------
20. CAPITAL COMMITMENTS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ----------------- ------------------ --------------------
2019 2018 2019 2018
------------------ ----------------- ------------------ --------------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ------------------ --------------------
Restated
------------------ ----------------- ------------------ --------------------
Capital expenditure
contracted for 5 828 388 18 208 295 5 828 388 2 931 385
------------------ ----------------- ------------------ --------------------
Capital expenditure
authorised but not yet 117 569 117 569
contracted for 873 56 481 152 873 9 092 999
------------------ ----------------- ------------------ --------------------
----------------- ---------------- ----------------- -----------------12
Balance at 31 December 123 398 74 689 123 398 024 384
261 447 261 ==========
========== ========== ==========
------------------ ----------------- ------------------ --------------------
The capital expenditure will be funded from the Group's own
resources.
21. CONTINGENT LIABILITIES
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
--------------------- ----------------- --------------------- -------------------
2019 2018 2019 2018
--------------------- ----------------- --------------------- -------------------
ZWL ZWL ZWL ZWL
--------------------- ----------------- --------------------- -------------------
Restated
--------------------- ----------------- --------------------- -------------------
126 952 126 952
Guarantees 189 38 260 135 189 6 159 566
--------------------- ----------------- --------------------- -------------------
Facilities approved 128 398
but not drawn down 20 067 960 555 20 067 960 20 671 107
--------------------- ----------------- --------------------- -------------------
Expected credit losses
on facilities approved
but not drawdown (1 477 002) (9 447 346) (1 477 002) (1 520 945)
--------------------- ----------------- --------------------- -------------------
Expected credit losses
on guarantees (5 427 344) (3 438 303) (5 427 344) (553 538)
--------------------- ----------------- --------------------- -------------------
-----------------140 ---------------- -----------------140 ----------------24
Balance at 31 December 115 803 153 773 115 803 756 190
========== 041 ========== =========
==========
--------------------- ----------------- --------------------- -------------------
22. EXCHANGE RATES
The following exchange rates have been used to translate the
foreign currency balances to Zimbabwe dollars at year end:
31 December 31 December
2019 2018
Mid - rate Mid - rate
----- ------------ ------------
ZWL ZWL
----- ------------ ------------
United States Dollar USD 16.7734 1.0000
----- ------------ ------------
British Sterling GBP 22.1677 1.2785
----- ------------ ------------
South African Rand ZAR 0.8350 14.2254
----- ------------ ------------
European Euro EUR 18.8164 1.1490
----- ------------ ------------
Botswana Pula BWP 0.6302 10.7296
----- ------------ ------------
23. EVENTS AFTER THE REPORTING PERIOD
Subsequent to the Group's reporting period ended 31 December
2019, the World Health Organisation (WHO) declared COVID-19 a world
pandemic and the Government of Zimbabwe declared COVID-19 a
national disaster. The Directors have concluded that the COVID-19
pandemic is a non-adjusting event, as it does not reflect
conditions that existed at the reporting date.
The current health emergency caused by the global spread of
COVID-19 has significant implications for the Zimbabwean economy
and the Group is following the advice and directives of the World
Health Organization (WHO) as well as the Government of Zimbabwe in
order to provide a safe environment for all of the Group's
stakeholders including shareholders, customers and employees. The
Government of Zimbabwe implemented a number of measures to mitigate
the widespread transmission of the virus, which include the
declaration of a 21-day national lockdown effective 30 March 2020
subsequently extended by a further 14 days to 3 May 2020. The
national lockdown coupled with the other devastating effects of the
novel virus are expected to result in a decline in transactional
volumes due to the restrictions in movement, thereby negatively
affecting the Bank's fee and commission income. These measures
would also have an impact on the cashflows of the Bank's customers
who do not fall within the essential services category, albeit to
varying extents depending on the underlying business models. This
might result in a deterioration of the Bank's credit risk and
liquidity risk profile. The Group's foreign exchange risk is also
expected to deteriorate on account of the negative economic
performance outlook in view of the economic restrictions
necessitated by the COVID-19 pandemic.
Credit risk
The Bank's significant credit exposures are in the following
sectors: services (24%), individuals (24%), agriculture (18%) and
distribution (16%), the majority of which are secured by tangible
collateral. The Bank has observed that the majority of businesses
within the services, agricultural and distribution sectors have
been predominately classified as essential services in terms of the
national lockdown pronounced by the Government of Zimbabwe in
response to the COVID-19 pandemic. This would imply that the
deterioration of credit risk in terms of the Bank's borrowing
clients falling into these categories is not expected to be severe.
However, the Bank is closely monitoring the developments and the
Group has strengthened its credit risk management practices in
response to the operating environment. The majority of the Bank's
individual customers are employed by the Government which has
continued to pay full salaries to date. Furthermore, the Bank takes
comfort in that the majority of its borrowing individual customers
are in the mortgages category, which would not be expected to
result in significant increases in Expected Credit Loss ("ECL")
allowances due to their low Loss Given Default (LGD) factor. The
Reserve Bank also issued a directive providing guidance on how
Banks are to approach credit provisioning in respect of the
COVID-19 crisis. The guidance indicated that Banks will not have to
adjust ECL stages for previously performing clients whose credit
risk would have increased due to COVID-19. This will also minimize
the increase in Bank's ECL due to COVID-19.
Liquidity risk
The Bank manages its liquidity risk through the Asset and
Liability Management Committee ("ALCO"), which monitors the Bank's
liquidity gap on a daily basis. In response to the COVID-19
pandemic, the Bank strengthened its liquidity risk management
practices to ensure that the increased liquidity risk is well
managed and does not deteriorate below internal benchmarks, which
surpass the regulatory thresholds. As at the end of Q1 of 2020, the
Bank had a stable liquidity position and is well positioned to meet
its foreign and long-term obligations as they fall due. Through the
Reserve Bank of Zimbabwe ("RBZ"), the Government also announced a
raft of measures including the relaxation of exchange control
regulations to allow the use of foreign currency, classified as
free funds in the economy, for improved flexibility and convenience
on the part of the transacting public in response to the measures
adopted to fight the novel virus. Resultantly, this has increased
the flow of foreign currency into the formal channels of the
economy and the Bank is set to benefit from this development.
Foreign exchange risk
The Bank's ALCO management committee also monitors the Group's
exposure to foreign exchange risk on a daily basis. In response to
the increase in foreign exchange rate risk, the Bank has also
buttressed its risk management practices in that regard to ensure
the Bank is well positioned to handle foreign exchange fluctuations
arising from market volatility due to the raging global
pandemic.
COVID-19 Impact assessment and mitigation
Whilst the Group is cognizant of the negative impacts of the
COVID-19 pandemic on its revenues and asset quality, the severity
and operational impact of the restrictions for the remainder of the
year cannot be reasonably estimated at this point in time. The
Group, however, continues to monitor the situation closely and will
provide further updates when visibility improves and there is
greater clarity over the expected financial performance on the
Group in 2020; as every listed entity on the ZSE will continue to
trade under cautionary for the duration of the lockdown period,
including any subsequent extensions, until the lockdown has been
formally dispensed with in terms of the enabling legal
instrument.
In view of this unprecedented economic and business uncertainty,
the Group is firmly focused on protecting its business; mitigating
any potential adverse financial impact and ensuring that the Group
is well positioned for a recovery trajectory post the pandemic. An
extensive range of business continuity measures are in place in
order to ensure business continuity. These measures include
enhanced safety and sanitation protocols at all our operating
Units, as well as making significant adjustments to work practices
to ensure social distancing. The measures are summarised below:
-- Encouraging customers to make use of the Bank's digital
channels for transacting purposes.
-- Enabling offsite working for all critical staff.
-- Reviewing all discretionary and non-essential expenditures
-- Suspension of all capital expenditure and limiting it to
expenditures that promote the new operating order.
-- Buttressing the credit, market and liquidity risk management practices.
-- Continue to broaden the Bank's market segments.
The above mentioned measures have been quite effective in
managing the Group's key performance indicators and benchmarks in
response to the adverse effects of the COVID-19 virus. Prior to the
advent of COVID-19, the Bank had embarked on a digitalisation drive
to improve the customer experience, enhancement of service delivery
and broadening the customer digital touch points. This strategy has
proven to be quite pivotal in the current operating environment and
will continue underpin the Bank's business model in order to
neutralize the reduced transactional activities due to the closure
of most businesses except those which were classified as
essential.
Having considered all the factors and the mitigation in place,
the Directors have made a going concern assessment and believe the
Group will continue operating in the foreseeable future.
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2019
Inflation adjusted Historical Cost*
31 December 31 December 31 December 31 December
----- ------------------- ------------------- ------------------- -------------------
2019 2018 2019 2018
----- ------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
----- ------------------- ------------------- ------------------- -------------------
Restated
----- ------------------- ------------------- ------------------- -------------------
180 212 323 330
Interest income 444 808 70 557 190 39 333 178
------------------- ------------------- ------------------- -------------------
(51 695 (72 131 (16 894
746) 939) 088) (8 865 016)
Interest expense ----------------- ----------------- ---------------- -----------------
------------------- ------------------- ------------------- -------------------
128 516 251 198
Net interest income 698 869 53 663 102 30 468 162
------------------- ------------------- ------------------- -------------------
183 203 233 280
Fee and commissions income 638 093 87 242 303 28 539 376
------------------- ------------------- ------------------- -------------------
254 811
445 15 660 953 99 863 112 1 899 670
Net foreign exchange gains ---------------- ---------------- ---------------- ----------------
------------------- ------------------- ------------------- -------------------
566 531 500 139 240 768
Revenue 781 915 517 60 907 208
------------------- ------------------- ------------------- -------------------
112 606 206 622
446 39 129 126 639 4 983 521
Other income a ---------------- ---------------- ---------------- ----------------
----- ------------------- ------------------- ------------------- -------------------
679 138 539 269 447 391
Operating income 227 041 156 65 890 729
------------------- ------------------- ------------------- -------------------
(240 474 (289 465 (105 925 (34 712
168) 631) 077) 711)
Operating expenditure b ----------------- ----------------- ----------------- -----------------
----- ------------------- ------------------- ------------------- -------------------
Operating income before
impairment
charge and loss on net monetary 438 664 249 803 341 466
position 059 410 079 31 178 018
------------------- ------------------- ------------------- -------------------
Impairment losses on loans
and advances financial
assets measured at amortised (11 048 (24 920 (11 048
cost 567) 236) 567) (4 011 952)
------------------- ------------------- ------------------- -------------------
(341 311 (114 114
482) 337) - -
Loss on net monetary position ----------------- ---------------- ---------------- ----------------
------------------- ------------------- ------------------- -------------------
110 768 330 417
Profit before taxation 86 304 010 837 512 27 166 066
------------------- ------------------- ------------------- -------------------
(70 006 (51 105 (44 513
030) 622) 700) (5 923 385)
Taxation ----------------- ----------------- ----------------- -----------------
------------------- ------------------- ------------------- -------------------
285 903
Profit for the period 16 297 980 59 663 215 812 21 242 681
------------------- ------------------- ------------------- -------------------
Other comprehensive income
----- ------------------- ------------------- ------------------- -------------------
Revaluation of land and 108 586 175 943
buildings, net of tax c 781 - 209 46 431
----- ------------------- ------------------- ------------------- -------------------
Translation gain on change
in functional currency,
net of tax 64 096 897 - 11 619 648 -
------------------- ------------------- ------------------- -------------------
---------------- ---------------- ---------------- ----------------
188 981 59 663 473 466 21 289
658 215 669 112
========= ========= ========= =========
----- ------------------- ------------------- ------------------- -------------------
Earnings/(losses) per share
(ZWL cents)
------------------- ------------------- ------------------- -------------------
- Basic and diluted d.4 98.74 361.46 1 732.12 128.70
----- ------------------- ------------------- ------------------- -------------------
- Headline d.4 (862.43) 230.70 188.37 111.41
----- ------------------- ------------------- ------------------- -------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
STATEMENT OF FINANCIAL POSITION
as at 31 December 2019
Inflation adjusted Historical Cost*
31 December 31 December 31 December 31 December
------ -------------------- ------------------- -------------------- -----------------
Note 2019 2018 2019 2018
------ -------------------- ------------------- -------------------- -----------------
ZWL ZWL ZWL ZWL
------ -------------------- ------------------- -------------------- -----------------
Restated
------ -------------------- ------------------- -------------------- -----------------
SHAREHOLDER'S FUNDS
------ -------------------- ------------------- -------------------- -----------------
Share capital e 161 906 161 906 16 506 16 506
------ -------------------- ------------------- -------------------- -----------------
Share premium 287 040 745 287 040 745 31 474 502 31 474 502
-------------------- ------------------- -------------------- -----------------
Functional currency translation
reserve 64 096 897 - 11 619 648 -
-------------------- ------------------- -------------------- -----------------
Revaluation reserve 108 586 781 - 176 079 950 136 741
-------------------- ------------------- -------------------- -----------------
217 387 032 221 025 066 329 398 472 47 267 030
Retained earnings ------------------ ---------------- ------------------ ---------------
-------------------- ------------------- -------------------- -----------------
677 273 361 508 227 717 548 589 078 78 894 779
Total shareholder's funds ----------------- ---------------- ------------------ ---------------
-------------------- ------------------- -------------------- -----------------
LIABILITIES
------ -------------------- ------------------- -------------------- -----------------
1 265 602 2 776 169 1 265 602 447 138
Deposits and other liabilities 395 240 395 216
-------------------- ------------------- -------------------- -----------------
Current tax liabilities 700 457 - 700 457 -
-------------------- ------------------- -------------------- -----------------
Deferred tax liabilities 112 700 544 - 97 666 693 -
-------------------- ------------------- -------------------- -----------------
Subordinated term loan 28 360 340 9 352 327 28 360 340 1 505 647
-------------------- ------------------- -------------------- -----------------
Amount owing to Holding 2 143 122 - 2 143 122 -
company ----------------- ----------------- ----------------- ---------------
-------------------- ------------------- -------------------- -----------------
1 409 506 2 785 521 1 394 473 448 643
858 567 007 863
Total liabilities ----------------- ----------------- ----------------- ---------------
-------------------- ------------------- -------------------- -----------------
Total shareholder's funds 2 086 780 3 293 749 1 943 062 527 538
and liabilities 219 284 085 642
=========== ========== =========== =========
------ -------------------- ------------------- -------------------- -----------------
ASSETS
------ -------------------- ------------------- -------------------- -----------------
112 440
Cash and cash equivalents f 492 304 267 698 426 589 492 304 267 912
------ -------------------- ------------------- -------------------- -----------------
Current tax assets - 1 306 292 - 210 302
-------------------- ------------------- -------------------- -----------------
117 249
Investment securities 107 166 155 728 294 727 107 166 155 434
-------------------- ------------------- -------------------- -----------------
Loans, advances and other 1 578 360 254 195
assets 850 026 347 157 815 429 137 558
-------------------- ------------------- -------------------- -----------------
Amount owing from Holding
Company - 3 467 901 - 558 303
-------------------- ------------------- -------------------- -----------------
Non - current assets held
for sale - 223 614 - 36 000
-------------------- ------------------- -------------------- -----------------
Unquoted investments 1 612 131 698 799 1 612 131 112 501
-------------------- ------------------- -------------------- -----------------
Investment properties g 229 867 982 130 134 664 229 867 982 20 950 606
------ -------------------- ------------------- -------------------- -----------------
Intangible assets 11 613 782 17 333 130 1 397 186 2 036 775
-------------------- ------------------- -------------------- -----------------
Property and equipment 394 189 555 128 300 867 295 285 227 17 844 069
-------------------- ------------------- -------------------- -----------------
- 7 202 541 - 1 904 182
Deferred tax assets ----------------- ----------------- ----------------- ---------------
-------------------- ------------------- -------------------- -----------------
Total assets 2 086 780 3 293 749 1 943 062 527 538
219 284 085 642
========== ========== ========== =========
-------------------- ------------------- -------------------- -----------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Inflation adjusted
Functional
Currency
Translation Revaluation Retained
Share Capital Share Premium Reserve Reserve Earnings Total
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
ZWL ZWL ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Balances at
1 January
2018 161 906 287 040 745 - - 166 006 337 453 208 988
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Profit for
the year - - - - 59 663 215 59 663 215
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Revaluation - - - - - -
of land and
buildings,
net of tax
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Dividends - - - - (4 644 485) (4 644 485)
paid ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Balances at
31 December
2018 161 906 287 040 745 - - 221 025 066 508 227 718
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Translation
gain on
change in
functional
currency,
net of tax - - 64 096 897 - - 64 096 897
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Profit for
the year - - - - 16 297 980 16 297 980
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - 108 586 781 - 108 586 781
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Dividend: - - - - (19 936 014) (19 936 014)
paid ---------------- ----------------- ----------------- ----------------- ---------------- -----------------
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
Balances at 161 906 287 040 745 64 096 897 108 586 781 217 387 032 677 273 361
31 December ========== ========== ========== ========== ========== ==========
2019
------------------ ------------------ ------------------ ------------------ ------------------- --------------------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Historical Cost*
Functional
Currency
Translation Revaluation Retained
Share Capital Share Premium Reserve Reserve Earnings Total
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
ZWL ZWL ZWL ZWL ZWL ZWL
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Balances at
1 January
2018 16 506 31 474 502 - 90 310 26 772 073 58 353 391
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Profit for
the year - - - - 21 242 681 21 242 681
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - 46 431 - 46 131
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Dividend - - - - (747 724) (747 724)
paid ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Balances at
31 December
2018 16 506 31 474 502 - 136 741 47 267 030 78 894 779
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Profit for
the year - - - - 285 903 812 285 903 812
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - 175 943 209 - 175 943 209
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Dividend
paid - - - (3 772 370) (3 772 370)
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Translation
gain on
change in
functional
currency, - - 11 619 648 - - 11 619 648
net of tax ---------------- ----------------- ----------------- ----------------- ----------------- -----------------
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
Balances at 16 506 31 474 502 11 619 648 176 079 950 329 398 472 548 589 078
31 December ========== ========== ========== ========== ========== ==========
2019
------------------ ------------------- -------------------- ------------------- ------------------- --------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
Inflation adjusted Historical Cost*
31 December 31 December 31 December 31 December
----------------------- ----------------------- ----------------------- ----------------------
2019 2018 2019 2018
----------------------- ----------------------- ----------------------- ----------------------
ZWL ZWL ZWL ZWL
----------------------- ----------------------- ----------------------- ----------------------
Restated
----------------------- ----------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
----------------------- ----------------------- ----------------------
Profit before taxation 86 304 010 110 768 837 330 417 512 27 166 066
----------------------- ----------------------- ----------------------- ----------------------
Non-cash items
----------------------- ----------------------- ----------------------- ----------------------
* Impairment losses on financial assets measured at
amortised cost 11 048 567 24 920 236 11 048 567 4 011 952
----------------------- ----------------------- ----------------------- ----------------------
(194 387
* Investment properties fair value adjustment (93 624 006) (19 523 429) 322) (2 551 436)
----------------------- ----------------------- ----------------------- ----------------------
* Profit on disposal of property and equipment - 139 122 - (22 396)
----------------------- ----------------------- ----------------------- ----------------------
* Profit on disposal of investment properties (584 149) (4 395 908) (584 149) (567 032)
----------------------- ----------------------- ----------------------- ----------------------
* Trade and other investments fair value gains (913 332) 316 323 (1 499 630) (10 154)
----------------------- ----------------------- ----------------------- ----------------------
* Impairment reversal on land and buildings - - (40 600) (76 661)
----------------------- ----------------------- ----------------------- ----------------------
* Depreciation (excluding Right of use assets) 15 427 213 11 991 839 2 307 360 1 370 312
----------------------- ----------------------- ----------------------- ----------------------
* Depreciation - Right of use assets 3 088 496 - 1 310 867 -
----------------------- ----------------------- ----------------------- ----------------------
* Interest capitalised on subordinated term loan 3 779 812 1 065 166 1 151 954 171 483
----------------------- ----------------------- ----------------------- ----------------------
* Amortisation of intangible assets 6 356 249 7 882 765 733 909 879 376
----------------------- ----------------------- ----------------------- ----------------------
(92 386 267) 128 510 (92 386 267) 20 689
* Unrealised foreign exchange loss/(gain) -------------------- ------------------- -------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
Operating cash flows before
changes in operating assets
and liabilities (61 503 405) 123 706 240 58 072 202 30 321 926
----------------------- ----------------------- ----------------------- ----------------------
Changes in operating assets
and liabilities
----------------------- ----------------------- ----------------------- ----------------------
(Decrease)/increase in deposits (1 809 709
and other liabilities 298) 617 889 994 530 528 880 90 143 854
----------------------- ----------------------- ----------------------- ----------------------
(348 675 (305 020
Decrease/(increase) in loans, 984 547 294 517) 105) (56 133 878)
advances and other assets -------------------- ------------------- -------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
(886 665
Net cash (used)/generated from 408) 402 507 937 283 580 977 64 331 902
operations -------------------- ------------------- ------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
Taxation
----------------------- ----------------------- ----------------------- ----------------------
(14 520 794
) (27 881 907) (9 079 118) (4 488 757)
Corporate tax paid -------------------- ------------------- -------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
(901 186
Net cash (outflow)/ inflow from 202) 374 626 030 274 501 860 59 843 145
operating activities -------------------- ------------------- ------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
----------------------- ----------------------- ----------------------- ----------------------
Proceeds on disposal of property
and equipment - 139 122 - 22 396
----------------------- ----------------------- ----------------------- ----------------------
Acquisition of intangible assets (636 901) (4 501 240) (94 320) (535 971)
----------------------- ----------------------- ----------------------- ----------------------
Acquisition of property and
equipment (35 323 914) (58 952 339) (24 308 497) (9 490 840)
----------------------- ----------------------- ----------------------- ----------------------
Acquisition of investment properties (1 939 045) (37 784 075) (351 515) (6 082 924)
----------------------- ----------------------- ----------------------- ----------------------
(Disposal)/Acquisition of investment (155 312
securities 621 128 566 399) 10 083 280 (25 004 013)
----------------------- ----------------------- ----------------------- ----------------------
Decrease in amount owing from
Holding Company 3 467 895 579 288 558 303 93 261
----------------------- ----------------------- ----------------------- ----------------------
Increase in amount owing to
Holding Company 10 733 345 - 2 143 122 -
----------------------- ----------------------- ----------------------- ----------------------
Proceeds on disposal of investment 5 888 719 29 826 660 5 888 719 4 801 846
properties ------------------- ------------------- ------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
(226 004
Net cash inflow /(outflow) from 603 318 667 982) (6 080 908) (36 196 245)
investing activities ------------------- ------------------- ------------------- -------------------
----------------------- ----------------------- ----------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------ ------------------- -------------------
Dividend paid (19 936 015) (6 382 843) (3 772 370) (747 724)
-------------------- ------------------ ------------------- -------------------
Payment of interest on
subordinated
term loan (803 062) (507 728) (180 450) (81 740)
-------------------- ------------------ ------------------- -------------------
(4 186 976) - (1 276 043) -
Repayment of lease liabilities ------------------ ---------------- ----------------- ----------------
-------------------- ------------------ ------------------- -------------------
Net cash outflow from financing (24 926 052) (6 890 571) (5 228 863) (829 464)
activities ------------------ --------------- ----------------- -----------------
-------------------- ------------------ ------------------- -------------------
Net (decrease)/ increase in (322 793 141 730 263 192
cash and cash equivalents 587) 477 089 22 817 436
-------------------- ------------------ ------------------- -------------------
Net foreign exchange and monetary
adjustments on cash and cash 116 671
equivalents 116 671 266 436 504 266 70 274
-------------------- ------------------ ------------------- -------------------
698 426 556 259 112 440 89 553
Cash and cash equivalents at 589 608 912 202
beginning of the year ------------------ ---------------- ---------------- ----------------
-------------------- ------------------ ------------------- -------------------
Cash and cash equivalents at
the end of the year (note f) 492 304 698 426 492 304 112 440
267 589 267 912
========== ========= ========== =========
-------------------- ------------------ ------------------- -------------------
ADDITIONAL INFORMATION ON OPERATIONAL
CASH FLOWS FROM INTEREST
------------------ ------------------- -------------------
199 550
Interest received 168 852 277 036 65 548 752 38 318 561
-------------------- ------------------ ------------------- -------------------
(48 055 (63 651 (15 089
Interest paid 909) 654) 895) (7 548 415)
-------------------- ------------------ ------------------- -------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2019
There are no material differences between the Bank and the
Holding company as the Bank is the principal operating subsidiary
of the Group. The notes to the financial statements under NMBZ
Holdings Limited are therefore the same as those of the Bank in
every material respect where applicable.
a. OTHER income
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------- ------------------- ------------------- -------------------
2019 2018 2019 2018
------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------- ------------------- ------------------- -------------------
Restated
------------------- ------------------- ------------------- -------------------
Trade and other investments
fair value gains 913 332 (316 323) 1 499 630 10 154
------------------- ------------------- ------------------- -------------------
Profit on disposal
of investment properties 584 149 4 395 908 584 149 567 032
------------------- ------------------- ------------------- -------------------
Profit on disposal
of property and equipment - 139 122 - 22 396
------------------- ------------------- ------------------- -------------------
Fair value gains on
investment properties 93 624 006 19 523 429 194 387 322 2 551 436
------------------- ------------------- ------------------- -------------------
Rental income 1 280 872 3 012 142 391 885 365 269
------------------- ------------------- ------------------- -------------------
Bad debts recovered 14 744 289 10 622 718 9 519 359 1 295 428
------------------- ------------------- ------------------- -------------------
Other operating income 1 459 818 1 752 130 240 294 171 806
------------------- ------------------- ------------------- -------------------
------------------ ------------------ ------------------ ------------------
112 606 39 129 126 206 622 4 983 521
446 ========== 639 ==========
========== ==========
------------------- ------------------- ------------------- -------------------
b. Operating EXPITURE
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----------------- ----------------- -----------------
2019 2018 2019 2018
----------------- ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- -----------------
Restated
----------------- ----------------- ----------------- -----------------
The operating profit is after recognising
the following:
----------------- ----------------- -----------------
116 124 130 911
Administration costs 211 642 55 305 935 15 955 591
----------------- ----------------- ----------------- -----------------
Audit fees:
----------------- ----------------- ----------------- -----------------
- Current year 1 580 232 755 184 993 686 98 991
----------------- ----------------- ----------------- -----------------
- Prior year 318 198 849 895 200 090 111 406
----------------- ----------------- ----------------- -----------------
Impairment reversal on
land and buildings* - - (40 600) (76 661)
----------------- ----------------- ----------------- -----------------
Depreciation - (excluding
Right of use assets) 15 427 213 11 991 839 2 307 360 1 370 312
----------------- ----------------- ----------------- -----------------
Amortisation of intangible
assets 6 356 249 7 882 765 733 909 879 376
----------------- ----------------- ----------------- -----------------
Depreciation - Right of
use assets 3 088 496 - 1 310 867 -
----------------- ----------------- ----------------- -----------------
Directors' remuneration 6 154 500 8 147 609 2 531 536 971 121
----------------- ----------------- ----------------- -----------------
- Fees for services as
directors 1 585 033 1 838 595 644 487 219 246
----------------- ----------------- ----------------- -----------------
- Expenses 127 149 149 410 80 767 17 364
----------------- ----------------- ----------------- -----------------
- Services rendered 4 442 318 6 159 603 1 806 282 734 511
----------------- ----------------- ----------------- -----------------
Staff costs - salaries,
allowances and related 128 926
costs 91 465 669 698 42 582 294 15 402 575
----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
240 474 289 465 105 925 34 712
168 631 077 711
========== ========== ========== ==========
----------------- ----------------- ----------------- -----------------
*The impairment reversal on land and buildings arose due to fair
value changes in the Bank's land and buildings measured using the
revaluation model.
c. Other comprehensive income
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----------------- ----------------- -----------------
2019 2018 2019 2018
----------------- ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- -----------------
Restated
----------------- ----------------- ----------------- -----------------
Translation gain on
change in functional
currency 86 325 787 - 15 649 358 -
----------------- ----------------- ----------------- -----------------
Tax effect (22 228 890) - (4 029 710) -
----------------- ----------------- ----------------- -----------------
--------------- --------------- --------------- ---------------
64 096 897 - 11 619 648 -
--------------- --------------- --------------- ---------------
----------------- ----------------- ----------------- -----------------
Revaluations of land
and buildings 146 244 823 - 236 960 551 62 533
----------------- ----------------- ----------------- -----------------
Tax effect (37 658 042) - (61 017 342) (16 102)
----------------- ----------------- ----------------- -----------------
--------------- ---------------
108 586 ---------------- 175 943 ---------------
781 - 209 46 431
--------------- --------------- --------------- ---------------
----------------- ----------------- ----------------- -----------------
--------------- --------------- --------------- ---------------
172 683 - 187 562 46 431
678 ========= 857 =========
========= =========
----------------- ----------------- ----------------- -----------------
d. EARNINGS PER SHARE
The calculation of earnings per share is based on the following
figures:
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
--------------------------- ------------------- ------------------- ------------------- -------------------
2019 2018 2019 2018
--------------------------- ------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
--------------------------- ------------------- ------------------- ------------------- -------------------
Restated
--------------------------- ------------------- ------------------- ------------------- -------------------
d.1 Earnings/(losses)
--------------------------- ------------------- ------------------- ------------------- -------------------
Profit for the
year 16 297 980 59 663 215 285 903 812 21 242 681
--------------------------------- ------------------- ------------------- ------------------- -------------------
Headline earnings (142 353 508) 38 078 986 31 091 848 18 388 988
--------------------------------- ------------------- ------------------- ------------------- -------------------
d.2 Number of shares
--------------------------- ------------------- ------------------- ------------------- -------------------
Weighted average
shares in issue 16 506 050 16 506 050 16 506 050 16 506 050
--------------------------------- ------------------- ------------------- ------------------- -------------------
d.3 Headline (losses)/ earnings
------------------------------------------------ ------------------- ------------------- -------------------
Profit for the
period 16 297 980 59 663 215 285 903 812 21 242 681
--------------------------------- ------------------- ------------------- ------------------- -------------------
Add/(deduct) non-recurring
items
------------------------------------------------ ------------------- ------------------- -------------------
Trade investments
fair value gains (913 332) 316 323 (1 499 630) (10 154)
--------------------------------- ------------------- ------------------- ------------------- -------------------
Profit on disposal
of property and
equipment - (139 122) - (22 396)
--------------------------------- ------------------- ------------------- ------------------- -------------------
Profit on disposal
of investment properties (584 149) (4 395 908) (584 149) (567 032)
--------------------------------- ------------------- ------------------- ------------------- -------------------
Unrealised foreign
exchange revaluation
gains (92 386 267) 128 510 (92 386 267) 20 689
--------------------------------- ------------------- ------------------- ------------------- -------------------
Fair value gains
on investment properties (93 624 006) (19 523 429) (194 387 322) (2 551 436)
--------------------------------- ------------------- ------------------- ------------------- -------------------
28 856 265 2 029 397 34 045 403 272 755
Tax thereon ----------------- ----------------- ----------------- -----------------
--------------------------------- ------------------- ------------------- ------------------- -------------------
Headline earnings (142 353 508) 38 078 986 31 091 848 18 388 988
=========== =========== =========== ===========
--------------------------- ------------------- ------------------- ------------------- -------------------
d.4 Earnings/(losses) per share
(ZWL cents)
------------------------------------------------ ------------------- ------------------- -------------------
Basic and diluted 98.74 361.46 1 732.12 128.70
--------------------------------- ------------------- ------------------- ------------------- -------------------
Headline (862.43) 230.70 188.37 111.41
--------------------------------- ------------------- ------------------- ------------------- -------------------
e. SHARE CAPITAL
e.1 Authorised
The authorised ordinary share capital at 31 December 2019 is at
the historical cost figure of ZWL25 000 (2018 - ZWL25 000)
comprising 25 million ordinary shares of ZWL0.001 each.
e.2 Issued and fully paid
The issued share capital at 31 December 2019 is at the inflation
adjusted figure of ZWL161 906 (2018 restated - ZWL161 906) and
historical cost of ZWL16 506 (2018 - 16 506) comprising 16 506 050
(2018 - 16 506 050) ordinary shares of ZWL0.001 each in historical
cost terms.
f. CASH AND CASH EQUIVALENTS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2019 2018 2019 2018
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Balances with the Central 267 032 553 329 267 032
Bank* 753 510 753 89 081 480
-------------------- -------------------- -------------------- --------------------
Current, nostro accounts 160 209 160 209
and cash 897 83 397 817 897 13 426 360
-------------------- -------------------- -------------------- --------------------
Interbank placements (see
below) 65 500 000 62 114 988 65 500 000 10 000 000
-------------------- -------------------- -------------------- --------------------
Expected Credit loss allowance (438 383) (415 726) (438 383) (66 928)
(see below) ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------
492 304 698 426 492 304 112 440
267 589 267 912
========= ========= ========= =========
-------------------- -------------------- -------------------- --------------------
Interbank placements
-------------------- -------------------- -------------------- --------------------
Interbank placements 65 500 000 62 114 988 65 500 000 10 000 000
-------------------- -------------------- -------------------- --------------------
Expected Credit Loss allowance
- Stage 1 (438 383) (415 726) (438 383) (66 928)
-------------------- -------------------- -------------------- --------------------
* ECL charged at 1 January 2018 (415 726) (241 552) (66 928) (26 770)
-------------------- -------------------- -------------------- --------------------
* Monetary adjustment 348 796 75 267 - -
-------------------- -------------------- -------------------- --------------------
* ECL charged through profit or loss (371 455) (249 441) (371 455) (40 158)
-------------------- -------------------- -------------------- --------------------
---------------- ---------------- ---------------- ---------------
65 061 617 61 669 262 65 061 617 9 933 072
========= ========= ========= =========
-------------------- -------------------- -------------------- --------------------
* Included in balances with the Central Bank is an amount of
USD13 840 412 (ZWL232 409 731 equivalent) transferred by the Bank
in respect of legacy debt settlements as directed by the RBZ
directive RU28 of 2019.
g. INVESTMENT PROPERTIES
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
---------------- ---------------- ---------------- ----------------
2019 2018 2019 2018
---------------- ---------------- ---------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ---------------- ---------------- ----------------
Restated
---------------- ---------------- ---------------- ----------------
130 134 112 544
At 1 January 664 359 20 950 606 18 977 000
---------------- ---------------- ---------------- ----------------
Additions 1 939 045 37 784 075 351 515 6 082 924
---------------- ---------------- ---------------- ----------------
(25 430
Disposals (5 304 570) 752) (5 304 570) (4 360 754)
---------------- ---------------- ---------------- ----------------
194 387
Fair value gains 93 624 006 19 523 429 322 2 551 436
---------------- ---------------- ---------------- ----------------
Reclassification from
non-current assets held
for sale 180 000 - 180 000 -
---------------- ---------------- ---------------- ----------------
Reclassification to property (14 286
and equipment - 447) - (2 300 000)
---------------- ---------------- ---------------- ----------------
Translation gain on change
in functional currency 9 294 837 - 19 303 109 -
---------------- ---------------- ---------------- ----------------
--------------- --------------- --------------- ---------------
At 31 December 2019 229 867 130 134 229 867 20 950
982 664 982 606
========= ========= ========= =========
---------------- ---------------- ---------------- ----------------
Investment properties comprise commercial properties and
residential properties that are leased out to third parties and
land held for future development. No properties were
encumbered.
Rental income amounting to ZWL1 280 872 (2018 - ZWL3 012 142)
was received and no operating expenses were incurred on the leased
investment properties in the current year due to the net leasing
arrangement on the properties.
Included in investment properties are properties which were
acquired as part of the foreclosure process with marketability
restrictions measured at ZWL4 668 863 as at 31 December 2019. The
Bank has no restrictions on the realisability of all the remaining
investment properties and no contractual obligations to purchase,
construct or develop the investment properties or for repairs,
maintenance and enhancements.
Measurement of fair value
Fair value hierarchy
The fair value of the Bank's investment properties as at 31
December 2019 has been arrived at on the basis of valuations
carried out by independent professional valuers, PMA Real Estate
(Private) Limited. The valuation which conforms to International
Valuation Standards, was in terms of the policy as set out in the
accounting policies section and was derived with reference to
market information close to the date of the valuation.
Level 3
The fair value for investment properties of ZWL229 867 982 (2018
- restated ZWL130 134 664) has been categorised under level 3 in
the fair value hierarchy based on the inputs used for the valuation
technique described below.
The following shows reconciliation between the opening and
closing balances for level 3 fair values:
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
---------------- ---------------- ---------------- ----------------
2019 2018 2019 2018
---------------- ---------------- ---------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ---------------- ---------------- ----------------
Restated
---------------- ---------------- ---------------- ----------------
130 134 112 544
At 1 January 664 359 20 950 606 18 977 000
---------------- ---------------- ---------------- ----------------
Additions 1 939 045 37 784 075 351 515 6 082 924
---------------- ---------------- ---------------- ----------------
(25 430
Disposals (5 304 570) 752) (5 304 570) (4 360 754)
---------------- ---------------- ---------------- ----------------
194 387
Fair value gains 93 624 006 19 523 429 322 2 551 436
---------------- ---------------- ---------------- ----------------
Reclassification from non-current
assets held for sale 180 000 - 180 000 -
---------------- ---------------- ---------------- ----------------
Reclassification to property (14 286
and equipment - 447) - (2 300 000)
---------------- ---------------- ---------------- ----------------
Translation gain on change
in functional currency 9 294 837 - 19 303 109 -
---------------- ---------------- ---------------- ----------------
--------------- --------------- --------------- ---------------
At 31 December 2019 229 867 130 134 229 867 20 950
982 664 982 606
========= ========= ========= =========
---------------- ---------------- ---------------- ----------------
The values were arrived at by applying yield rates of 5% on
rental values of between ZWL64 - ZWL112 per square metre. The
properties are leased out under operating lease to various
tenants.
The values were arrived at by applying yield rates of 5% on
rental values of between ZWL64 - ZWL112 per square metre. The
properties are leased out under operating lease to various
tenants.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of investment properties, as well as the
significant unobservable inputs used.
Valuation Significant unobservable inter-relationship between
technique inputs key unobservable inputs
and fair value measurement
The The estimated fair value
investment * Weighted average expected market rental growth (5%); would increase /(decrease)
method if:
Discounted * expected market rental growth were higher/ (lower);
cash flows * Void period (average 3 months after the end of each
was used to lease);
value all * void periods were shorter/(longer);
income
producing * Occupancy rate (55%); and
properties. * the occupancy rates were higher /(lower); and
The direct * Average market yield of 10%.
comparison * the risk adjusted discount rates were lower/
method was (higher).
applied on * Marketability restrictions for level 3 items due to
all underlying contractual agreements with third parties
residential .
properties.
----------------------------------------------------------- ----------------------------------------------------------
Below is an indication of the sensitivity analysis at different
discount rates:-
Change in fair value
Change in rate December 2019 December 2018
-------------- --------------
ZWL ZWL
-------------- --------------
+5% 18 654 576 7 241 473
-------------- --------------
+3% 11 192 736 4 344 880
-------------- --------------
+1% 3 730 912 1 448 293
-------------- --------------
-1% -3 730 912 - 1 448 293
-------------- --------------
-3% -11 192 736 - 4 344 880
-------------- --------------
-5% -18 654 576 - 7 241 473
-------------- --------------
h. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These financial statements are the responsibility of the
directors. This responsibility includes the setting up of internal
controls and risk management processes, which are monitored
independently. The information contained in these financial
statements has been prepared on the going concern basis and is in
accordance with the provisions of the Companies Act (Chapter 24:03)
of Zimbabwe, the Banking Act (Chapter 24:20) of Zimbabwe and
International Financial Reporting Standards.
2. CORPORATE GOVERNANCE
The Bank adheres to principles of corporate governance derived
from the National Code on Corporate Governance Zimbabwe, King IV
Report, the United Kingdom Combined Code and Reserve Bank of
Zimbabwe corporate governance guidelines. The Bank is cognisant of
its duty to conduct business with due care and in good faith in
order to safeguard all stakeholders' interests.
Board and Director evaluations are carried out an annual basis,
wherein the effectiveness of the Board is reviewed, including its
gender and skills mix. Furthermore, the independence of Independent
Non-Executive Directors is reviewed on an annual basis.
The Bank has in place an Ethics Charter ("Code of Ethics") that
all Board and staff members are required to adhere to. Also the
Bank adheres to its Environmental and Social Risk Management
Framework, wherein its main objectives are to:
-- Identify and assess environmental and social risks and
opportunities associated with a Client's activities and its sphere
of influence;
-- Promote improved social and environmental performance of a Client's companies; and
-- Avoid, or where avoidance is not possible, minimize,
mitigate, or compensate for adverse impacts on workers, affected
communities, and the environment.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and
expertise on the Board. Non-executive directors are of such calibre
as to provide independence to the Board. The Chairman of the Board
is an independent non-executive director. The Board is supported by
mandatory committees in executing its responsibilities. The Board
meets at least quarterly to assess risk, review performance and
provide guidance to management on both operational and policy
issues.
The Board conducts an annual peer based evaluation on the
effectiveness of its activities. The process involves the members
evaluating each other collectively as a board and individually as
members. The evaluation, as prescribed by the RBZ, takes into
account the structure of the board, effectiveness of committees,
strategic leadership, corporate social responsibility, attendance
and participation of members and weaknesses noted. Remedial plans
are invoked to address identified weaknesses with a view to
continually improve the performance and effectiveness of the Board
and its members.
3.1 Directors' attendance (NMB Bank Limited Board is the same as
the NMBZ Holdings Limited Board)
Board of Audit Risk Asset and Loans Human Credit Head Office
Directors Committee Management Liability Review Resources, Committee Project
Management Committee Remuneration Sub-Committee
Committee and
(ALCO) & Nominations
Finance Committee
Committee
Mr. B. A.
Chikwanha 4 4 4 4 4 4 5 5
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Mr. B.
Ndachena (E) 4 4 4 4 5 5
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Mr. B. P.
Washaya (E) 4 4 4 4 4 4 5 5
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Ms. S.
Chitehwe 4 4 5 4 4 3 4 4 5 4
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Mr. J.
Tichelaar 4 3 4 3 4 3 4 3 4 3
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Mr. J. de la
Fargue 4 4 4 4 4 4 4 4 5 5 5 5
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Ms. J.
Maguranyanga 4 4 5 5 4 4 4 4
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Mr. C.
Chikaura 4 4 5 5 4 4 4 4 4 4 5 5 5 5
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
Ms. C. Glover 4 3 4 3 4 3 4 3
--- -------- --- -------- --- --------- ---------- --- -------- --- ---------- --- -------- ---- -----------
KEY
Meetings planned
Meetings attended
(E) Executive.
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Board has established the Board Asset and Liability
Management Committee (ALCO) and the Board Risk and Compliance
Committee, which are responsible for defining the Group's risk
universe, developing policies and monitoring implementation. The
Board also has the Board Credit Committee (BCC) which is
responsible for sanctioning credits and the Board Loans Review
Committee (LRC), which is responsible for monitoring asset quality
and adherence to the credit risk management policy.
Risk management is linked logically from the level of individual
transactions to the Group level. Risk management activities broadly
take place simultaneously at the following different hierarchy
levels:
a) Strategic Level: This involves risk management functions
performed by senior management and the board of directors. It
includes the definition of risk, ascertaining the Group's risk
appetite, formulating strategy and policy for managing risk and
establishes adequate systems and controls to ensure overall risk
remains within acceptable levels and is adequately compensated.
b) Macro Level: It encompasses risk management within a business
area or across business lines. These risk management functions are
performed by middle management.
c) Micro Level: This involves "On-the-line" risk management
where risks are actually created. These are the risk management
activities performed by individuals who assume risk on behalf of
the organisation such as Treasury Front Office, Corporate Banking,
Retail banking etc. The risk management in these areas is confined
to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing
pillars, namely:
a) adequate board and senior management oversight;
b) adequate strategy, policies, procedures and limits;
c) adequate risk identification, measurement, monitoring and information systems; and
d) comprehensive internal controls and independent reviews.
4.1 Credit risk
Credit risk is the risk that a financial contract will not be
honoured according to the original set of terms. The risk arises
when borrowers or counterparties to a financial instrument fail to
meet their contractual obligations. The Group's general credit
strategies centre on sound credit granting process, diligent credit
monitoring and strong loan collection and recovery. There is a
separation between loan collection and recovery. There is a
separation between loan granting and credit monitoring to ensure
independency and effective management of the loan portfolio. The
Board has put in place sanctioning committees with specific credit
approval limits. The Credit Management department does the initial
review of all applications before recommending them to the
Executive Credit Committee and finally the Board Credit Committee
depending on the loan amount. The Group has in place a Board Loans
Review Committee responsible for reviewing the quality of the loan
book and adequacy of loan loss provisions.
The Group has an automated credit processes from loan
origination, appraisal, monitoring and collections. The system has
a robust loan monitoring and reporting module which is critical in
managing credit risk. In view of the group's move into the mass
market, retail credit has become a key area of focus. The group has
put in place robust personal loan monitoring systems and structures
to mitigate retail loan delinquencies. This includes a rigorous
scheme assessment and a dedicated pre-delinquency team and a
separate recoveries team.
Credit Management
-- Responsible for evaluating & approving credit proposals from the business units.
-- Together with business units, has primary responsibility on
the quality of the loan book.
-- Reviewing credit policy for approval by the Board Credit Committee.
-- Reviewing business unit level credit portfolios to ascertain
changes in the credit quality of individual customers or other
counterparties as well as the overall portfolio and detect unusual
developments.
-- Approve initial customer internal credit grades or recommend
to the Credit Committees for approval.
-- Setting the credit risk appetite parameters.
-- Ensure the Group adheres to limits, mandates and its credit policy.
-- Ensure adherence to facility covenants and conditions of
sanction e.g. annual audits, gearing levels, management
accounts.
-- Manage trends in asset and portfolio composition, quality and
growth and non-performing loans.
-- Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits.
Credit Monitoring and Financial Modelling
-- Independent credit risk management.
-- Independent on-going monitoring of individual credit and portfolios.
-- Triggers remedial actions to protect the interests of the
Group, if appropriate (e.g. in relation to deteriorated
credits).
-- Monitors the on-going development and enhancement of credit
risk management across the Group.
-- Reviews the Internal Credit Rating System.
-- On-going championing of the Basel II methodologies across the Group.
-- Ensures consistency in the rating processes and performs
independent review of credit grades to ensure they conform to the
rating standards.
-- Confirm the appropriateness of the credit risk strategy and
policy or recommends necessary revisions in response to
changes/trends identified.
Credit Administration
-- Prepares and keeps custody of all facility letters.
-- Security registration.
-- Safe custody of security documents.
-- Ensures all conditions of sanction are fulfilled before
allowing drawdown or limit marking.
-- Review of credit files for documentation compliance e.g. call
reports, management accounts.
Recoveries
The recoveries unit is responsible for all collections and
ensures that the Group maximises recoveries from Non-Performing
Loans (NPLs) and loans and advances written off.
4.2 Market risk
This is the exposure of the Group's on and off balance sheet
positions to adverse movement in market
prices resulting in a loss in earnings and capital. The market
prices will range from money market
(interest rate risk), foreign exchange and equity markets in
which the bank operates. The Group has in place a Management Asset
and Liability Committee (ALCO) which monitors market risk and
recommends the appropriate levels to which the Group should be
exposed at any time. Net Interest
Margin is the primary measure of interest rate risk, supported
by periodic stress tests to assess the
Group's ability to withstand stressed market conditions. On
foreign exchange risk, the bank monitors
currency mismatches and make adjustments depending on exchange
rate movement forecast. The
mismatches per currency are contained within 5% of the Group's
capital position.
Management ALCO meets on a monthly basis and operates within the
prudential guidelines and policies established by the Board ALCO.
The Board ALCO is responsible for setting exposure thresholds and
limits, and meets on a quarterly basis.
4.3 Liquidity risk
Liquidity risk is the risk of financial loss arising from the
inability of the Group to fund asset increases or meet obligations
as they fall due without incurring unacceptable costs or losses.
The Group identifies this risk through maturity profiling of assets
and liabilities and assessment of expected cash flows and the
availability of collateral which could be used if additional
funding is required.
The daily liquidity position is monitored and regular liquidity
stress testing is conducted under a variety of scenarios covering
both normal and more severe market conditions. All liquidity
policies and procedures are subject to review and approval by the
Board ALCO.
The key measure used by the bank for managing liquidity risk is
the ratio of net liquid assets to deposits to customers. The Group
also actively monitors its loans to deposit ratio against a set
threshold in a bid to monitor and limit funding risk. The group
monitors funding concentration risk by reviewing the ratio of top
20 depositors to the total funding. Funding mix is also monitored
by monitoring the contribution of wholesale and demand deposits to
the total funding for the bank. Liquidity risk is monitored through
a daily liquidity reports produced by the Risk Management
department. This is augmented by a monthly management ALCO and a
quarterly board ALCO meetings.
4.4 Operational risk
This risk is inherent in all business activities and is the risk
of loss arising from inadequate or failed
internal processes, people, systems or from external events. The
Group utilises monthly Key Risk Indicators to monitor operational
risk in all units. Further to this, the Group has an elaborate
Operational Loss reporting system in which all incidents with a
material impact on the well-being of the Group are reported to risk
management. The risk department conducts periodic risk assessments
on all the units within the Group aimed at identifying the top
risks and ways to minimise their impact. There is a Board Risk and
Compliance Committee whose function is to ensure that this risk is
minimised. The Risk Committee with the assistance of the internal
audit function and the Risk Management department assesses the
adequacy of the internal controls and makes the necessary
recommendations to the Board.
4.5 Legal and compliance risk
Legal risk is the risk from uncertainty due to legal actions or
uncertainty in the applicability or interpretation of contracts,
laws or regulations. Legal risk may entail such issues as contract
formation, capacity and contract frustration. Compliance risk is
the risk arising from non - compliance with laws and regulations.
To manage this risk, permanent relationships are maintained with
firms of legal practitioners and access to legal advice is readily
available to all departments. The Group has an independent
compliance function which is responsible for identifying and
monitoring all compliance issues and ensures the Group complies
with all regulatory and statutory requirements.
4.6 Reputational risk
Reputation risk is the risk of loss of business as a result of
negative publicity or negative perceptions
by the market with regards to the way the Group conducts its
business. To manage this risk, the Group
strictly monitors customers' complaints, continuously train
staff at all levels, conducts market surveys
and periodic reviews of business practices through its Internal
Audit department. The directors are
satisfied with the risk management processes in the Group as
these have contributed to the minimisation
of losses arising from risky exposures.
4.7 Strategic risk
This refers to current and prospective impact on a Group's
earnings and capital arising from adverse business decisions or
implementing strategies that are not consistent with the internal
and external environment. To manage this risk, the Group always has
a strategic plan that is adopted by the Board of Directors.
Further, attainment of strategic objectives by the various
departments is monitored periodically at management level.
4.8 Environmental, Social & Governance (ESG) Risk
Environment, Social and Governance (ESG) or sustainability risk
is the consideration of non-financial risks arising from the
environment (flora and fauna) as well as societal issues. The Group
is not only concerned about making profits, but is also keen on
assessing the impact it has on the planet and the people it
interacts with. There is a growing number of frameworks and
standards aimed at addressing global concerns on sustainability.
Global risk reports show that environmental and societal risks have
overtaken economic and geopolitical risks in terms of both
likelihood and impact.
To manage this risk, during the reporting period, the Bank
appointed an ESG risk manager within the Risk Department. This
function is responsible for ESG policy implementation,
coordination, reviews and reporting. The Group commits to
responsible financing through abiding to its Exclusion List and
continues to enhance its ESG policies, processes and procedures as
well as to train staff on sustainability issues. The Group conducts
risk reviews to identify and measure sustainability risks and in
the process implement relevant and adequate controls around these
risks.
4.9 Risk Ratings
4.9.1 Reserve Bank of Zimbabwe Ratings
The Reserve Bank of Zimbabwe conducted an onsite inspection on
the Group's banking subsidiary on 24 November 2016. Below are the
final ratings from the onsite examination.
4.9.1.1 CAMELS* Ratings
Latest RBS** Previous RBS Previous RBS
CAMELS Component Ratings Ratings Ratings
24/11/2016 30/06/2013 31/01/2008
C apital Adequacy 2 2 4
------------- ------------- -------------
A sset Quality 3 4 2
------------- ------------- -------------
M anagement 3 3 3
------------- ------------- -------------
E arnings 2 2 3
------------- ------------- -------------
L iquidity 3 2 3
------------- ------------- -------------
S ensitivity to
Market Risk 2 2 3
------------- ------------- -------------
Composite Rating 3 3 3
------------- ------------- -------------
*CAMELS is an acronym for Capital Adequacy, Asset quality,
Management, Earnings, Liquidity and Sensitivity to Market Risk.
CAMELS rating system uses a rating scale of 1-5, where '1' is
Strong, '2' is Satisfactory, '3' is Fair, '4' is Weak and '5' is
Critical.
**RBS stands for Risk-Based Supervision.
4.9.1.2 Summary RAS ratings
Latest RAS*** Previous RAS Previous
RAS Component Ratings Ratings RAS Ratings
24/11/2016 30/06/2013 31/01/2008
Overall Inherent Risk High Moderate Moderate
-------------- ------------- -------------
Overall Risk Management Acceptable Acceptable Acceptable
Systems
-------------- ------------- -------------
Overall Composite Risk Moderate Moderate Moderate
-------------- ------------- -------------
Direction of Overall Composite Stable Stable Stable
Risk
-------------- ------------- -------------
*** RAS stands for Risk Assessment System.
4.9.1.3 Summary risk matrix - 24 November 2016 on - site
examination
Level of Inherent Adequacy of Overall Direction
Type of Risk Risk Risk Management Composite of Overall
Systems Risk Composite
Risk
Credit High Acceptable High Stable
------------------ ----------------- ----------- ------------
Liquidity High Acceptable High Stable
------------------ ----------------- ----------- ------------
Interest Rate Moderate Acceptable Moderate Stable
------------------ ----------------- ----------- ------------
Foreign Exchange Low Acceptable Low Stable
------------------ ----------------- ----------- ------------
Strategic Risk Moderate Acceptable Moderate Stable
------------------ ----------------- ----------- ------------
Operational Risk Moderate Acceptable Moderate Stable
------------------ ----------------- ----------- ------------
Legal & Compliance Moderate Acceptable Moderate Stable
------------------ ----------------- ----------- ------------
Reputation High Acceptable Moderate Stable
------------------ ----------------- ----------- ------------
Overall Moderate Acceptable Moderate Stable
------------------ ----------------- ----------- ------------
KEY
Level of Inherent Risk
Low - reflects a lower than average probability of an adverse
impact on a banking institution's capital and earnings. Losses in a
functional area with low inherent risk would have little negative
impact on the banking institution's overall financial
condition.
Moderate - could reasonably be expected to result in a loss
which could be absorbed by a banking institution in the normal
course of business.
High - reflects a higher than average probability of potential
loss. High inherent risk could reasonably be expected to result in
a significant and harmful loss to the banking institution.
Adequacy of Risk Management Systems
Weak - risk management systems are inadequate or inappropriate
given the size, complexity and risk profile of the banking
institution. Institution's risk management systems are lacking in
important ways and therefore a cause of more than normal
supervisory attention. The internal control systems will be lacking
in important aspects particularly as indicated by continued control
exceptions or by the failure to adhere to written policies and
procedures.
Acceptable - management of risk is largely effective but lacking
to some modest degree. While the institution might be having some
minor risk management weaknesses, these have been recognised and
are being addressed. Management information systems are generally
adequate.
Strong - management effectively identifies and controls all
types of risk posed by the relevant functional areas or per
inherent risk. The board and senior management are active
participants in managing risk and ensure appropriate policies and
limits are put in place. The policies comprehensively define the
bank's risk tolerance, responsibilities and accountabilities are
effectively communicated.
Overall Composite Risk
Low - would be assigned to low inherent risk areas. Moderate
risk areas may be assigned a low composite risk where internal
controls and risk management systems are strong and effectively
mitigate much of the risk.
Moderate - risk management systems appropriately mitigates
inherent risk. For a given low risk area, significant weaknesses in
the risk management systems may result in a moderate composite risk
assessment.
On the other hand, a strong risk management system may reduce
the risk so that any potential financial loss from the activity
would have only a moderate negative impact on the financial
condition of the organisation.
High - risk management systems do not significantly mitigate the
high inherent risk. Thus, the activity could potentially result in
a financial loss that would have a significant impact on the bank's
overall condition.
Direction of Overall Composite Risk
Increasing - based on the current information, risk is expected
to increase in the next 12 months.
Decreasing - based on current information, risk is expected to
decrease in the next 12 months.
Stable - based on the current information, risk is expected to
be stable in the next 12 months.
4.9.2 External Credit Ratings
The external credit ratings were given by Global Credit Rating
(GCR), a credit rating agency accredited with the Reserve Bank of
Zimbabwe.
Security class 2019 2018
Long term BB- BBB-
The current rating expires in August 2020.
4.10 Regulatory Compliance
There was no regulatory breach resulting in penalties during the
period under review. The Bank is committed to comply with and
adhere to all regulatory requirements.
5. CAPITAL MANAGEMENT
The primary objective of the Bank's capital management is to
ensure that the Bank complies with the RBZ requirements. In
implementing the current capital requirements, the RBZ requires the
Banking subsidiary to maintain a prescribed ratio of total capital
to total risk weighted assets.
Regulatory capital consists of Tier 1 capital, which comprises
share capital, share premium, retained earnings (including current
year profit), statutory reserve and other equity reserves. The
other component of regulatory capital is Tier 2 capital, which
includes subordinated term debt, revaluation reserves and portfolio
provisions.
Tier 3 capital relates to an allocation of capital to market and
operational risk.
Various limits are applied to elements of the capital base. The
core capital (Tier 1) shall comprise not less than 50% of the
capital base and the regulatory reserves and portfolio provisions
are limited to 1.25% of total risk weighted assets.
The Bank's regulatory capital position at 31 December was as
follows:
Inflation adjusted Historical Cost
2019 2018 2019 2018
-------------------- ------------------- -------------------- -----------------
ZWL ZWL ZWL ZWL
-------------------- ------------------- -------------------- -----------------
Restated
-------------------- ------------------- -------------------- -----------------
Share capital 161 906 161 906 16 506 16 506
-------------------- ------------------- -------------------- -----------------
287 040
Share premium 287 040 745 745 31 474 502 31 474 502
-------------------- ------------------- -------------------- -----------------
221 025 329 398
Retained earnings 217 387 032 066 472 47 267 030
-------------------- ------------------- -------------------- -----------------
(20 234
Fair value gains on investment - 771) - (3 257 631)
properties ----------------- ---------------- ----------------- --------------
-------------------- ------------------- -------------------- -----------------
487 992 360 889
504 589 683 947 480 75 500 407
-------------------- ------------------- -------------------- -----------------
Less: capital allocated (24 142 (13 706
for market and operational (13 706 269) 847) 269) (3 886 799)
risk ----------------- ---------------- ----------------- --------------
-------------------- ------------------- -------------------- -----------------
463 850 347 183
Tier 1 capital 490 883 414 099 211 71 613 608
-------------------- ------------------- -------------------- -----------------
Tier 2 capital (subject
to limit as per Banking 205 935
Regulations) 193 856 644 50 068 140 382 8 197 298
-------------------- ------------------- -------------------- -----------------
Fair value gains on investment
properties - 20 234 771 - 3 257 631
-------------------- ------------------- -------------------- -----------------
Functional currency translation
resrv 64 096 897 - 11 619 648 -
-------------------- ------------------- -------------------- -----------------
Fair valuation gains on 176 079
land and buildings 108 586 781 - 950 136 741
-------------------- ------------------- -------------------- -----------------
Subordinated debt 294 339 1 876 817 294 339 302 152
-------------------- ------------------- -------------------- -----------------
Stage 1 & 2 ECL provisions
- (limited to 1,25% of
risk weighted assets) 20 878 627 27 956 552 17 941 445 4 500 774
-------------------- ------------------- -------------------- -----------------
513 918 553 118
Tier 1 & 2 capital 684 740 058 239 593 9 810 906
-------------------- ------------------- -------------------- -----------------
Tier 3 capital (sum of
market and operational 24 142 13 706
risk capital) 13 706 269 847 269 3 886 799
-------------------- ------------------- -------------------- -----------------
----------------- --------------- --------------- --------------
Total capital base 698 446 538 061 566 824 83 697 705
328 087 862 =========
========== ========== =========
-------------------- ------------------- -------------------- -----------------
1 568 817 2 236 524 1 435 315 360 061
Total risk weighted assets 144 251 609 931
-------------------- ------------------- -------------------- -----------------
Tier 1 ratio 31.29% 20.74% 24.19% 19.89%
-------------------- ------------------- -------------------- -----------------
Tier 2 ratio 12.36% 2.24% 14.35% 2.28%
-------------------- ------------------- -------------------- -----------------
Tier 3 ratio 0.87% 1.08% 0.95% 1.08%
-------------------- ------------------- -------------------- -----------------
Total capital adequacy
ratio 44.52% 24.06% 39.49% 23.25%
-------------------- ------------------- -------------------- -----------------
RBZ minimum required 12% 12% 12% 12%
-------------------- ------------------- -------------------- -----------------
6. SEGMENT INFORMATION
For management purposes, the Bank is organised into five
operating segments based on products and services as follows:
Retail Banking Individual customer's deposits and consumer
overdrafts, credit card facilities and
funds transfer facilities.
Corporate Banking Loans and other credit facilities and
deposit and current accounts for corporate
and institutional customers.
Treasury Money market investment, securities trading,
accepting and discounting of instruments
and foreign currency trading.
International Banking Handles the Bank's foreign currency denominated
banking business and manages relationships
with correspondent.
Digital Banking Handles the Bank's Digital Banking products
including Card and POS Services.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss which in certain
respects is measured differently from operating profit or loss in
the financial statements. Income taxes are managed on a bank wide
basis and are not allocated to operating segments.
Interest income is reported net as management primarily relies
on net interest revenue as a performance measure, not the gross
income and expense.
Transfer prices between operating segments are on arm's length
basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or
counterparty amounted to 10% or more of the Bank's total revenue in
2019 and 2018.
The following table presents income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
Retail Banking Corporate Treasury International Digital
Inflation Banking Banking Banking Banking Other Total
adjusted
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
For the year
ended 31
December
2019
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Income
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Third party 433 612 730 833
income 80 752 147 88 765 652 35 363 708 7 984 485 84 355 453 528 973
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Interest and
similar (19 832 (27 722 (51 695
expense (4 141 148) 183) 415) - - - 746)
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
----------------- ---------------- ----------------- ---------------
------------ 68 933 ----------------- ---------------- 84 355 433 612 679 138
Net operating 76 610 999 468 7 641 293 7 984 485 453 528 227
income --------------- --------------- ----------------- ---------------- ---------------- ----------------- ---------------
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Other material
non-cash
items
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Impairment
losses on
financial
assets
measured at
amortised
cost 2 505 772 8 129 454 413 341 - - - 11 048 567
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Depreciation
of property
and equipment 7 432 905 335 771 103 329 57 662 6 792 659 698 150 15 427 213
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Depreciation
of right of
use assets - - - - - 3 088 496 3 088 496
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Amortisation
of intangible
assets - - - - - 6 356 249 6 356 249
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Segment (11 987
profit/(loss) 31 020 284 18 939 582 20 861 597 (766 697) 28 236 805 559) 86 304 010
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Income tax (70 006 (70 006
charge - - - - - 030) 030)
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Revaluation of
land and
buildings, 108 586 108 586
net of tax - - - - - 781 781
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Translation
gain on
change - - - - - 64 096 897 64 096 897
in functional
currency --------------- ----------------- ----------------- ---------------- ---------------- ----------------- ---------------
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Profit/(loss) 31 020 18 939 20 861 (766 697) 28 236 98 985 188 981
for the year 284 582 597 ========== 805 867 658
========= ========== ========== ========== ========== =========
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
As at 31
December 2019
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Assets and
liabilities
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Capital
expenditure
(property
and equipment
and
intangible
assets) 6 592 267 - 124 352 19 881 1 064 734 28 159 581 35 960 815
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
360 259 569 190 327 314 110 907 707 061 2 089 780
Total assets 251 851 026 699 12 041 259 131 219
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
Total 575 250 407 188 261 424 113 325 1 409 506
liabilities 093 006 308 38 506 936 - 724 856
----------------- ------------------- ------------------- ------------------ ------------------ -------------------- ------------------
6. SEGMENT INFORMATION
The following table presents income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
Retail Banking Corporate Treasury International Digital
Inflation Banking Banking Banking Banking Other Total
adjusted -
Restated
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
For the year
ended 31
December 2018
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Income
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Third party 107 042 79 066 321 801
income 023 196 50 020 957 3 509 546 49 960 329 928 611 400 980
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Interest and
similar (6 855 (37 225 (22 356
expense (6 694 647) 508) 265) 520) - - (72 131 939)
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
-------------- ----------------- ----------------- ----------------- --------------- ---------------- ---------------
100 347 73 210 12 795 (18 846 49 960 321 801 539 269
Net operating 377 688 692 975) 329 928 041
income ---------------- --------------- ----------------- ------------------ ---------------- ----------------- ---------------
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Other material
non-cash
items:
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Impairment
losses on
financial
assets
measured at
amortised 18 336
cost 5 651 813 125 932 298 - - - 24 920 236
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Depreciation
of property
and equipment 2 961 021 292 320 94 689 26 157 5 416 693 3 200 958 11 991 839
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Amortisation
of intangible
assets - - - - - 7 882 765 7 882 765
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Segment
profit/(loss) 6 450 806 9 783 584 4 176 244 (1 875 083) 5 652 381 67 406 463 110 768 837
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Income tax (51 105
charge - - - - - 622) (51 105 622)
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Other - - - - - - -
comprehensive
income --------------- ----------------- ----------------- ----------------- --------------- ---------------- ---------------
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Profit/(loss) 6 450 806 9 783 4 176 244 (1 875 5 652 381 35 483 59 663 215
for the ========= 584 ========== 083) ========= 421 =========
year at ========== ========== ==========
31 December
2018
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Assets and
Liabilities
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Capital
expenditure
(property
and equipment
and
intangible
assets) 10 501 839 25 637 - 74 729 1 120 059 47 766 046 59 488 310
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
561 604 809 433 919 179 950 329 3 293 749
Total assets 751 458 760 19 837 695 33 384 462 158 284
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
Total 919 829 824 719 797 512 174 093 2 785 521
liabilities 080 196 901 69 367 300 - 090 567
------------------ ------------------ ------------------- -------------------- ------------------ ------------------- -----------------
6.1 GEOGRAPHICAL INFORMATION
The Bank operates in one geographical market, Zimbabwe.
Registered Offices
4(th) Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1(st) Street/Kwame Nkrumah Avenue Leopold Takawira Street
Harare Bulawayo
Zimbabwe Zimbabwe
Telephone +(263) (242) 759651 +263 (2922) 70169
Facsimile +(263) (242) 759648 +263 (2922) 68535
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Investor Services
PLC
1 Armagh Avenue The Pavilions
(Off Enterprise Road) Bridgewater Road
Eastlea Bristol
P O Box 11 BS99 9ZZ
Harare United Kingdom
Zimbabwe
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR ILMLTMTMTBIM
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