TIDMNMB
RNS Number : 8617X
NMBZ Holdings Ld
03 September 2020
NMBZ HOLDINGS
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED REVIEWED RESULTS
FOR THE SIX MONTHSED 30 JUNE 2020
FINANCIAL SUMMARY
Inflation adjusted Historical Cost
30 June 30 June 31 December 30 June 30 June 31 December
------------ ------------ ------------- ------------ ---------- ------------
2020 2019 2019 2020 2019 2019
------------ ------------ ------------- ------------ ---------- ------------
Restated Restated
------------ ------------ ------------- ------------ ---------- ------------
Reviewed Reviewed Audited
------------ ------------ ------------- ------------ ---------- ------------
1 248 545 1 291 433 1 914 723 1 461 158 104 329 464 285
Total income (ZWL) 848 954 540 296 370 244
------------ ------------ ------------- ------------ ---------- ------------
Operating profit
before impairment
charge and loss
on net monetary 883 605 865 002 1 149 090 1 252 502 73 508 341 453
position (ZWL) 127 477 915 523 993 654
------------ ------------ ------------- ------------ ---------- ------------
Total comprehensive 992 251 703 127 672 728 1 725 623 61 425 473 463
income (ZWL) 893 345 135 822 194 396
------------ ------------ ------------- ------------ ---------- ------------
Basic earnings
per share (ZWL
cents) 170.53 174.77 55.15 270.66 14.55 71.56
------------ ------------ ------------- ------------ ---------- ------------
Total deposits 3 493 310 4 021 200 3 120 529 3 493 310 480 292 1 191 079
(ZWL) 688 461 011 688 497 845
------------ ------------ ------------- ------------ ---------- ------------
Total gross loans 1 439 233 2 103 827 1 396 704 1 439 233 263 435 533 110
and advances (ZWL) 342 197 117 342 295 289
------------ ------------ ------------- ------------ ---------- ------------
Total shareholders'
funds and shareholders' 2 860 394 1 521 627 1 854 516 2 389 080 136 054 579 169
liabilities (ZWL) 662 784 185 902 899 046
------------ ------------ ------------- ------------ ---------- ------------
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
Facebook: NMB Bank Zimbabwe
Twitter: @NMBBankZim
Whatsapp:
+263775710000
CHAIRMAN'S STATEMENT
INTRODUCTION
The 2020 operating environment was largely characterised by the
unprecedented global challenges emanating from the novel COVID-19
pandemic. Global and regional economies have experienced
significant challenges due to the COVID-19 virus and the Zimbabwean
economy was no exception. The Government of Zimbabwe pronounced a
number of socio-economic restrictions, effectively plunging the
nation into lockdown conditions in an attempt to manage the spread
of the virus as well as mitigate its ravaging effects, which was
followed by subsequent pronouncements and measures to gradually
alter and vary the lockdown conditions. A raft of policy
pronouncements have also been made and these have all significantly
impacted on the Group's operating environment.
In spite of the difficult local operating environment and the
unique global circumstances, the Group remained resilient and this
culminated in the financial results which were underpinned by the
Banking subsidiary's digitalisation drive and fair value gains on
the bank's property portfolio. The Bank's digital strategy could
not have come at a better time as it has been quite pivotal in
driving business within the COVID-19 induced circumstances. The
Bank has recorded significant growth and expansion on its digital
platforms and this has resulted in enhanced service delivery.
Furthermore, in response to the prevailing hyperinflationary
environment, the Group has adopted a number of value preservation
strategies in order to ensure that shareholders' value is not
eroded.
The key inflation adjusted financial highlights of the Group as
at 30 June 2020 are depicted below:
Shareholders' funds and shareholders' liabilities ZWL2.9 billion
(December 2019 - ZWL1.9 billion)
Total assets ZWL6.9 billion (December 2019 - ZWL5.5 billion)
Total comprehensive income ZWL992.3 million (June 2019 -
ZWL703.1 million)
Operating income before impairments and
monetary adjustments ZWL883.6 million (June 2019 - ZWL865.0
million)
HYPERINFLATIONARY REPORTING
On 11 October 2019, the Public Accountants and Auditors Board
(PAAB) issued a pronouncement to the effect that the Zimbabwean
economy had met all conditions necessary to be classified as a
hyperinflationary economy. On that basis, the Directors have
prepared the accompanying financial statements using the
hyper-inflationary accounting basis to achieve fair presentation at
the reporting date of 30 June 2020. The following results
commentary is primarily on the Group's hyperinflationary adjusted
financial statements at the reporting date.
GROUP RESULTS
Financial performance
The profit before taxation was ZWL844 746 155 (June 2019 -
ZWL852 273 012) during the period under review and this gave rise
to total comprehensive income of ZWL992 251 893 (June 2019 - ZWL703
127 345). The Group achieved a basic earnings per share of 170.53
cents (June 2019 - 174.77 cents) and this translated into the
headline losses per share of 1.28 cents (June 2019 - earnings per
share of 35.82 cents). The significant differential between the
basic and headline losses per share is largely due to investment
properties fair value adjustments and gains arising from the
translation of foreign currency balances due to the depreciation of
the Zimbabwe dollar against the USD and other major currencies.
Total income amounted to ZWL1 248 545 848 and this was down 3%
from ZWL1 291 433 954 recorded during the six months ended 30 June
2019 mainly due to a reduction in net interest income due to
sub-optimal market interest rates.
Operating expenses amounted to ZWL327 844 569 and these were
down 4% from ZWL341 124 089 recorded during the six months ended 30
June 2019. The reduced costs were a result of cost containment
measures adopted by the Group in addition to improved efficiencies
arising out of the Group's digital drive.
The Group recorded an impairment credit loss on financial assets
measured at amortised cost amounting to ZWL25 219 962 compared to
an expected credit loss reversal of ZWL7 896 544 during the six
months ended 30 June 2019 due to growth in the banking subsidiary's
financial assets.
The Bank has continued with its drive to reduce non-performing
loans (NPLs) and this saw the NPL ratio reduce from 1.37% as at 31
December 2019 to 0.81% as at 30 June 2020. The drop in the NPL
ratio is largely due to aggressive collections and stricter credit
underwriting standards.
Financial position
The Group's total assets increased by 27% from ZWL5 473 819 939
as at 31 December 2019 to ZWL6 936 485 718 as at 30 June 2020
mainly due to a 47% increase in property and equipment, a 126%
increase in investment properties and a 6% increase in cash and
cash equivalents.
Investment properties increased from ZWL602 234 779 as at 31
December 2019 to ZWL1 363 353 363 as at 30 June 2020 whilst
property and equipment increased from ZWL1 032 743 479 at 31
December 2019 to ZWL1 514 418 395 as at 30 June 2020 mainly due to
the significant increase in property values in ZWL terms in line
with market changes.
Gross loans and advances increased by 3% from ZWL1 396 704 117
as at 31 December 2019 to ZWL1 439 233 342 as at 30 June 2020
mainly due to a slowdown in advances during the period under review
in view of the prevailing economic conditions.
Cash and cash equivalents increased from ZWL1 289 795 771 as at
31 December 2019 to ZWL1 369 056 048 at 30 June 2020 mainly due to
the upward foreign exchange revaluation of the Group's foreign
denominated liquid assets.
Total deposits increased by 12% from ZWL3 120 529 011 at 31
December 2019 to ZWL3 493 310 688 as at 30 June 2020 as a result of
deposit mobilization strategies and the translation of foreign
denominated deposits to the local currency.
The Bank maintained a sound liquidity position with a liquidity
ratio of 73.90% which was significantly above the statutory minimum
of 30%.
Capital
The banking subsidiary maintained adequate capital levels to
cover all risks as reflected by a capital adequacy ratio of 39.39%
as at 30 June 2020 (31 December 2019 - 39.49%). The ratio was well
above the regulatory minimum of 12%.
The Group's shareholders' funds and shareholders' liabilities
increased by 54% from ZWL1 854 516 185 as at 31 December 2019 to
ZWL2 860 394 662 as at 30 June 2020 as a result of the current
period's total comprehensive income.
The Bank's regulatory capital as at 30 June 2020 was ZWL1 466
396 127 and was above the minimum regulatory capital of ZWL25
million. The Bank submitted its capitalisation plan to the RBZ in
terms of the requirements for a Tier 1 bank to have a minimum
Zimbabwe dollar equivalent of USD30 million by 31 December 2021. We
await approval of our capitalisation plan by the RBZ.
DIVID
The Board has resolved not to declare an interim dividend as the
Group is firmly focused on achieving the revised minimum regulatory
capital requirement of the ZWL equivalent of USD30 million for a
Tier 1 Bank by 31 December 2021.
DIRECTORATE
There were no changes to the Directorate during the period under
review. The directors of both NMBZ Holdings Limited and NMB Bank
Limited boards remain 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 Chairman), Mr James
de la Fargue (Non-Executive Director), Ms Jean Maguranyanga
(Independent Non-Executive Director), Mr Julius Tichelaar (Non
Executive Director), Ms Sabinah Chitehwe (Independent Non-Executive
Director), Ms Christine Glover (Non-Executive Director) and Mr
Givemore Taputaira (Independent Non-Executive Director).
FUNCTIONAL CURRENCY
As announced in the Group's financial statements for the year
ended 31 December 2019, we continue 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 US$ 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 also
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.
On 26 March 2020, the Reserve Bank of Zimbabwe in a press
statement announced various interventions in response to the
financial vulnerabilities caused by the COVID-19 pandemic. One of
the measures announced therein was the authorization of the use of
free-funds in paying for goods and services, in terms of Statutory
Instrument (SI) 85 of 2020. On 24 July 2020, the Government of
Zimbabwe issued Statutory Instrument (SI) 185 of 2020, which
granted permission to display, quote or offer prices for all goods
and services in both Zimbabwe dollars and foreign currency at the
interbank exchange rate.
On 23 June 2020, the Reserve Bank of Zimbabwe introduced the
Foreign Exchange Auction System, effectively abandoning the fixed
foreign currency exchange rate regime which had been prevailing for
the greater part of 2020. Significant trades have been recorded on
the platform and significant movements in the exchange rate have
been resultantly recorded.
The Directors, having assessed all these developments, concluded
that the Group's functional currency remains the Zimbabwe dollar
having changed 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 lines of
credit providers as at 30 June 2020. The Bank registered these
foreign debts with the Reserve Bank of Zimbabwe (RBZ) as required
by the regulatory directives. During the previous financial period,
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 1:63.74 at 30 June
2020. This effectively values the original credit lines at a rate
of 1:1 on a netted off basis. The RBZ approved the line of credit
balances amounting to USD13 840 412.
CORPORATE SOCIAL INVESTMENTS
During the period under review, the Group channelled its
Corporate Social Investments towards education, environment
conservation as well as the support of disadvantaged and vulnerable
groups. Donations towards education were to the Ministry of
Education Mashonaland West Provincial Wellness Launch and
Matabeleland North Athletics team NASH/NAPH. Donations were also
made to KidzCan for treatment of children living with cancer and
commemoration of the World Kidney Day.
The Group in conjunction with other banks also channelled its
Corporate Social Investments towards the fight against COVID-19
under the Bankers Association of Zimbabwe. Leveraging the ecosystem
of customers, business partners and the public at large, the Bank
also set up a COVID-19 donations platform through which
institutions and individuals are making donations towards fighting
this global pandemic.
CORPORATE DEVELOPMENTS
In the advent of the 'new normal', where physical interactions
have to be kept at a minimum in line with the World Health
Organisation (WHO) guidelines on fighting the novel COVID-19
pandemic, the Bank's strategy is anchored on the enhancement of its
digital touch points to ensure uninterrupted service delivery to
the Bank's valued clients via digital platforms.
The Bank continues with its financial inclusion drive and has
intensified the opening of a number of low cost accounts via our
NMBLite product.
The construction of our new Head Office along Borrowdale Road
has been completed and the envisaged migration was hampered by the
unforeseeable COVID-19 induced challenges.
COVID-19 UPDATE
The Group has been closely monitoring the developments around
the COVID-19 crisis. To this end, we have fully embraced and
implemented the WHO guidelines to ensure the safety of our valued
clients, staff and stakeholders. Amongst several initiatives, we
have enabled remote working for staff, accelerated the Bank's
digital transformation drive and we continue to encourage our
customers to fully utilize the Bank's enhanced digital banking
platforms thereby minimizing the need for them to physically visit
the Bank's banking halls and offices. These measures have
significantly contributed towards the maintenance of social
distancing by decongesting the Bank's branches and workspaces.
Where customers and staff have had to visit the branches and
offices, we have strictly adhered to the prescribed WHO regulations
which include temperature checking, sanitization and the correct
wearing of masks at all times.
OUTLOOK AND STRATEGY
The operating environment continues to be challenging and the
introduction of the RBZ's Foreign Exchange (FX) Auction system on
23 June 2020 should hopefully result in price discovery and
stabilisation of the FX market.
We continue to be optimistic that the measures being taken by
the Government and the Central Bank to stimulate the economy will
have the desired effects in the short to medium term and
consequently improve the country's economic climate. The
containment of the COVID-19 pandemic continues to be a prerequisite
for an economic rebound and the measures taken so far by the
Government should lead to a slowdown in the spread of the Corona
virus which should result in an increase in the level of economic
activities in the country.
As aforementioned, the banking subsidiary has continued to
enhance its digital offerings and some digital platforms will be
launched shortly which will provide customers with simplicity and
convenience in transacting and digitally meet a greater part of
their information requirements.
APPRECIATION
I remain sincerely grateful to our valued clients, shareholders
and regulatory authorities who continue to support the Group in the
face of the numerous challenges posed by the tough operating
environment. To my fellow board members, management and staff, I
extend my heartfelt gratitude for their continued diligence,
dedication and relentless efforts which have culminated in the
achievement of these commendable results.
May I take this opportunity to implore all our valued
stakeholders to remain vigilant and resolute as we all put up a
fight against the horrendous COVID-19 pandemic.
B. A. CHIKWANHA
CHAIRMAN
25 August 2020
REVIEWER'S STATEMENT
These condensed inflation adjusted interim financial statements
have been reviewed by Ernst & Young Chartered Accountants
(Zimbabwe) and an adverse review conclusion issued thereon due to
continuing issues from prior years with regards to non-compliance
with International Accounting Standard 21, "The Effects of Changes
in Foreign Exchange Rates" and International Accounting Standard 8,
"Accounting Polices, Changes in Accounting Estimates and Errors"
and their effect on base numbers used for reporting under
International Accounting Standard 29, "Financial Reporting in
Hyperinflationary Economies". The reviewer's report is available
for inspection at the Holding Company's registered office. The
engagement partner for this review is Mr Walter Mupanguri (PAAB
Practicing Number 0367).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2020
Inflation adjusted Historical Cost*
30 June 30 June 30 June 30 June
------ --------------------- -------------------- --------------------- -------------------
Note 2020 2019 2020 2019
--------------------- -------------------- --------------------- -------------------
ZWL ZWL ZWL ZWL
------ --------------------- -------------------- --------------------- -------------------
Restated
------ --------------------- -------------------- --------------------- -------------------
Reviewed Reviewed
------ --------------------- -------------------- --------------------- -------------------
Interest income 4 205 869 041 284 733 413 127 969 603 23 200 282
------ --------------------- -------------------- --------------------- -------------------
(37 096 152) (85 307 388) (22 245 160) (6 890 386)
Interest expense ---------------- ---------------- ---------------- ----------------
------ --------------------- -------------------- --------------------- -------------------
Net interest income 168 772 889 199 426 025 105 724 443 16 309 896
------ --------------------- -------------------- --------------------- -------------------
Fee and commission
income 5.1 241 177 285 221 924 797 154 253 951 18 569 148
------ --------------------- -------------------- --------------------- -------------------
Net foreign
exchange gains 133 139 769 355 453 683 114 112 987 32 664 282
------ --------------------- -------------------- --------------------- -------------------
----------------- ----------------- ---------------- ----------------
------ --------------------- -------------------- --------------------- -------------------
Revenue 543 089 943 776 804 505 374 091 381 67 543 326
------ --------------------- -------------------- --------------------- -------------------
429 322 1 064 821
668 359 753 061 755 29 895 658
Other income 5.2 ------------------ ----------------- ---------------- ----------------
------ --------------------- -------------------- --------------------- -------------------
1 211 449 1 206 126 1 438 913
Operating income 696 566 136 97 438 984
------ --------------------- -------------------- --------------------- -------------------
(327 844 (341 124 (186 410 (23 929
Operating 569) 089) 613) 991)
expenditure 6 ------------------- ----------------- ---------------- -----------------
------ --------------------- -------------------- --------------------- -------------------
Operating income
before
impairment charge
and loss
on net monetary 1 252 502
position 883 605 127 865 002 477 523 73 508 993
------ --------------------- -------------------- --------------------- -------------------
Impairment losses
on financial
assets measured at
amortised
cost (25 219 962) 7 896 544 (25 219 962) 943 144
------ --------------------- -------------------- --------------------- -------------------
Loss on net
monetary position (13 639 010) (20 626 009) - -
------ --------------------- -------------------- --------------------- -------------------
----------------
Profit before ---------------- ---------------- 1 227 282 ---------------
taxation 844 746 155 852 273 012 561 74 452 137
------ --------------------- -------------------- --------------------- -------------------
(155 504 (162 249 (133 332 (17 013
400) 579) 999) 168)
Taxation charge 7 ------------------ ---------------- ------------------- ----------------
------ --------------------- -------------------- --------------------- -------------------
Profit for the 1 093 949
period 689 241 755 690 023 433 562 57 438 969
------ --------------------- -------------------- --------------------- -------------------
Other comprehensive
income
------ --------------------- -------------------- --------------------- -------------------
Items that will not be reclassified to
profit or loss
-------------------- --------------------- -------------------
Revaluation gain on
land
and buildings, net 303 010
of tax 5.3 138 13 103 912 631 674 260 3 986 225
------ --------------------- -------------------- --------------------- -------------------
---------------- --------------- ------------------ ---------------
------ --------------------- -------------------- --------------------- -------------------
Total comprehensive income 992 251 703 127 345 1 725 623 61 425 194
for 893 ========= 822 =========
the period ========== ===========
--------------------- -------------------- --------------------- -------------------
Earnings/(losses) per share
(ZWL cents)
--------------------- -------------------- --------------------- -------------------
- Basic 9.3 170.53 174.77 270.66 14.55
------ --------------------- -------------------- --------------------- -------------------
- Diluted 9.3 160.69 161.18 255.53 13.42
------ --------------------- -------------------- --------------------- -------------------
- Headline 9.3 (1.28) 35.82 1.11 3.21
------ --------------------- -------------------- --------------------- -------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Inflation adjusted Historical Cost*
30 June 31 Dec 30 June 31 Dec
------- -------------------- ------------------- -------------------- -------------------
Note 2020 2019 2020 2019
------- -------------------- ------------------- -------------------- -------------------
ZWL ZWL ZWL ZWL
------- -------------------- ------------------- -------------------- -------------------
Restated
------- -------------------- ------------------- -------------------- -------------------
SHAREHOLDERS' FUNDS Reviewed Audited
------- -------------------- ------------------- -------------------- -------------------
Share capital 10.2.1 2 087 754 2 087 754 84 116 84 116
------- -------------------- ------------------- -------------------- -------------------
440 278 441 838
Capital reserves 222 966 19 121 607 19 184 170
------- -------------------- ------------------- -------------------- -------------------
Functional currency
translation 167 928 167 928
reserve 479 479 11 619 648 11 619 648
------- -------------------- ------------------- -------------------- -------------------
587 498 284 488 807 754 176 079
Revaluation reserves 371 233 210 950
------- -------------------- ------------------- -------------------- -------------------
1 535 555 846 313 1 423 455 329 505
646 891 131 569
Retained earnings ----------------- ---------------- ---------------- ----------------
------- -------------------- ------------------- -------------------- -------------------
2 733 348 1 742 657 2 262 034 536 473
Total equity 472 323 712 453
------- -------------------- ------------------- -------------------- -------------------
Redeemable ordinary
shares 11 14 335 253 37 557 157 14 335 253 14 335 253
------- -------------------- ------------------- -------------------- -------------------
Subordinated term 112 710 112 710
loan 12 937 74 301 705 937 28 360 340
------- -------------------- ------------------- -------------------- -------------------
----------------- ---------------- ----------------- ----------------
------- -------------------- ------------------- -------------------- -------------------
Total shareholders'
funds 2 860 394 1 854 516 2 389 080 579 169
and shareholders' 662 185 902 046
liabilities ----------------- ---------------- ----------------- ---------------
------- -------------------- ------------------- -------------------- -------------------
LIABILITIES
------- -------------------- ------------------- -------------------- -------------------
Deposits and other 3 649 929 3 322 435 3 649 929 1 268 146
liabilities 13.1 722 897 722 016
------- -------------------- ------------------- -------------------- -------------------
Deferred tax 411 392 414 985
liabilities 690 1 637 282 705 97 653 191
------- -------------------- ------------------- -------------------- -------------------
295 230
Current tax 14 768 644 575 14 768 644 624 937
liabilities ----------------- ----------------- ----------------- -----------------
------- -------------------- ------------------- -------------------- -------------------
Total shareholders' funds and 6 936 485 5 473 819 6 468 764 1 945 593
liabilities 718 939 973 190
========== ========== ========== ==========
-------------------- ------------------- -------------------- -------------------
ASSETS
------- -------------------- ------------------- -------------------- -------------------
Cash and cash 1 369 056 1 289 795 1 369 056 492 304
equivalents 15 048 771 048 267
------- -------------------- ------------------- -------------------- -------------------
Investment 129 932 280 766 129 932 107 166
securities 14.1 320 312 320 155
------- -------------------- ------------------- -------------------- -------------------
Loans, advances and
other 2 526 003 2 233 628 2 436 533 817 960
assets 16 092 818 439 242
------- -------------------- ------------------- -------------------- -------------------
Trade and other
investments 7 325 771 4 223 647 7 325 771 1 612 131
------- -------------------- ------------------- -------------------- -------------------
Investment 1 363 353 602 234 1 363 353 229 867
properties 363 779 363 982
------- -------------------- ------------------- -------------------- -------------------
Intangible assets 18 26 396 729 30 427 133 2 639 087 1 397 186
------- -------------------- ------------------- -------------------- -------------------
Property and 1 514 418 1 032 743 1 159 924 295 285
equipment 19 395 479 945 227
------- -------------------- ------------------- -------------------- -------------------
----------------- ----------------- ----------------- -----------------
Total assets 6 936 485 5 473 819 6 468 764 1 945 593
718 939 973 190
========== ========== ========== ==========
------- -------------------- ------------------- -------------------- -------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
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 1 409 288 671 740
January 2019 2 015 305 762 - 1 560 744 - 258 875 925 736
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Total
comprehensive
income for 703 127
the period - - - - 13 103 912 690 023 433 345
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Share issue -
scrip
dividend 72 449 30 989 460 - - - - 31 061 909
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Change in
functional
currency
translation 167 928 167 928
reserve - - 479 - - - 479
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
(52 230
- - - - - (52 230 685) 685)
Dividends paid ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- ----------------
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Balances at 30
June 2019 - 440 278 167 928 1 521 627
Restated 2 087 754 222 479 1 560 744 13 103 912 896 668 673 784
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Total
comprehensive
income for 271 384 221 029
the period - - - - 321 (50 354 782) 539
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Balance as
at 31
December ---------------- ---------------- ---------------- -------------------
2019 ---------------- 440 278 167 928 ---------------- 284 488 ----------------- 1 742 657
- Restated 2 087 754 222 479 1 560 744 233 846 313 891 323
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Unwinding of
share option
reserve - - - (1 560 744) - - (1 560 744)
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Total
comprehensive
income for 303 010 992 251
the period - - - - 138 689 241 755 893
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
--------------- ---------------- ---------------- --------------- --------------- ----------------- ------------------
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
Balances at 30 2 087 754 440 278 167 928 - 587 498 1 535 555646 2 733 348
June 2020 ========= 222 479 ========= 371 ========== 472
========== ========== ========= ===========
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- --------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
Historical Cost*
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 2019 80 975 16 463 734 - 62 563 136 741 47 377 400 64 121 413
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Total
comprehensive
income for
the period - - - - 3 986 225 57 438 969 61 425 194
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Share issue -
scrip
dividend 3 141 2 657 873 - - - - 2 661 014
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Change in
functional
currency
translation
reserve - - 11 619 648 - - - 11 619 648
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
- - - - - (3 772 370) (3 772 370)
Dividends paid ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- ----------------
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Balances at 30
June 2019 84 116 19 121 607 11 619 648 62 563 4 122 966 101 043 999 136 054 899
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Total
comprehensive
income for 171 956
the period - - - - 984 228 461 570 400 418 554
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Balance as ----------------
at December ---------------- ---------------- ---------------- ---------------- 176 079 ---------------- ----------------
2019 84 116 19 121 607 11 619 648 62 563 950 329 505 569 536 473 453
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Unwinding of
share option
reserve - - - (62 563) - - (62 563)
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Total
comprehensive
income for 631 674 1 093 949 1 725 623
the period - - - - 260 562 822
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
--------------- --------------- --------------- --------------- --------------- ----------------- ------------------
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
Balances at 30 84 116 19 121 607 11 619 648 - 807 754 1 423 455131 2 262 034
June 2020 ========= ========== ========== ========= 210 ========== 712
========= ===========
----------------- ----------------- ----------------- ----------------- ----------------- ------------------- -------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2020
Inflation adjusted Historical Cost *
30 June 30 June 30 June 30 June
---------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
---------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
---------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- --------------------
Reviewed Reviewed
-------------------- -------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
-------------------- -------------------- --------------------
844 746 852 273 1 227 282 74 452
Profit before taxation 155 012 561 137
---------------------- -------------------- -------------------- --------------------
Non-cash items:
---------------------- -------------------- -------------------- --------------------
- Depreciation(excluding right
of use assets) 19 299 688 34 764 116 4 340 825 988 561
---------------------- -------------------- -------------------- --------------------
- Depreciation - Right of use
assets 1 985 839 5 967 714 1 501 219 537 067
---------------------- -------------------- -------------------- --------------------
- Amortisation of intangible
assets 7 238 239 22 309 322 328 236 373 555
---------------------- -------------------- -------------------- --------------------
* Impairment losses on financial assets measured at
amortised costs 25 219 962 (7 896 544) 25 219 962 (943 144)
---------------------- -------------------- -------------------- --------------------
(640 103 (380 064 (1 053 907 (27 991
* Investment properties fair value gains 624) 124) 444) 540)
---------------------- -------------------- -------------------- --------------------
* Trade and other investments fair value adjustment (3 102 124) (4 762 662) (5 713 640) (506 254)
---------------------- -------------------- -------------------- --------------------
- Interest capitalised on subordinated
term loan 5 459 411 2 309 884 2 888 228 275 887
---------------------- -------------------- -------------------- --------------------
(113 156 (247 818 (113 156 (29 598
- Unrealised foreign exchange 723) 512) 723) 834)
gains ------------------ ----------------- ---------------- ----------------
---------------------- -------------------- -------------------- --------------------
Operating cash flows before changes 147 586 277 082 17 587
in operating assets and liabilities 823 206 88 783 224 435
---------------------- -------------------- -------------------- --------------------
Changes in operating assets and
liabilities
---------------------- -------------------- -------------------- --------------------
Increase/(Decrease) in deposits (1 492 755 (324 288 561 534 (26 719
and other liabilities 091) 863) 790 258)
---------------------- -------------------- -------------------- --------------------
1 527 246 (403 980 (410 549 (9 734
(Increase)/Decrease in loans, 950 927) 859) 285)
advances and other assets ------------------- ----------------- ----------------- -----------------
---------------------- -------------------- -------------------- --------------------
182 078 (451 187 239 768 (18 866
Net cash generated/(used) from 682 584) 155 108)
operations ------------------ ----------------- ------------------ -----------------
---------------------- -------------------- -------------------- --------------------
TAXATION
-------------------- -------------------- --------------------
Tax on dividends paid - (2 074 228) - (247 740)
---------------------- -------------------- -------------------- --------------------
(12 483 (10 211 (1 219
Corporate tax paid 633) 836) (9 197 573) 677)
---------------------- -------------------- -------------------- --------------------
------------------- ----------------- ----------------- ----------------
169 595 (463 473 230 570 (20 333
Net cash inflow/(outflow) from 049 648) 582 525)
operations ------------------- ----------------- ----------------- ----------------
---------------------- -------------------- -------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
-------------------- -------------------- --------------------
Acquisition of intangible assets (3 207 838) (789 701) (1 570 139) (94 320)
---------------------- -------------------- -------------------- --------------------
(Acquisition)/Disposal of investment 150 833 (22 766
securities 992 75 578 716 165) 9 026 936
---------------------- -------------------- -------------------- --------------------
(85 399 (82 103 (19 605 (9 806
Acquisition of property and equipment 196) 509) 609) 241)
---------------------- -------------------- -------------------- --------------------
Proceeds on disposal of investment
properties 262 500 - 262 500 -
---------------------- -------------------- -------------------- --------------------
(121 277 (79 840
Acquisition of investment properties 460) (2 832 244) 437) (338 276)
---------------------- -------------------- -------------------- --------------------
---------------- ---------------- ----------------- ----------------
---------------------- -------------------- -------------------- --------------------
(58 788 (10 146 (123 519 (21 545
Net cash (used)/generated in 002) 738) 850) 426)
investing activities ----------------- ---------------- ---------------- ----------------
---------------------- -------------------- -------------------- --------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
------------------ ------------------- ------------------- ------------------
Payment of interest on subordinated
term loan - (1 507 481) - (180 050)
------------------ ------------------- ------------------- ------------------
Repayment of lease liabilities (8 839 289) (2 938 988) (5 082 972) (559 029)
------------------ ------------------- ------------------- ------------------
(11 528
Cash dividend paid - 654) - (832 659)
------------------ ------------------- ------------------- ------------------
- (428 632) - (30 958)
Share issue costs - scrip dividend ---------------- ---------------- -------------- ----------------
------------------ ------------------- ------------------- ------------------
(16 403
Net cash outflow from financing (8 839 289) 755) (5 082 972) (1 602 696)
activities ---------------- ---------------- ---------------- ----------------
------------------ ------------------- ------------------- ------------------
Net increase in cash and cash 101 967 (490 024 101 967 (23 148
equivalents 759 142) 759 122)
------------------ ------------------- ------------------- ------------------
Net foreign exchange and monetary
adjustments on cash and cash 774 784 838 399 774 784 100 136
equivalents 022 746 022 405
------------------ ------------------- ------------------- ------------------
492 304 941 420 492 304 112 440
Cash and cash equivalents at 267 167 267 912
beginning of the period ---------------- ----------------- ----------------- ----------------
------------------ ------------------- ------------------- ------------------
Cash and cash equivalents at 1 369 056 1 289 795 1 369 056 189 429
the end of the period 048 771 048 195
========== ========= ========== =========
------------------ ------------------- ------------------- ------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2020
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
These condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
(IAS) 34, Interim Financial Reporting. Selected explanatory notes
are included to explain events and transactions that are
significant to an understanding of the changes in financial
position of the Group since the last annual consolidated financial
statements as at and for the year ended 31 December 2019. These
condensed consolidated interim financial statements do not include
all the information required for the full annual financial
statements prepared in accordance with International Financial
Reporting Standards.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 25 August 2020.
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.
As such, the Directors have 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.
Dates Indices Conversion factor
31 December 2018 88.81 16.2736
30 June 2019 172.61 8.3726
31 December 2019 551.63 2.6199
30 June 2020 1 445.21 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 2018, 30 June 2019, 31 December 2019 have been restated by
applying the change in the index from the date of last
re-measurement to 30 June 2020;
-- Income statement transactions have been restated by applying
the change in the index from the approximate date of the
transactions to 30 June 2020;
-- 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 30 June 2020;
-- 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 30
June 2020;
-- Equity has been restated by applying the change in index from
the date of issue to 30 June 2020;
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 F unctional and presentation currency
For the purpose of the consolidated financial statements, the
results and financial position of the Group are expressed in
Zimbabwe Dollars (ZWL) which is the functional currency of the
Group, and the presentation currency for the consolidated financial
statements. Note 2.5.6 provides further information on the
determination of the Group's functional currency.
2.3 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 the 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.
2.4 Comparative financial information
The interim financial statements comprise consolidated
statements of financial position, comprehensive income, changes in
equity and cash flows. The comparative information covers a period
of six months.
2.5 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 six months ended 30 June 2020 is included in the following
notes:
2.5.1 Deferred tax
Provision for 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.
2.5.2 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.
2.5.3 Investment securities
The Group has Treasury Bills for which there is currently no
market information to facilitate the application of fair value
principles, in determining fair value disclosures.
However, in terms of IFRS 9, investment securities measured at
amortised cost do not require fair value adjustments. As such none
of the Group's investment securities required the application of
fair value measurement principles to determine their carrying
amounts.
2.5.4 Intangible assets
Intangible assets are initially recognised at cost. Subsequently
the assets are measured at
cost less accumulated amortisation and any impairment loss.
2.5.5 Impairment losses on financial instruments
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.
2.5.6 Determination of 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$2.5.
On the same date, Statutory Instrument 33 of 2019 was also
issued and it specified that for accounting and other purposes, all
assets and liabilities that were in USD immediately before the
22(nd) of February 2019 were deemed to have been valued in RTGS
Dollars at a rate of 1:1 with the USD.
On 24 June 2019, the Monetary Authorities announced that the
multi-currency regime, which the country was operating in since
February 2009 had been discontinued and the country had adopted a
mono-currency regime meaning that the sole legal tender would be
the Zimbabwe Dollar (ZWL).
On 26 March 2020, the Reserve Bank of Zimbabwe in a press
statement announced various interventions in response to the
financial vulnerabilities caused by the COVID-19 pandemic. One of
the measures announced therein was the authorization of the use of
free-funds in paying for goods and services, in terms of Statutory
Instrument (SI) 85 of 2020. On 24 July 2020, the Government of
Zimbabwe issued Statutory Instrument (SI) 185 of 2020, which
granted permission to display, quote or offer prices for all goods
and services in both Zimbabwe dollars and foreign currency at the
interbank exchange rate.
On 23 June 2020, the Reserve Bank of Zimbabwe introduced the
Foreign Exchange Auction System, effectively abandoning the fixed
foreign currency exchange rate regime which had been prevailing for
the greater part of 2020. Significant trades have been recorded on
the platform and significant movements in the exchange rate have
been resultantly recorded.
In light of the developments summarised above, the Directors
concluded that the Group's functional currency remains the Zimbabwe
dollar (ZWL) following its change from US$ with effect from 22
February 2019.
2.6.0 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.
2.6.1 COVID-19
The Directors fully acknowledge the unprecedented challenges and
uncertainties posed by the COVID-19 pandemic. In that regard,
significant judgments have generally been applied in light of the
likely impacts of COVID-19 on the Group's activities.
2.6.2 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 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 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 stated at fair value. Gains and losses
arising from a change in fair value of investment properties are
recognised in the profit or loss statement. The fair value is
determined at the end of each reporting period by a 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 period-end. The revaluation
model is used for the Group's land and buildings with the fair
values determined by an independent professional valuer using
significant unobservable market inputs. 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 Shareholders' funds and shareholders' liabilities
Shareholders' funds and shareholders' liabilities refer to the
total investment made by the shareholders to the Group and it
consists of share capital, share premium, Functional Currency
Translation Reserve, share options reserve, retained earnings,
redeemable ordinary shares and subordinated term loans.
3.7 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
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 Bank 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 Bank 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 Bank 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.
3.8 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.
3.9 Revenue from contracts with customers
Revenue is recognised to the extent that it is probable that the
Group has satisfactorily performed the performance obligations set
out in the underlying contract with its customers and that 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.
3.10 Interest income
For all financial instruments measured at amortised cost and
financial instruments designated at fair value through profit or
loss, 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.
3.11 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.
3.12 Leases
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.
In terms of IFRS 16, the Group recognises lease liabilities in
relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17, Leases. These
liabilities are measured at the present value of the remaining
lease payments, discounted using the Group's incremental borrowing
rate.
The Group has neither enjoyed nor extended any lease payment
holidays in its capacity as either lessee or lessor respectively
due to COVID-19. As such, there are no COVID-19 induced lease
modifications applicable during the period under review.
Measurement of right-of-use assets
The associated right-of-use assets for property leases are
measured on a prospective basis. The right-of-use assets are
measured at the amount equal to the lease liability, adjusted by
the amount of any prepaid or accrued lease payments relating to
that lease recognised in the consolidated statement of financial
position.
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.
Short-term leases
The Group does not recognise lease liabilities or Right-of-Use
Assets in respect of short-term leases which are accounted for on a
straight-line basis.
3.13 Financial Instruments
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
The Group 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:
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 Banking subsidiary'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 principal 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 "Net Investment 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 'Net Investment Income'. Interest
income from these financial assets is included in "Interest income"
using the effective interest rate method.
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):
-- 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 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.
Special consideration has been made in respect of the
uncertainties posed by the COVID-19 pandemic on the recoverability
of the Group's financial instruments. The Group's ECL computations
have taken this into account, resulting in notable increases in the
ECL.
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 and cure
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.
It is the Bank's policy to consider a financial instrument as
'cured' and subsequently reclassified out of Stage 3 when none of
the above mentioned default criteria have been present for at least
six consecutive months. The decision whether to classify a
financial asset as Stage 1 or Stage 2 once cured depends on the
updated credit grade at the time of the cure and whether this
indicates that there has been a significant increase in credit risk
compared to initial recognition.
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.
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.
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 and rewards on the basis of the
predetermined repurchase price, and the criteria for derecognition
are therefore not met. This also applies to certain securitisation
transactions in which the Bank retains a subordinated residual
interest.
3.13.2 Financial Liabilities
(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.
3.13.3 Financial guarantee contracts and loan commitments
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.
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 IFRS15.
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.
3.13.4 Critical Accounting Estimates and Judgements
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 2.5 (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:
-- 1 2-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.
Loss Given Default (LGD)
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
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.
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
30 June 30 June 30 June 30 June
-------------------- ------------------- -------------------- --------------------
2020 2019 2020 2019
-------------------- ------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- ------------------- -------------------- --------------------
Restated
-------------------- ------------------- -------------------- --------------------
Loans and advances
to banks 5 196 133 3 150 400 2 980 143 282 764
-------------------- ------------------- -------------------- --------------------
Loans and advances
to customers 190 954 025 214 374 164 119 161 161 17 884 227
-------------------- ------------------- -------------------- --------------------
9 718 883 67 208 849 5 828 299 5 033 291
Investment securities ------------------ ----------------- ------------------ ------------------
-------------------- ------------------- -------------------- --------------------
205 869 041 284 733 413 127 969 603 23 200 282
=========== =========== =========== ===========
-------------------- ------------------- -------------------- --------------------
5. NON-INTEREST INCOME
5.1 FEE AND COMMISSION INCOME
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
------------------- -------------------- ------------------- --------------------
2020 2019 2020 2019
------------------- -------------------- ------------------- --------------------
ZWL ZWL ZWL ZWL
------------------- -------------------- ------------------- --------------------
Restated
------------------- -------------------- ------------------- --------------------
Retail banking customer
fees 71 709 961 83 918 750 47 269 488 10 057 590
------------------- -------------------- ------------------- --------------------
Corporate banking credit
related fees 30 682 472 10 327 568 20 688 016 2 754 380
------------------- -------------------- ------------------- --------------------
Financial guarantee fees 2 835 946 666 379 1 717 761 79 114
------------------- -------------------- ------------------- --------------------
International banking
commissions 4 769 260 6 747 517 2 999 072 598 868
------------------- -------------------- ------------------- --------------------
131 179 120 264
646 583 81 579 614 5 079 196
Digital banking fees ----------------- ------------------ ----------------- ------------------
------------------- -------------------- ------------------- --------------------
241 177 221 924 154 253 18 569 148
285 797 951 ===========
========== =========== ==========
------------------- -------------------- ------------------- --------------------
5.2 OTHER INCOME
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
------------------- -------------------- ------------------- --------------------
2020 2019 2020 2019
------------------- -------------------- ------------------- --------------------
ZWL ZWL ZWL ZWL
------------------- -------------------- ------------------- --------------------
Restated
------------------- -------------------- ------------------- --------------------
Trade and other investments
fair value adjustments 3 102 124 4 762 662 5 713 640 506 254
------------------- -------------------- ------------------- --------------------
Fair value gains on investment 640 103 380 064 1 053 907
properties 624 124 444 27 991 540
------------------- -------------------- ------------------- --------------------
Rental income 1 722 165 2 495 821 1 456 767 194 895
------------------- -------------------- ------------------- --------------------
Bad debts recovered 2 078 628 13 373 536 1 308 953 1 131 780
------------------- -------------------- ------------------- --------------------
21 353 212 28 625 918 2 434 951 71 189
Other net operating income ----------------- ------------------ ----------------- ------------------
------------------- -------------------- ------------------- --------------------
668 359 429 322 1 064 821 29 895 658
753 061 755 ===========
========== =========== ==========
------------------- -------------------- ------------------- --------------------
5.3 OTHER COMPREHENSIVE INCOME
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
---------------- ----------------- ---------------- ----------------
2020 2019 2020 2019
---------------- ----------------- ---------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ----------------- ---------------- ----------------
Restated
---------------- ----------------- ---------------- ----------------
Revaluations of land
and buildings 402 510 811 17 648 367 839 099 708 5 368 653
---------------- ----------------- ---------------- ----------------
(207 425
Tax effect (99 500 673) (4 544 455) 448) (1 382 428)
---------------- ----------------- ---------------- ----------------
--------------- ---------------- --------------- ---------------
303 010 13 103 912 631 674 3 986 225
138 ========= 260 =========
========= =========
---------------- ----------------- ---------------- ----------------
6. Operating EXPITURE
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
-------------------- -------------------- -------------------- --------------------------
2020 2019 2020 2019
-------------------- -------------------- -------------------- --------------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------------
Restated
-------------------- -------------------- --------------------------
The operating profit is after recognising
the following:
-------------------- -------------------- --------------------------
179 526 141 674 112 698
Administration costs 651 553 385 11 501 078
-------------------- -------------------- -------------------- --------------------------
Impairment reversal on
land and buildings - - - (40 600)
-------------------- -------------------- -------------------- --------------------------
Depreciation -
(excluding
right of use assets) 19 299 688 34 764 116 4 340 825 988 561
-------------------- -------------------- -------------------- --------------------------
Amortisation of
intangible
assets 7 238 239 22 309 322 328 236 373 555
-------------------- -------------------- -------------------- --------------------------
Depreciation -right of
use assets 1 985 839 5 967 714 1 501 219 537 067
-------------------- -------------------- -------------------- --------------------------
Staff costs - salaries, 119 794 136 408
allowances and related 152 384 67 541 948 10 570 330
costs ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------------
327 844 341 124 186 410 23 929 991
569 089 613 ===========
========== =========== ==========
-------------------- -------------------- -------------------- --------------------------
7. TAXATION
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
------------------ ------------------ ------------------ -----------------
2020 2019 2020 2019
------------------ ------------------ ------------------ -----------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ -----------------
Income tax expense Restated
------------------ ------------------ ------------------ -----------------
Current tax 22 311 558 16 081 502 22 311 558 1 920 735
------------------ ------------------ ------------------ -----------------
Deferred tax 133 192 842 146 168 077 111 021 441 15 092 433
------------------ ------------------ ------------------ -----------------
----------------- ----------------- ----------------- ----------------
155 504 400 162 249 579 133 332 999 17 013 168
========== ========== ========== ==========
------------------ ------------------ ------------------ -----------------
8. IMPAIRMENT LOSSES ON FINANCIAL ASSETS MEASURED AT AMORTISED COST
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.
The Group has considered the increased uncertainties arising out
of the COVID-19 developments in the computation of ECLs, resulting
in significant increases being noted in the Groups ECLs during the
period under review.
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. IMPAIRMENT LOSSES ON FINANCIAL ASSETS MEASURED AT AMORTISED COST
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.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
for the period attributable to ordinary equity holders of NMBZ
Holdings Limited by the weighted average number of ordinary shares
outstanding during the period.
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 dilute 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
30 June 30 June 30 June 30 June
-------------- -------------- ------------ -------------
2020 2019 2020 2019
-------------- -------------- ------------ -------------
ZWL ZWL ZWL ZWL
-------------- -------------- ------------ -------------
Restated
-------------- -------------- ------------ -------------
1 093 949
Profit for the period 689 241 755 690 023 433 562 57 438 969
-------------- -------------- ------------ -------------
Headline (losses)/earnings
for the period (5 178 881) 141 420 994 4 476 245 12 692 709
-------------- -------------- ------------ -------------
9.2 Number of shares
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
------------------------- ------------------- ------------------- ------------------- -------------------
2020 2019 2020 2019
------------------------- ------------------- ------------------- ------------------- -------------------
9.2.1 Basic earnings per share
------------------------- ------------------- ------------------- ------------------- -------------------
Weighted average number
of ordinary shares for
basic and headline earnings
per share 404 171 689 394 824 611 404 171 689 394 824 611
--------------------------------- ------------------- ------------------- ------------------- -------------------
9.2.2 Diluted earnings per share
---------------------------------------------- ------------------- ------------------- -------------------
Number of shares at
beginning of period 404 171 689 392 955 196 404 171 689 392 955 196
--------------------------------- ------------------- ------------------- -------------------
Effect of dilution:
------------------------- ------------------- ------------------- ------------------- -------------------
Weighted average number
of shares issued - scrip
dividend - 11 216 493 - 11 216 493
--------------------------------- ------------------- ------------------- ------------------- -------------------
Share options approved
but not granted 23 942 639 23 942 639 23 942 639 23 942 639
--------------------------------- ------------------- ------------------- ------------------- -------------------
----------------- ----------------- ----------------- -----------------
------------------------- ------------------- ------------------- ------------------- -------------------
428 114 328 428 114 328 428 114 328 428 114 328
========== ========== ========== ==========
------------------------- ------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------------- ------------------- ------------------- ------------------- -------------------
9.2.3 Headline (losses)/ Restated
earnings
------------------------- ------------------- ------------------- ------------------- -------------------
1 093 949
Profit for the period 689 241 755 690 023 433 562 57 438 969
--------------------------------- ------------------- ------------------- ------------------- -------------------
Add/(deduct) non-recurring items
---------------------------------------------- ------------------- ------------------- -------------------
Trade investments fair
value gains (3 102 124) (4 762 662) (5 713 640) (506 254)
--------------------------------- ------------------- ------------------- -------------------
Unrealised foreign exchange (113 156 (247 818 (113 156
revaluation gains 723) 512) 723) (29 598 834)
--------------------------------- ------------------- ------------------- ------------------- -------------------
Fair value gains on (640 103 (380 064 (1 053 907
investment properties 624) 124) 444) (27 991 540)
--------------------------------- ------------------- ------------------- ------------------- -------------------
61 941 834 84 042 858 83 304 490 13 350 368
Tax thereon ----------------- ----------------- ----------------- -----------------
--------------------------------- ------------------- ------------------- ------------------- -------------------
Headline (losses)/ earnings (5 178 882) 141 420 993 4 476 245 12 692 709
========== ========== ========== ==========
--------------------------------- ------------------- ------------------- ------------------- -------------------
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
30 June 30 June 30 June 30 June
-------- --------------------- -------- --------
2020 2019 2020 2019
-------- --------------------- -------- --------
ZWL ZWL ZWL ZWL
-------- --------------------- -------- --------
Restated
-------- --------------------- -------- --------
Basic 170.53 174.77 270.66 14.55
-------- --------------------- -------- --------
Diluted 160.99 161.18 255.53 13.42
-------- --------------------- -------- --------
Headline (1.28) 35.82 1.11 3.21
-------- --------------------- -------- --------
10. SHARE CAPITAL
10.1 30 June 31 December 30 June 31 December
2020 2019 2020 2019
-------------------- ---------- ------------ ---------- ------------
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
30 June 31 December 30 June 31 December
----------------- --------------- ------------ ----------- ------------
2020 2019 2020 2019
----------------- --------------- ------------ ----------- ------------
Shares million Shares ZWL ZWL
million
----------------- --------------- ------------ ----------- ------------
Restated
----------------- --------------- ------------ ----------- ------------
10.2.1 Ordinary shares
----------------- --------------- ------------ ----------- ------------
Ordinary shares 404 404 2 087 754 2 087 754
-------------------------- --------------- ------------ ----------- ------------
========== ========== ========== ==========
-------------------------- --------------- ------------ ----------- ------------
Historical Cost
30 June 31 December 30 June 31 December
----------------- --------------- ------------ ----------- ------------
2020 2019 2020 2019
----------------- --------------- ------------ ----------- ------------
Shares million Shares ZWL ZWL
million
----------------- --------------- ------------ ----------- ------------
Restated
----------------- --------------- ------------ ----------- ------------
Ordinary shares
----------------- --------------- ------------ ----------- ------------
Ordinary shares 404 404 84 116 84 116
----------------- --------------- ------------ ----------- ------------
========== ========== ========== ==========
----------------- --------------- ------------ ----------- ------------
Historical Cost
30 June 31 December 30 June 31 December
--------------------- --------------- --------------- ----------- ------------
2020 2019 2020 2019
--------------------- --------------- --------------- ----------- ------------
Shares million Shares million ZWL ZWL
Restated
--------------------- --------------- --------------- ----------- ------------
10.2.2 Redeemable ordinary
shares
--------------------- --------------- --------------- ----------- ------------
Redeemable ordinary
shares 104 104 29 040 29 040
------------------------------ --------------- --------------- ----------- ------------
========== ========== ========== ==========
------------------------------ --------------- --------------- ----------- ------------
No ordinary shares were issued during the six months ended 30
June 2020. Of the unissued ordinary shares of 196 million shares
(2019 - 196 million), options which may be granted in terms of the
2012 ESOS amount to 23 942 639. No share options were exercised
from the scheme as at 30 June 2020.
Subject to the provisions of section 183 of the Companies Act
(Chapter 24:03), the unissued shares are under the control of the
directors.
11. REDEEMABLE ORDINARY SHARES
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ------------------ ----------------- -----------------
2020 2019 2020 2019
------------------ ------------------ ----------------- -----------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ----------------- -----------------
Restated
------------------ ------------------ ----------------- -----------------
Nominal value (note
10.2.2) 29 040 472 586 29 040 29 040
------------------ ------------------ ----------------- -----------------
Share premium 14 306 213 37 084 571 14 306 213 14 306 213
------------------ ------------------ ----------------- -----------------
----------------- ----------------- ---------------- ----------------
14 335 253 37 557 157 14 335 253 14 335 253
========== ========== ========== ==========
------------------ ------------------ ----------------- -----------------
On 30 June 2013 the Company 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 of 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 set by the
Reserve Bank of Zimbabwe of ZWL100 million by 31 December 2020. FMO
and Norfund combined 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 5th anniversary (30 June 2018) but before the 9th
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 detailed in the share
buy-back agreement. The 5th anniversary, which is the initial
exercisable date of the share buy-back agreement was reached on 30
June 2018. 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 9th anniversary (30 June 2022) of the effective date.
12. SUBORDINATED TERM LOAN
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
----------------- ----------------- ----------------- -----------------
2020 2019 2020 2019
----------------- ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- -----------------
Restated
----------------- ----------------- ----------------- -----------------
At 1 January 74 301 705 24 502 313 28 360 340 1 505 647
----------------- ----------------- ----------------- -----------------
(48 512 ( 20 557
Monetary adjustment 547) 643 ) - -
----------------- ----------------- ----------------- -----------------
Exchange revaluation 81 462 368 67 811 778 81 462 369 25 883 189
----------------- ----------------- ----------------- -----------------
Interest capitalised 5 459 411 3 018 021 2 888 228 1 151 954
----------------- ----------------- ----------------- -----------------
Interest paid - (472 764) - (180 450)
----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
112 710 74 301 705 112 710 28 360 340
937 ========== 937 =========
========== ==========
----------------- ----------------- ----------------- -----------------
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 had 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 six months ended 30 June 2020 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 30 June 2020.
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. T he 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
30 June 31 December 30 June 31 December
-------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Deposits from banks and other 1 506 340 809 586 1 506 340 309 012
financial institutions** 051 115 051 254
-------------------- -------------------- -------------------- --------------------
1 986 970 2 310 942 1 986 970
Current and deposit accounts 637 896 637 882 067 591
from customers* ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------
3 493 310 3 120 529 3 493 310 1 191 079
Total deposits 688 011 688 845
-------------------- -------------------- -------------------- --------------------
Trade and other payables* 156 619 034 201 906 886 156 619 034 77 066 171
-------------------- -------------------- -------------------- --------------------
----------------- ----------------- ----------------- -----------------
3 649 929 3 322 435 3 649 929 1 268 146
722 897 722 016
========== ========== ========== ==========
-------------------- -------------------- -------------------- --------------------
* 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 ZWL554 146 338, ZWL286 569 001
and ZWL528 854 064 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 year ended 31
December 2019, 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 the above
mentioned lines of credit balances were 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 30 June 2020
at the closing rate of USD/ZWL1:63.74. 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. The RBZ
approved the legacy debt in respect of the FMO and Swedfund lines
of credit.
13.2 Maturity analysis
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
1 958 829 2 737 077 1 958 829 1 044 719
Less than 1 month 014 430 014 581
------------------ ------------------ ------------------ ------------------
1 092 347 1 092 347
1 to 3 months 571 132 384 950 571 50 530 229
------------------ ------------------ ------------------ ------------------
3 to 6 months 288 445 669 88 276 533 288 445 669 33 694 415
------------------ ------------------ ------------------ ------------------
6 months to 1 year 153 496 604 115 092 629 153 496 604 43 929 895
------------------ ------------------ ------------------ ------------------
1 to 5 years 27 504 47 194 890 27 504 18 013 895
------------------ ------------------ ------------------ ------------------
Over 5 years 164 326 502 579 164 326 191 830
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
3 493 310 3 120 529 3 493 310 1 191 079
688 011 688 845
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
13.3 Sectoral analysis of deposits
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
2020 2019 2020 2019
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
ZWL % ZWL % ZWL % ZWL %
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Restated
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Agriculture 42 707 032 1 66 495 341 2 42 707 032 1 25 380 716 2
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Banks and other
financial 1 506 340 1 506 340 309 012
institutions 051 43 809 586 115 26 051 43 254 26
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
119 294
Distribution 177 623 734 5 312 541 045 10 177 623 734 5 305 10
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
103 037
Individuals 279 975 306 8 269 948 734 9 279 975 306 8 176 9
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
164 249
Manufacturing 675 654 304 20 430 320 538 14 675 654 304 20 753 14
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Mining companies 34 085 542 1 53 071 581 2 34 085 542 1 20 256 979 2
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Municipalities
and parastatals 86 150 225 3 151 939 106 4 86 150 225 3 57 993 887 4
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
115 811
Other deposits 244 729 198 7 303 417 568 10 244 729 198 7 950 10
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
216 039
Services 358 825 699 10 566 004 896 18 358 825 699 10 339 18
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Transport and
telecommunications 87 219 597 2 157 204 087 5 87 219 597 2 60 003 485 5
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
3 493 310 100 3 120 529 100 3 493 310 100 1 191 079 100
688 === 011 === 688 === 845 ===
========== ========== ========== ==========
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
14. FINANCIAL INSTRUMENTS
14.1 Investment securities
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
----- ----------------- ----------------- ----------------- -----------------
Note 2020 2019 2020 2019
----- ----------------- ----------------- ----------------- -----------------
ZWL ZWL
----- ----------------- ----------------- ----------------- -----------------
Restated
----- ----------------- ----------------- ----------------- -----------------
Amortised cost 130 393 281 820 130 393 107 568
- Gross 426 836 426 657
----- ----------------- ----------------- ----------------- -----------------
Impairment allowance 16.3 (461 106) (1 054 524) (461 106) (402 502)
----- ----------------- ----------------- ----------------- -----------------
- ECL at 1 January (1 054 524) (7 231 829) (402 502) (444 390)
----- ----------------- ----------------- ----------------- -----------------
- Monetary adjustment 652 022 6 287 048 - -
----- ----------------- ----------------- ----------------- -----------------
* ECL charged through profit and loss (58 604) (109 743) (58 604) 41 888
----- ----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
129 932 280 766 129 932 107 166
320 312 320 155
========= ========= ========= =========
----------------- ----------------- ----------------- -----------------
The Group holds Treasury Bills and Government Bonds totaling
ZWL130 393 426 with interest rates ranging from 2% to 18%. 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 ZWL130 393 426, a total of
ZWL114 179 886 had been pledged as security against interbank
borrowings at 30 June 2020.
14.2 Maturity analysis of investment securities measured at amortised cost
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ----------------- ----------------- -----------------
2020 2019 2020 2019
------------------ ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ----------------- -----------------
Restated
------------------ ----------------- ----------------- -----------------
Less than 1 month 2 528 129 6 549 790 2 528 129 2 500 000
------------------ ----------------- ----------------- -----------------
1 to 3 months 17 774 132 16 741 459 17 774 132 6 390 075
------------------ ----------------- ----------------- -----------------
3 to 6 months 35 200 000 49 778 402 35 200 000 19 000 000
------------------ ----------------- ----------------- -----------------
143 538
6 months to 1 year 50 360 440 425 50 360 440 54 787 417
------------------ ----------------- ----------------- -----------------
1 to 5 years 13 148 494 35 392 271 13 148 494 13 508 934
------------------ ----------------- ----------------- -----------------
11 382 231 29 820 489 11 382 231 11 382 231
Over 5 years ---------------- --------------- --------------- ---------------
------------------ ----------------- ----------------- -----------------
130 393 281 820 130 393 107 568
426 836 426 657
------------------ ----------------- ----------------- -----------------
Expected Credit loss
allowance (461 106) (1 054 524) (461 106) (402 502)
------------------ ----------------- ----------------- -----------------
---------------- --------------- --------------- ---------------
129 932 280 766 129 932 107 166
320 312 320 155
========== ========== ========== ==========
------------------ ----------------- ----------------- -----------------
14.3 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.
14.3.1 Financial instruments measured at fair value - fair value hierarchy
Inflation adjusted
30 June
----------------- ---------------- ----------------- ----------------
2020 Level 1 Level 2 Level 3
----------------- ---------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
----------------- ---------------- ----------------- ----------------
Trade and other investments 7 325 771 - - 7 325 771
----------------- ---------------- ----------------- ----------------
---------------- --------------- ---------------- ---------------
7 325 771 - - 7 325 771
========= ========= ========= =========
----------------- ---------------- ----------------- ----------------
31 Dec
----------------- ---------------- ----------------- ----------------
2019 Level 1 Level 2 Level 3
----------------- ---------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
----------------- ---------------- ----------------- ----------------
Restated
----------------- ---------------- ----------------- ----------------
Trade and other investments 4 223 647 - - 4 223 647
----------------- ---------------- ----------------- ----------------
---------------- --------------- ---------------- ---------------
4 223 647 - - 4 223 647
========= ========= ========= =========
----------------- ---------------- ----------------- ----------------
During the reporting period ended 30 June 2020 and 31 December
2019, 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.
14.3.1 Financial instruments measured at fair value - fair value hierarchy
Historical Cost
30 June
---------------- ----------------- ----------------- ----------------
2020 Level 1 Level 2 Level 3
---------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ----------------- ----------------- ----------------
Trade and other investments 7 325 771 - - 7 325 771
---------------- ----------------- ----------------- ----------------
--------------- ---------------- ---------------- ---------------
7 325 771 - - 7 325 771
========= ========= ========= =========
---------------- ----------------- ----------------- ----------------
31 Dec
---------------- ----------------- ----------------- ----------------
2019 Level 1 Level 2 Level 3
---------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ----------------- ----------------- ----------------
Trade and other investments 1 612 131 - - 1 612 131
---------------- ----------------- ----------------- ----------------
--------------- ---------------- ---------------- ---------------
1 612 131 - - 1 612 131
========= ========= ========= =========
---------------- ----------------- ----------------- ----------------
Level 3 fair value measurements
Reconciliation of trade and other investments
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Balance at 1 January 4 223 647 1 830 794 1 612 131 112 501
------------------ ------------------ ------------------ ------------------
Gain recognised in
profit or loss 3 102 124 2 392 853 5 713 640 1 499 630
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
7 325 771 4 223 647 7 325 771 1 612 131
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
14.3.2 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
30 June 31 December 30 June 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Assets
------------------ ------------------ ------------------ ------------------
1 369 056 1 289 795 1 369 056 492 304
Cash and cash equivalents 048 771 048 267
------------------ ------------------ ------------------ ------------------
Loans, advances and 2 526 003 2 233 628 2 436 533 817 960
other accounts 092 818 439 242
------------------ ------------------ ------------------ ------------------
129 932 129 932 107 166
Investment securities 320 280 766 312 320 155
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
Total 4 024 991 3 804 190 3 935 521 1 417 430
460 901 807 664
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
Liabilities
------------------ ------------------ ------------------ ------------------
Deposits and other 3 649 929 3 322 435 3 649 929 1 268 146
liabilities 722 897 722 016
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
3 649 929 3 322 435 3 649 929 1 268 146
722 897 722 016
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
15. CASH AND CASH EQUIVALENTS
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------- ------------------- ------------------ -----------------
2020 2019 2020 2019
------------------- ------------------- ------------------ -----------------
ZWL ZWL ZWL ZWL
------------------- ------------------- ------------------ -----------------
Restated
------------------- ------------------- ------------------ -----------------
Balances with the Central 267 032
Bank 616 622 760 699 603 351 616 622 760 753
------------------- ------------------- ------------------ -----------------
Current, nostro accounts* 160 209
and cash 677 935 252 419 736 453 677 935 252 897
------------------- ------------------- ------------------ -----------------
Interbank placements 75 000 000 171 604 491 75 000 000 65 500 000
------------------- ------------------- ------------------ -----------------
Expected Credit loss
allowance (501 964) (1 148 524) (501 964) (438 383)
------------------- ------------------- ------------------ -----------------
------------------ ------------------ ----------------- ----------------
1 369 056 1 289 795 1 369 056 492 304
048 ========== 771 048 ========== 267
========== =========
------------------- ------------------- ------------------ -----------------
*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 transactions which include payments and cash
withdrawals.
16. LOANS, ADVANCES AND OTHER ASSETS
16. 1 Total loans, advances and other assets
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------- ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------- ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------- ------------------ ------------------ ------------------
Restated
------------------- ------------------ ------------------ ------------------
Fixed term loans -
Corporate 979 815 593 675 373 875 979 815 593 264 688 911
------------------- ------------------ ------------------ ------------------
Fixed term loans -
Retail 176 287 662 248 295 838 176 287 662 94 772 446
------------------- ------------------ ------------------ ------------------
Mortgages 65 729 823 153 495 347 65 729 823 58 587 891
------------------- ------------------ ------------------ ------------------
Overdrafts 162 018 744 273 795 109 162 018 744 97 600 959
------------------- ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
1 383 851 1 350 960 1 383 851 515 650
822 169 822 207
------------------- ------------------ ------------------ ------------------
1 142 151 1 052 681
Other assets 270 882 668 649 617 302 310 035
------------------- ------------------ ------------------ ------------------
------------------ ---------------- ---------------- ----------------
2 526 003 2 233 628 2 436 533 817 960 242
092 818 439 ==========
=========== ========== ==========
------------------- ------------------ ------------------ ------------------
16.1.2 Maturity analysis
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
---------------------- --------------------- --------------------- ------------------
2020 2019 2020 2019
---------------------- --------------------- --------------------- ------------------
ZWL ZWL ZWL ZWL
---------------------- --------------------- --------------------- ------------------
Restated
---------------------- --------------------- --------------------- ------------------
138 436
Less than 1 month 264 429 315 362 691 051 264 429 315 142
---------------------- --------------------- --------------------- ------------------
1 to 3 months 215 702 983 168 078 148 215 702 983 64 154 025
---------------------- --------------------- --------------------- ------------------
3 to 6 months 89 164 354 56 693 764 89 164 354 21 639 536
---------------------- --------------------- --------------------- ------------------
105 500
6 months to 1 year 296 429 046 276 403 465 296 429 046 893
---------------------- --------------------- --------------------- ------------------
153 679
1 to 5 years 481 854 751 402 628 472 481 854 751 923
---------------------- --------------------- --------------------- ------------------
91 652 893 130 209 217 91 652 893 49 699 770
Over 5 years ----------------- ---------------- ----------------- ----------------
---------------------- --------------------- --------------------- ------------------
1 439 233 1 396 704 1 439 233 533 110
Total advances 342 117 342 289
---------------------- --------------------- --------------------- ------------------
Allowances for impairment
losses on loans and (17 115
advance (54 947 636) (44 840 761) (54 947 636) 341)
---------------------- --------------------- --------------------- ------------------
Impairment loss allowance (216 450 (13 300
at 1 January (44 840 761) 141) (17 115 341) 688)
---------------------- --------------------- --------------------- ------------------
Monetary adjustment 27 725 420 181 603 455 - -
---------------------- --------------------- --------------------- ------------------
ECL charge through profit
or loss (30 773 577) (12 915 183) (30 773 577) (4 929 615)
---------------------- --------------------- --------------------- ------------------
Revaluation exchange
loss movement through
profit or loss (7 058 718) - (7 058 718) -
---------------------- --------------------- --------------------- ------------------
Bad debts written off - 2 921 108 - 1 114 962
---------------------- --------------------- --------------------- ------------------
Suspended interest on
credit impaired financial (433 884) (903 187) (433 884) (344 741)
assets ------------------- ------------------ ------------------ ---------------
---------------------- --------------------- --------------------- ------------------
1 383 851 1 350 960 1 383 851 515 650
822 169 822 207
---------------------- --------------------- --------------------- ------------------
1 142 151 1 052 681 302 310
Other assets* 270 882 668 649 617 035
---------------------- --------------------- --------------------- ------------------
------------------ ------------------ ------------------ ----------------
2 526 003 2 233 628 2 436 533 817 960
092 818 439 242
========== ========== ========== ==========
---------------------- --------------------- --------------------- ------------------
*Included in other assets is an amount of ZWL904 685 146 pledged
with the RBZ for the facilitation of legacy debts settlement in
terms of Regulatory directives.
16.2 Sectoral analysis of utilisations
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
2020 2019 2020 2019
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
ZWL % ZWL % ZWL % ZWL %
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
Restated
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
Agriculture
and 457 721 253 524 457 721
horticulture 761 32 002 18 761 32 96 767 992 18
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
Conglomerates 43 824 781 3 6 280 981 - 43 824 781 3 2 397 398 -
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
336 962
Distribution 96 804 587 7 856 16 96 804 587 7 87 785 991 16
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
Food &
beverages 84 902 259 6 3 031 557 6 84 902 259 6 29 457 868 6
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
212 110 212 110 126 212
Individuals 136 14 77 177 136 24 136 14 109 24
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
285 628 330 665 285 628
Manufacturing 556 20 109 11 556 20 60 715 905 11
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
159 070
Mining 1 216 358 - 563 - 1 216 358 - 1 157 120 -
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
257 024 229 991 257 024 128 615
Services 904 18 913 24 904 18 906 24
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
1 439 233 100 1 396 704 100 1 439 233 100 533 110 100
342 === 117 === 342 === 289 ===
========== ========== ========== ==========
----------------- ----- ----------------- ----- ----------------- ----- --------------- -----
The material concentration of loans and advances are to the
agriculture and horticulture sector at 32% (2019 - 18%) and the
manufacturing sector at 20% (2019 - 11%).
16.3 Impairment analysis of financial instruments measured at amortised cost
Inflation adjusted
Stage 1 Stage 2 Stage 3 Total
-------------------- ----------------- ----------------- -------------------
Gross carrying amount at 2 335 203 2 385 012
1 January 2020 247 30 731 236 19 077 740 224
-------------------- ----------------- ----------------- -------------------
(1 443 875 (19 001 (11 795 (1 474 672
Monetary adjustment 683) 380) 926) 990)
-------------------- ----------------- ----------------- -------------------
Transfers
-------------------- ----------------- ----------------- -------------------
(12 365
(9 686 339) 456) 2 679 117
-------------------- ----------------- ----------------- -------------------
(14 245
- to 12 months to ECL 14 328 649 187) (83 462) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (2 555 722) 2 586 076 (30 355) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (2 086 589) (706 345) 2 792 934 -
-------------------- ----------------- ----------------- -------------------
Net movement in financial
assets 924 429 576 4 027 517 1 723 084 930 180 176
-------------------- ----------------- ----------------- -------------------
------------------ ---------------- ---------------- ------------------
Balance as at 30 June 2020 1 825 443 3 391 917 11 684 015 1 840 519
479 ========= ========= 410
=========== ===========
-------------------- ----------------- ----------------- -------------------
Loss allowance analysis
-------------------- ----------------- ----------------- -------------------
At 1 January 2020 20 058 931 819 694 3 981 948 24 860 573
-------------------- ----------------- ----------------- -------------------
- ECL - Loans, advances
& guarantees 12 313 699 819 694 3 981 948 17 115 341
-------------------- ----------------- ----------------- -------------------
* Guarantees and facilities approved not drawn down 6 904 347 - - 6 904 347
-------------------- ----------------- ----------------- -------------------
- ECL - Investment securities 402 502 - - 402 502
-------------------- ----------------- ----------------- -------------------
- ECL - Interbank placements 438 383 - - 438 383
-------------------- ----------------- ----------------- -------------------
Transfers 180 924 (595 864) 414 940 -
-------------------- ----------------- ----------------- -------------------
- to 12 month ECL 622 516 (618 132) (4 384) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (142 230) 143 913 (1 683) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (299 362) (121 645) 421 007 -
-------------------- ----------------- ----------------- -------------------
Net increase/(decrease)
in ECL 24 174 740 587 710 457 512 25 219 962
-------------------- ----------------- ----------------- -------------------
Loans and advances 29 728 355 587 710 457 512 30 773 577
-------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down (5 675 801) - - (5 675 801)
-------------------- ----------------- ----------------- -------------------
Investment securities 58 605 - - 58 605
-------------------- ----------------- ----------------- -------------------
Interbank placements 63 581 - - 63 581
-------------------- ----------------- ----------------- -------------------
Revaluation exchange losses
on loans and advances ECL 7 058 718 - - 7 058 718
-------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
Balance as at 30 June 2020 51 473 313 811 540 4 854 400 57 139 253
========= ========= ========== =========
-------------------- ----------------- ----------------- -------------------
Loans and advances 49 281 696 811 540 4 854 400 54 947 636
-------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down 1 228 547 - - 1 228 547
-------------------- ----------------- ----------------- -------------------
Investment securities 461 106 - - 461 106
-------------------- ----------------- ----------------- -------------------
Interbank placements 501 964 - - 501 964
-------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
51 473 313 811 540 4 854 400 57 139 253
========= ========= ========= =========
-------------------- ----------------- ----------------- -------------------
16.3 Impairment analysis of financial instruments measured at amortised cost
Inflation adjusted
Stage 1 Stage 2 Stage 3 Total
------------------- ----------------- ----------------- -------------------
Gross carrying amount at 6 058 045 408 759 317 002 6 783 806
1 January 2019 168 319 492 979
------------------- ----------------- ----------------- -------------------
(5 056 550 (369 151 (265 967 (5 691 670
Monetary adjustment 775) 603) 709) 087)
------------------- ----------------- ----------------- -------------------
Transfers
------------------- ----------------- ----------------- -------------------
29 279 (3 468
(25 810 961) 540 581)
------------------- ----------------- ----------------- -------------------
- to 12 months to ECL 3 518 133 (3 228 025) (290 109) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (27 073 980) 33 631 682 (6 557 702) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (2 255 114) (1 124 117) 3 379 230 -
------------------- ----------------- ----------------- -------------------
Net movement in financial
assets 518 917 352 14 563 834 10 873 808 544 354 994
------------------- ----------------- ----------------- -------------------
------------------ ---------------- ---------------- ------------------
Balance as at 31 December 1 494 600 83 451 090 58 440 010 1 636 491
2019 784 ========= ========= 884
=========== ===========
------------------- ----------------- ----------------- -------------------
Loss allowance analysis
------------------- ----------------- ----------------- -------------------
At 1 January 2019 20 302 891 2 235 763 13 647 640 36 186 294
------------------- ----------------- ----------------- -------------------
- ECL - Loans, advances
& guarantees 18 963 283 2 235 763 13 647 640 34 846 686
------------------- ----------------- ----------------- -------------------
- ECL - Investment securities 1 164 264 - - 1 164 264
------------------- ----------------- ----------------- -------------------
- ECL - Interbank placements 175 344 - - 175 344
------------------- ----------------- ----------------- -------------------
Transfers (2 267 029) 2 295 772 (28 743) -
------------------- ----------------- ----------------- -------------------
- to 12 month ECL 92 040 (85 797) (6 243) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (1 775 514) 2 682 969 (907 455) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (583 555) (301 400) 884 955 -
------------------- ----------------- ----------------- -------------------
Net increase/(decrease) (2 384 (3 186
in ECL 34 516 855 006) 533) 28 946 316
------------------- ----------------- ----------------- -------------------
Loans and advances 15 564 615 (2 384 006) (265 426) 12 915 183
------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down 18 088 802 - - 18 088 802
------------------- ----------------- ----------------- -------------------
Investment securities (109 743) - - (109 743)
------------------- ----------------- ----------------- -------------------
Interbank placements 973 181 - - 973 181
------------------- ----------------- ----------------- -------------------
Bad debts written off - - (2 921 108) (2 921 108)
------------------- ----------------- ----------------- -------------------
---------------- --------------- ---------------- ----------------
Balance as at 31 December 52 552 717 2 147 529 10 432 65 132 610
2019 ========= ========= 364 =========
=========
------------------- ----------------- ----------------- -------------------
Loans and advances 32 260 863 2 147 529 10 432 369 44 840 761
------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down 18 088 801 - - 18 088 801
------------------- ----------------- ----------------- -------------------
Investment securities 1 054 524 - - 1 054 524
------------------- ----------------- ----------------- -------------------
Interbank placements 1 148 524 - - 1 148 524
------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
52 552 712 2 147 529 10 432 65 132 610
========= ========= 369 =========
=========
------------------- ----------------- ----------------- -------------------
16.4 Credit-impaired financial assets
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
---------------- ---------------- ---------------- ----------------
2020 2019 2020 2019
---------------- ---------------- ---------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ---------------- ---------------- ----------------
Restated
---------------- ---------------- ---------------- ----------------
Total credit impaired financial
assets 11 684 015 19 077 740 11 684 015 7 281 814
---------------- ---------------- ---------------- ----------------
Expected credit losses
on credit impaired financial (10 432
assets (4 854 400) 369) (4 854 400) (3 981 948)
---------------- ---------------- ---------------- ----------------
Retail loans insurance (499 057) (1 307 487) (499 057) (499 057)
---------------- ---------------- ---------------- ----------------
Suspended interest on credit-impaired
financial assets (433 884) (903 187) (433 884) (344 739)
---------------- ---------------- ---------------- ----------------
--------------- --------------- --------------- ---------------
Net credit impaired financial 5 896 674 6 434 697 5 896 674 2 456 070
assets ========= ========== ========= =========
---------------- ---------------- ---------------- ----------------
The net credit-impaired financial assets of these accounts
represent recoverable portions covered by realisable security,
which includes guarantees, cession of debtors, mortgages over
properties, equities and promissory notes all fair valued at ZWL4
131 650 (2019 - ZWL8 335 250).
16.5 Loans to related parties (included under loans, advances and other assets)
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------- ------------------- ------------------- -------------------
2020 2019 2020 2019
------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------- ------------------- ------------------- -------------------
Restated
------------------- ------------------- ------------------- -------------------
Executive directors 1 177 733 1 954 913 1 177 733 746 174
------------------- ------------------- ------------------- -------------------
Officers 46 165 070 70 598 522 46 165 070 26 946 866
------------------- ------------------- ------------------- -------------------
Officers' companies - - - -
----------------- ----------------- ----------------- -----------------
------------------- ------------------- ------------------- -------------------
47 342 803 72 553 435 47 342 803 27 693 040
------------------- ------------------- ------------------- -------------------
ECL on staff loans -
Stage 1 (1 834 371) (127 721) (1 834 371) (48 750)
------------------- ------------------- ------------------- -------------------
----------------- ------------------ ------------------ ----------------27
45 508 432 72 425 714 45 508 432 644 290
========== ========== ========== =========
------------------- ------------------- ------------------- -------------------
17. INTANGIBLE ASSETS
Inflation adjusted
Computer
Software Total
------------------- ----------------
ZWL ZWL
------------------- ----------------
Cost
------------------- ----------------
Balance at 1 January 2019 123 362 720 123 362 720
------------------- ----------------
1 668 628 1 668 628
Capitalisation acquisitions ----------------- --------------
------------------- ----------------
Balance at 31 December 2019 125 031 348 125 031 348
------------------- ----------------
Acquisitions 3 207 838 3 207 838
------------------- ----------------
---------------- --------------
Balance at 30 June 2020 128 239 128 239 186
186 ========
=========
------------------- ----------------
Accumulated amortisation
------------------- ----------------
Balance at 1 January 2019 77 951 380 77 951 380
------------------- ----------------
16 652 838 16 652 838
Amortisation for the year ---------------- --------------
------------------- ----------------
Balance at 31 December 2019 94 604 218 94 604 218
------------------- ----------------
Amortisation for the year 7 238 239 7 238 239
------------------- ----------------
--------------- ---------------
Balance at 30 June 2020 101 842 457 101 842 457
========= =========
------------------- ----------------
Carrying amount
------------------- ----------------
At 30 June 2020 26 396 729 26 396 729
========== ========
------------------- ----------------
Restated at 31 December 2019 30 427 133 30 427 133
========= ========
------------------- ----------------
At 31 December 2018 - Restated 45 411 343 45 411 343
========== ========
------------------- ----------------
Historical Cost
Computer
Software Total
------------------- ----------------
ZWL ZWL
------------------- ----------------
Cost
------------------- ----------------
Balance at 1 January 2019 5 375 405 5 375 405
------------------- ----------------
Acquisitions 94 320 94 320
------------------- ----------------
----------------- --------------
------------------- ----------------
Balance at 31 December 2019 5 469 725 5 469 725
------------------- ----------------
Acquisitions 1 570 139 1 570 139
------------------- ----------------
----------------- --------------
Balance at 30 June 2020 7 039 864 7 039 864
========== ========
------------------- ----------------
Accumulated amortisation
------------------- ----------------
Balance at 1 January 2019 3 338 632 3 338 632
------------------- ----------------
733 909 733 909
Amortisation for the year ----------------- --------------
------------------- ----------------
Balance at 31 December 2019 4 072 541 4 072 541
------------------- ----------------
Amortisation for the year 328 236 328 236
------------------- ----------------
----------------- --------------
Balance at 30 June 2020 4 400 777 4 400 777
========== ========
------------------- ----------------
Carrying amount
------------------- ----------------
At 30 June 2020 2 639 087 2 639 087
========== ========
------------------- ----------------
At 31 December 2019 1 397 186 1 397 186
========== ========
------------------- ----------------
At 1 January 2019 2 036 775 2 036 775
========== ========
------------------- ----------------
18. 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
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
168 996 540 132
At 1 January 2019 - restated 470 166 264 633 29 873 411 105 750 226 - 69 247 791 531
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Additions 48 037 157 30 073 122 3 040 032 11 395 371 - - 92 545 682
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Initial recognition - Right
of Use Asset - - - - 38 275 228 - 38 275 228
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
(37 762
Capitalisations 870) 3 213 701 769 427 2 666 736 - 31 113 005 -
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
383 149
Revaluation gain - - - - - 383 149 135 135
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Translation gains on change 226 166
in functional - - - - - 226 166 302 302
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
----------------- ------------------ -------------------- ------------------ -----------------
179 570 199 551 ------------------- 119 512 -------------------- 709 716 1 280 268
At 31 December 2019 - restated 757 456 33 682 871 334 38 275 228 833 878
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Additions 71 363 740 13 696 542 - 338 913 - - 85 399 196
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Capitalisations 542 202 (542 202) - - - - -
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Disposals - - (4 047 718) - - - (4 047 718)
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Remeasurement of Right of
Use Asset - - - - 21 591 106 - 21 591 106
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
402 510
Revaluation gain - - - - - 402 510 811 811
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
----------------- ------------------ ----------------- ------------------ ------------------ ------------------ -----------------
At 30 June 2020 251 476 212 665 29 635 153 119 851 59 866 334 1 112 187 1 781 014
699 196 =========== 247 =========== 643 019
========== =========== =========== =========== ==========
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Accumulated depreciation
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
199 180
At 1 January 2019 - restated - 85 899 869 23 837 869 87 777 468 - 1 665 221 428
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Charge for the year - 27 452 336 4 226 561 7 926 049 8 989 273 1 583 168 50 177 388
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Disposals - - (4 047 718) - - - (4 047 718)
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
----------------- ---------------
----------------- 113 352 ----------------- ------------------ ------------------ ---------------- 245 310
At 31 December 2019 - restated - 206 24 016 712 95 703 517 8 989 273 3 248 389 098
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Charge for period - 9 161 977 1 157 810 4 271 648 - 4 708 253 19 299 688
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Charge for period - Right
of Use Asset - - - - 1 985 839 - 1 985 839
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
At 30 June 2020 - 122 514 183 25 174 522 99 975 165 10 975 112 7 956 642 266 595
========== =========== ========== =========== =========== ========== 624
=========
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
Carrying amount
At 30 June 2020 251 476 85 483 360 4 460 631 19 876 082 48 891 222 1 104 230 1 514 418
699 =========== ========== =========== =========== 401 395
========== ========== ==========
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
At 31 December 2019 - Restated 179 570 83 983 948 9 666 158 23 808 817 29 285 955 706 427 1 032 743
757 =========== ========== =========== =========== 844 479
========== ========== ==========
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
At 1 January 2019 - Restated 168 996 80 364 764 6 035 542 17 972 758 - 67 582 569 340 952
470 =========== ========== =========== =========== ========== 102
========== =========
------------------------------------------------------------------- ------------------- -------------------- --------------------- --------------------- ------------------- ------------------
18. PROPERTY AND EQUIPMENT
Historical Cost
Capital Furniture Right of Freehold
work in progress Computers Motor Vehicles & Equipment Use Assets** Land & Buildings Total
------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Cost/Revaluation ZWL ZWL ZWL ZWL ZWL ZWL ZWL
amount
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
26 478
At 1 January 2019 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
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
(14 413
Capitalisations 772) 1 226 643 293 684 1 017 871 - 11 875 574 -
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
236 960 236 960
Revaluation gain - - - - - 551 551
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Translation gain
on change
in functional 15 653
currency - - - - - 15 653 157 157
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Initial
recognition -
Right
of use asset - - - - 4 096 580 - 4 096 580
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Reversal of
impairment - - - - - 40 600 40 600
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
----------------- ---------------- ---------------
At 31 December 14 824 ------------------ ----------------- ------------------ ------------------ 268 382 307 537
2019 373 11 615 145 1 769 802 6 848 941 4 096 580 800 722
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
19 605
Additions 14 059 872 5 318 326 - 227 412 - - 609
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Right of Use Asset 11 776
re-measurement - - - - 11 776 445 - 445
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Capitalisations 206 954 (206 954) - - - - -
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
839 099 839 099
Revaluation gain - - - - - 708 708
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Disposals - - (180 000) - - - (180 000)
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
----------------- ------------------ ----------------- ------------------ ------------------ ---------------- ---------------
At 30 June 2020 29 091 16 726 516 1 589 802 7 076 353 15 873 025 1 107 482 1 177
199 =========== ========== =========== =========== 588 839 484
========== ========== ==========
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Accumulated
depreciation
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 1 January 2019 - 3 607 903 1 008 262 3 626 458 - 391 644 8 634 267
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Charge for the
year - 1 427 692 222 449 481 383 1 310 867 175 836 3 618 227
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
---------------
At 31 December ----------------- ----------------- ------------------ ------------------- ----------------- 12 252
2019 ------------------- 5 035 595 1 230 711 4 107 841 1 310 867 567 480 495
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Charge for the
year - 1 172 454 90 892 392 772 - 2 684 707 4 340 825
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Charge for period
- Right
of Use Asset - - - - 1 501 219 - 1 501 219
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Disposals - - (180 000) - - - (180 000)
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
------------------ ------------------ ------------------ ------------------ ------------------- ------------------ ----------------
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 30 June 2020 - 6 208 049 1 141 603 4 500 613 2 812 086 3 252 187 17 914
========== =========== ========== =========== =========== ========== 538
==========
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
Carrying amount
At 30 June 2020 29 091 10 518 468 448 199 2 575 739 13 060 939 1 104 230 1 159
199 =========== ========== =========== =========== 401 924 945
========== ========== ==========
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 31 December 14 824 373 6 579 550 539 092 2 741 100 2 785 713 267 815 295 285
2019 ========== =========== ========== =========== =========== 400 227
========== ==========
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
At 1 January 2019 9 463 994 3 805 448 261 508 851 765 - 3 461 354 17 844
========== =========== ========== =========== =========== ========== 069
==========
-------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------
19. LEASES
The Group leases various buildings for the furtherance of its
trade. Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants other than the security
interests in the leased assets that are held by the lessor. Leased
assets may not be used as security for borrowing purposes.
The Group's leases are recognised as a right-of-use asset and a
corresponding liability is also recognised in the Statement of
Financial Position from the date at which the leased asset is
available for use by the Group.
Assets and liabilities arising from a leasing arrangement are
initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
-- fixed payments, less any lease incentives receivable;
-- the exercise price of a purchase option if the Group is
reasonably certain to exercise that option, and;
-- payments of penalties for terminating the lease, if it is provided in the leasing agreement.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The Right-of-Use Assets represent the Group's rights to occupy
land and buildings in various lease arrangements 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
The lease payments are discounted using the Group's incremental
borrowing rate. The Group does not recognise Right of Use Assets or
lease liabilities or short term leases which are expensed on a
straight line basis.
20. CAPITAL COMMITMENTS
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Capital expenditure
contracted for 5 447 693 15 269 794 5 447 693 5 828 388
------------------ ------------------ ------------------ ------------------
Capital expenditure
authorised but not yet 112 558 308 021 112 558 117 569
contracted for 144 310 144 873
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
Balance at 31 December 118 005 323 291 118 005 123 398
837 104 837 261
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
The capital expenditure will be funded from the Group's own
resources.
21. CONTINGENT LIABILITIES
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ----------------- ------------------ ------------------
2020 2019 2020 2019
------------------ ----------------- ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ------------------ ------------------
Restated
------------------ ----------------- ------------------ ------------------
161 995 332 604 161 995 126 952
Guarantees 686 057 686 189
------------------ ----------------- ------------------ ------------------
Facilities approved
but not drawn down 33 896 956 52 576 367 33 896 956 20 067 960
------------------ ----------------- ------------------ ------------------
Expected credit losses
on facilities approved
but not drawdown (319 214) (3 869 621) (319 214) (1 477 002)
------------------ ----------------- ------------------ ------------------
Expected credit losses (14 219
on guarantees (909 332) 185) (909 332) (5 427 344)
------------------ ----------------- ------------------ ------------------
----------------- ---------------- ----------------- -----------------
Closing balances 194 664 367 091 194 664 140 115
096 618 096 803
========== ========== ========== ==========
------------------ ----------------- ------------------ ------------------
22. EXCHANGE RATES
The following exchange rates have been used to translate the
foreign currency balances to Zimbabwean dollars (ZWL) at period
end:-
30 June 31 December
2020 2019
Mid - rate Mid - rate
----- ----------- ------------
ZWL ZWL
----- ----------- ------------
United States Dollar USD 63.7442 16.7734
----- ----------- ------------
British Sterling GBP 78.6922 22.1677
----- ----------- ------------
South African Rand ZAR 0.2723 0.8350
----- ----------- ------------
European Euro EUR 71.5337 18.8164
----- ----------- ------------
Botswana Pula BWP 0.1852 0.6302
----- ----------- ------------
The translation of foreign currency denominated Profit or loss
items was done using the various spot rates which applied on the
respective transaction dates during the period under review.
23. EVENTS AFTER THE REPORTING PERIOD
The Directors have assessed and concluded that there were no
significant events after the reporting
period which require separate disclosure for the Group.
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2020
Inflation adjusted Historical Cost*
30 June 30 June 30 June 30 June
2020 2019 2020 2019
ZWL ZWL ZWL ZWL
Restated
Reviewed Reviewed
Interest income 205 869 041 284 733 413 127 969 603 23 200 282
(37 096 152) (85 307 388) (22 245 160) (6 890 386)
Interest expense ----------------- ----------------- ----------------- ----------------
Net interest income 168 772 889 199 426 025 105 724 443 16 309 896
Fee and commissions income 241 177 285 221 924 797 154 253 951 18 569 148
133 139 769 355 453 683 114 112 987 32 495 530
Net foreign exchange gains ---------------- ---------------- ---------------- ---------------
Revenue 543 089 943 776 804 505 374 091 381 67 374 574
1 064 821
668 359 753 429 322 061 755 30 064 410
Other income a ----------------- ---------------- ---------------- ---------------
1 211 449 1 206 126 1 438 913
Operating income 696 566 136 97 438 984
(329 405 (340 952 (186 473 (23 917
313) 063) 176) 567)
Operating expenditure b ----------------- ----------------- ----------------- ----------------
Operating income before
impairment
charge and loss on net monetary 1 252 439
position 882 044 383 865 174 503 960 73 521 417
Impairment losses on financial
assets measured at amortised
cost (25 219 962) 7 896 544 (25 219 962) 943 144
(206 421
(33 265 303) 981) - -
Loss on net monetary position ----------------- ----------------- ----------------- ----------------
1 227 219
Profit before taxation 823 559 118 666 649 066 998 74 464 561
(155 504 (162 136 (133 332 (17 022
400) 398) 999) 320)
Taxation ------------------ ----------------- ----------------- ----------------
1 093 886
Profit for the period 668 054 718 504 512 668 999 57 442 241
Other comprehensive income
Revaluation gains on land
and buildings, net of tax 303 010 138 13 103 912 631 674 260 3 986 225
---------------- ----------------- ----------------- ---------------
971 064 517 616 1 725 561 61 428
856 580 259 466
========== ========== ========== =========
Earnings/(losses) per share
(ZWL cents)
- Basic and diluted c.4 4 047.33 3 056.53 6 627.19 348.01
- Headline c.4 (159.73) (267.11) 19.32 76.92
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Inflation adjusted Historical Cost*
30 June 31 December 30 June 31 December
------ ------------------- ------------------- -------------------- -------------------
Note 2020 2019 2020 2019
------ ------------------- ------------------- -------------------- -------------------
ZWL ZWL ZWL ZWL
------ ------------------- ------------------- -------------------- -------------------
Restated
------ ------------------- ------------------- -------------------- -------------------
SHAREHOLDER'S FUNDS Reviewed Audited
------ ------------------- ------------------- -------------------- -------------------
Share capital d 424 180 424 180 16 506 16 506
------ ------------------- ------------------- -------------------- -------------------
752 022
Share premium 752 022 609 609 31 474 502 31 474 502
------------------- ------------------- -------------------- -------------------
Functional currency translation 167 928
reserve 167 928 479 479 11 619 648 11 619 648
------------------- ------------------- -------------------- -------------------
284 488
Revaluation reserve 587 498 371 233 807 754 210 176 079 950
------------------- ------------------- -------------------- -------------------
1 237 590 569 535 1 423 285
458 740 471 329 398 472
Retained earnings ----------------- ----------------- ------------------ ---------------
------------------- ------------------- -------------------- -------------------
2 745 464 1 774 399 2 274 150
097 241 337 548 589 078
Total shareholder's funds ----------------- ----------------- ------------------ ---------------
------------------- ------------------- -------------------- -------------------
LIABILITIES
------ ------------------- ------------------- -------------------- -------------------
3 647 386 3 315 771 3 647 386 1 265 602
Deposits and other liabilities 105 824 105 395
------------------- ------------------- -------------------- -------------------
Current tax liabilities 14 844 164 1 835 139 14 844 164 700 457
------------------- ------------------- -------------------- -------------------
295 265
Deferred tax liabilities 411 406 190 946 414 999 204 97 666 693
------------------- ------------------- -------------------- -------------------
74 301
Subordinated term loan 112 710 937 705 112 710 937 28 360 340
------------------- ------------------- -------------------- -------------------
Amount owing to Holding 2 143 122 5 614 799 2 143 122 2 143 122
company ----------------- ----------------- ----------------- -----------------
------------------- ------------------- -------------------- -------------------
4 188 490 3 692 789 4 192 083 1 394 473
518 413 532 007
Total liabilities ----------------- ----------------- ----------------- -----------------
------------------- ------------------- -------------------- -------------------
Total shareholder's 6 933 954 5 467 188 6 466 233 1 943 062
funds 615 654 869 085
and liabilities ========== ========== =========== ==========
------ ------------------- ------------------- -------------------- -------------------
ASSETS
------ ------------------- ------------------- -------------------- -------------------
Cash and cash 1 369 056 1 289 795 1 369 056
equivalents e 048 771 048 492 304 267
------ ------------------- ------------------- -------------------- -------------------
280 766
Investment securities 129 932 319 312 129 932 319 107 166 155
------------------- ------------------- -------------------- -------------------
Loans, advances and other 2 523 471 2 226 997 2 434 002
assets 990 533 336 815 429 137
------------------- ------------------- -------------------- -------------------
Trade and other investments 7 325 771 4 223 647 7 325 771 1 612 131
------------------- ------------------- -------------------- -------------------
1 363 353 602 234 1 363 353
Investment properties f 363 779 363 229 867 982
------ ------------------- ------------------- -------------------- -------------------
30 427
Intangible assets 26 396 729 133 2 639 087 1 397 186
------------------- ------------------- -------------------- -------------------
1 514 418 1 032 743 1 159 924
Property and equipment 395 479 945 295 285 227
------------------- ------------------- -------------------- -------------------
----------------- ----------------- ----------------- -----------------
-------------------------------- ------------------- ------------------- -------------------- -------------------
Total assets 6 933 954615 5 467 188 6 466 233 1 943 062
========== 654 869 085
========== ========== ==========
------------------- ------------------- -------------------- -------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
Inflation adjusted
Functional
Currency
Translation Revaluation Retained
Share Capital Share Premium Reserve Reserve Earnings Total
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
ZWL ZWL ZWL ZWL ZWL ZWL
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Balances at 1 752 022
January 2019 424 180 609 - - 221 025 066 973 471 855
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Change in
functional
currency
translation 167 928
reserve - - 479 - - 167 928 479
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Total
comprehensive
income for
the
period - - - 13 103 912 504 512 668 517 616 580
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
- - - - (52 230 685) (52 230 685)
Dividends paid ----------------- ----------------- ----------------- ----------------- ------------------ ------------------
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Balances at 30 752 022 167 928 1 606 786
June 2019 424 180 609 479 13 103 912 673 307 049 229
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Total
comprehensive
income for (103 771
the 271 384 321 309) 167 613 012
period --------------- ----------------- ----------------- ------------------ ------------------ ----------------
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Balances at 31 752 022 167 928 1 774 399
December 2019 424 180 609 479 284 488 233 569 535 740 241
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Total
comprehensive
income for
the
period - - - 303 010 138 668 054 718 971 064 856
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
Balances at 30 424 180 752 022 167 928 587 498 371 1 237 590 2 745 464
June 2020 ========== 609 479 ========== 458 097
========== ========== =========== ==========
------------------ ------------------- ------------------- --------------------- --------------------- --------------------
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
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 2019 16 506 31 474 502 - 136 741 47 267 030 78 894 779
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Change in
functional
currency
translation
reserve - - 11 619 648 - - 11 619 648
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Total
comprehensive
income for
the
period - - - 3 986 225 57 442 241 61 428 466
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
- - - - (3 772 370) (3 772 370)
Dividend paid ----------------- ----------------- ----------------- ----------------- ----------------- ----------------
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Balances at 30
June 2019 16 506 31 474 502 11 619 648 4 122 966 100 936 901 148 170 523
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Profit for the
period - - - 171 956 984 228 461 571 400 418 555
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Balances at
31 December ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
2019 16 506 31 474 502 11 619 648 176 079 950 329 398 472 548 589 078
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Total
comprehensive
income for
the 1 093 886 1 725 561
period - - - 631 674 260 999 259
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
Balances at 30 16 506 31 474 502 11 619 648 807 754 210 1 423 285 2 274 150
June 2020 ========== ========== ========== ========== 471 337
========== ==========
------------------ ------------------ ------------------ ------------------ ------------------- ------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
STATEMENT OF CASH FLOWS
for the six months ended 30 June 2020
Inflation adjusted Historical Cost*
30 June 30 June 30 June 30 June
---------------------- -------------------- ----------------------- ----------------------------
2020 2019 2020 2019
---------------------- -------------------- ----------------------- ----------------------------
ZWL ZWL ZWL ZWL
---------------------- -------------------- ----------------------- ----------------------------
Restated
---------------------- -------------------- ----------------------- ----------------------------
Reviewed Reviewed
---------------------- -------------------- ----------------------- ----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
-------------------- ----------------------- ----------------------------
666 649 1 227 219
Profit before taxation 823 559 118 066 998 74 464 561
---------------------- -------------------- ----------------------- ----------------------------
Non-cash items
---------------------- -------------------- ----------------------- ----------------------------
* Impairment losses on financial assets measured at
amortised cost 25 219 962 (7 896 544) 25 219 962 (943 144)
---------------------- -------------------- ----------------------- ----------------------------
(640 103 (380 064 (1 053 907
* Investment properties fair value adjustment 624) 124) 444) (27 991 540)
---------------------- -------------------- ----------------------- ----------------------------
* Trade and other investments fair value gains (3 102 124) (4 762 662) (5 713 640) (506 254)
---------------------- -------------------- ----------------------- ----------------------------
* Depreciation (excluding Right of use assets) 19 299 688 34 764 116 4 340 825 988 561
---------------------- -------------------- ----------------------- ----------------------------
* Depreciation - Right of use assets 1 985 839 5 967 714 1 501 219 537 067
---------------------- -------------------- ----------------------- ----------------------------
* Interest capitalised on subordinated term loan 5 459 411 2 309 884 2 888 228 275 887
---------------------- -------------------- ----------------------- ----------------------------
* Amortisation of intangible assets 7 238 239 22 309 322 328 236 373 555
---------------------- -------------------- ----------------------- ----------------------------
(113 156 (247 818 (113 156
723) 512) 723) (29 598 834)
* Unrealised foreign exchange gains ------------------- ------------------ -------------------- --------------------
---------------------- -------------------- ----------------------- ----------------------------
Operating cash flows before
changes in operating assets
and liabilities 126 399 786 91 458 260 88 720 661 17 599 859
---------------------- -------------------- ----------------------- ----------------------------
Changes in operating assets
and liabilities
---------------------- -------------------- ----------------------- ----------------------------
(Decrease)/Increase in deposits (1 488 634 (328 963
and other liabilities 636) 301) 561 534 792 (27 152 693)
---------------------- -------------------- ----------------------- ----------------------------
1 544 313 (198 444 (410 487
Decrease/(increase) in loans, 530 246) 298) (9 394 652)
advances and other assets ------------------- ------------------ -------------------- --------------------
---------------------- -------------------- ----------------------- ----------------------------
(435 949
Net cash generated/(used) from 182 078 680 287) 239 768 155 (18 947 486)
operations ------------------ ----------------- ------------------- -------------------
---------------------- -------------------- ----------------------- ----------------------------
Taxation
---------------------- -------------------- ----------------------- ----------------------------
(10 211
(12 483 633) 836) (9 197 573) (1 219 677)
Corporate tax paid ------------------- ------------------ -------------------- --------------------
---------------------- -------------------- ----------------------- ----------------------------
(446 161
Net cash inflow/(outflow) from 169 595 047 123) 230 570 582 (20 167 163)
operating activities ------------------- ------------------ ------------------- -------------------
---------------------- -------------------- ----------------------- ----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
---------------------- -------------------- ----------------------- ----------------------------
Acquisition of intangible assets (3 207 838) (789 701) (1 570 139) (94 320)
---------------------- -------------------- ----------------------- ----------------------------
Acquisition of property and (82 103
equipment (85 399 196) 509) (19 605 609) (9 806 241)
---------------------- -------------------- ----------------------- ----------------------------
(121 277
Acquisition of investment properties 460) (2 832 244) (79 840 437) (338 276)
---------------------- -------------------- ----------------------- ----------------------------
Disposal/(Acquisition) of investment
securities 150 833 993 75 578 716 (22 766 165) 9 026 936
---------------------- -------------------- ----------------------- ----------------------------
Decrease in amount owing from
Holding Company - 4 674 439 - 558 303
---------------------- -------------------- ----------------------- ----------------------------
Increase in amount owing to
Holding Company - 18 286 435 - 2 184 087
---------------------- -------------------- ----------------------- ----------------------------
Proceeds on disposal of investment 262 500 - 262 500 -
properties ------------------- ----------------- ------------------- -------------------
---------------------- -------------------- ----------------------- ----------------------------
(123 519
Net cash inflow/(outflow) from 58 788 001 12 814 136 850) (1 530 489)
investing activities ------------------- ----------------- ------------------- -------------------
---------------------- -------------------- ----------------------- ----------------------------
STATEMENT OF CASH FLOWS
for the six months ended 30 June 2020
Inflation adjusted Historical Cost*
30 June 30 June 30 June 30 June
-------------------- ------------------- ------------------- ------------------
2020 2019 2020 2019
-------------------- ------------------- ------------------- ------------------
ZWL ZWL ZWL ZWL
-------------------- ------------------- ------------------- ------------------
Restated
-------------------- ------------------- ------------------- ------------------
Reviewed Reviewed
-------------------- ------------------- ------------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------- ------------------- ------------------
Dividend paid - (52 230 685) (3 772 370)
-------------------- ------------------- ------------------- ------------------
Payment of interest on
subordinated
term loan - (1 507 481) - (180 050)
-------------------- ------------------- ------------------- ------------------
(8 839 289) (2 938 988) (5 082 972) (559 029)
Repayment of lease liabilities ------------------ ----------------- ----------------- ----------------
-------------------- ------------------- ------------------- ------------------
Net cash outflow from financing (8 839 289) (56 677 154) (5 082 972) (4 511 449)
activities ------------------ ----------------- ----------------- ----------------
-------------------- ------------------- ------------------- ------------------
Net increase/(decrease) in (490 024 (23 148
cash and cash equivalents 101 967 759 143) 101 967 759 123)
-------------------- ------------------- ------------------- ------------------
Net foreign exchange and
monetary
adjustments on cash and cash 100 136
equivalents 774 784 022 838 399 746 774 784 022 406
-------------------- ------------------- ------------------- ------------------
492 304 941 420 492 304 112 440
Cash and cash equivalents at 267 168 267 912
beginning of the period ----------------- ----------------- ----------------- ---------------
-------------------- ------------------- ------------------- ------------------
Cash and cash equivalents at
the end of the period 1 369 056 1 289 795 1 369 056 189 429
048 771 048 195
========== ========== ========== =========
-------------------- ------------------- ------------------- ------------------
*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 Reviewer has not
expressed an opinion on the Historical Cost information.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2020
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
30 June 30 June 30 June 30 June
----------------- ----------------- ------------------ ---------------
2020 2019 2020 2019
----------------- ----------------- ------------------ ---------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ------------------ ---------------
Restated
----------------- ----------------- ------------------ ---------------
Trade and other investments
fair value gains 3 102 124 4 762 662 5 713 640 675 006
----------------- ----------------- ------------------ ---------------
Fair value gains on 1 053 907
investment properties 640 103 624 380 064 124 444 27 991 540
----------------- ----------------- ------------------ ---------------
Rental income 1 722 165 2 495 821 1 456 767 194 895
----------------- ----------------- ------------------ ---------------
Bad debts recovered 2 078 628 13 373 536 1 308 953 1 131 780
----------------- ----------------- ------------------ ---------------
Other operating income 21 353 212 28 625 918 2 434 951 71 189
----------------- ----------------- ------------------ ---------------
---------------- ---------------- ----------------- --------------
668 359 429 322 1 064 821 30 064 410
753 061 755 ========
========= ========= ==========
----------------- ----------------- ------------------ ---------------
b. Operating EXPITURE
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
----------------- ----------------- ----------------- -----------------
2020 2019 2020 2019
----------------- ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- -----------------
Restated
----------------- ----------------- ----------------- -----------------
The operating profit is after recognising
the following:
----------------- ----------------- -----------------
181 087 141 502 112 760
Administration costs 395 527 948 11 488 654
----------------- ----------------- ----------------- -----------------
Impairment reversal on
land and buildings* - - - (40 600)
----------------- ----------------- ----------------- -----------------
Depreciation - (excluding
Right of use assets) 19 299 688 34 764 116 4 340 825 988 561
----------------- ----------------- ----------------- -----------------
Amortisation of intangible
assets 7 238 239 22 309 322 328 236 373 555
----------------- ----------------- ----------------- -----------------
Depreciation - Right of
use assets 1 985 839 5 967 714 1 501 219 537 067
----------------- ----------------- ----------------- -----------------
Staff costs - salaries,
allowances and related 119 794 136 408
costs 152 384 67 541 948 10 570 330
----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
329 405 340 952 186 473 23 917
313 063 176 567
========== ========== ========== ==========
----------------- ----------------- ----------------- -----------------
*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. EARNINGS PER SHARE
The calculation of earnings per share is based on the following
figures:
Inflation adjusted Historical Cost
30 June 30 June 30 June 30 June
------------------------- ------------------- ------------------- ------------------- -------------------
2020 2019 2020 2019
------------------------- ------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------------- ------------------- ------------------- ------------------- -------------------
Restated
------------------------- ------------------- ------------------- ------------------- -------------------
c.1 Earnings/(losses)
------------------------- ------------------- ------------------- ------------------- -------------------
1 093 886
Profit for the year 668 054 718 504 512 668 999 57 442 241
------------------------------- ------------------- ------------------- ------------------- -------------------
Headline earnings (26 365 917) (44 089 772) 3 189 319 14 180 190
------------------------------- ------------------- ------------------- ------------------- -------------------
c.2 Number of shares
------------------------- ------------------- ------------------- ------------------- -------------------
Weighted average
shares in issue 16 506 050 16 506 050 16 506 050 16 506 050
------------------------------- ------------------- ------------------- ------------------- -------------------
c.3 Headline (losses)/ earnings
---------------------------------------------- ------------------- ------------------- -------------------
1 093 886
Profit for the period 668 054 718 504 512 668 999 57 442 241
------------------------------- ------------------- ------------------- -------------------
Add/(deduct) non-recurring items
---------------------------------------------- ------------------- ------------------- -------------------
Trade investments
fair value gains (3 102 124) (4 762 662) (5 713 640) (506 254)
------------------------------- ------------------- ------------------- -------------------
Unrealised foreign
exchange revaluation
gains (113 156 723) (247 818 512) (113 156 723) (29 598 834)
------------------------------- ------------------- ------------------- ------------------- -------------------
Fair value gains (1 053 907
on investment properties (640 103 624) (380 064 124) 444) (27 991 540)
------------------------------- ------------------- ------------------- ------------------- -------------------
61 941 834 84 042 858 82 080 126 13 350 368
Tax thereon ----------------- ----------------- ----------------- -----------------
------------------------------- ------------------- ------------------- ------------------- -------------------
Headline earnings (26 365 919) (44 089 772) 3 189 318 12 695 981
=========== =========== =========== ===========
------------------------- ------------------- ------------------- ------------------- -------------------
Earnings/(losses) per share
(ZWL cents)
---------------------------------------------- ------------------- ------------------- -------------------
c.4 Basic 4 047.33 3 056.53 6 627.19 348.01
------------------------- ------------------- ------------------- -------------------
Diluted basic 4 047.33 3 056.53 6 627.19 348.01
------------------------------- ------------------- ------------------- ------------------- -------------------
Headline (159.73) (267.11) 19.32 76.92
------------------------------- ------------------- ------------------- ------------------- -------------------
d. SHARE CAPITAL
d.1 Authorised
The authorised ordinary share capital at 30 June 2020 is at the
historical cost figure of ZWL25 000 (2019 - ZWL25 000) comprising
25 million ordinary shares of ZWL0.001 each.
d.2 Issued and fully paid
The issued share capital at 30 June 2020 is at the historical
cost figure of ZWL16 506 (2019 - ZWL16 506) and inflation adjusted
figure of ZWL424 180 (2019 - ZWL424 180) comprising 16 506 050
(2019 - 16 506 050) ordinary shares of ZWL0.001 each in historical
cost terms.
e. CASH AND CASH EQUIVALENTS
Inflation adjusted Historical Cost
30 June 31 Dec 30 June 31 Dec
------------------- ------------------- ------------------- ------------------
2020 2019 2020 2019
------------------- ------------------- ------------------- ------------------
ZWL ZWL ZWL ZWL
------------------- ------------------- ------------------- ------------------
Restated
------------------- ------------------- ------------------- ------------------
Balances with the Central 699 603 267 032
Bank 616 622 760 351 616 622 760 753
------------------- ------------------- ------------------- ------------------
Current, nostro accounts 419 736 160 209
and cash 677 935 252 453 677 935 252 897
------------------- ------------------- ------------------- ------------------
171 604
Interbank placements 75 000 000 491 75 000 000 65 500 000
------------------- ------------------- ------------------- ------------------
Expected Credit loss (501 964) (1 148 524) (501 964) (438 383)
allowance ----------------- ----------------- ----------------- ----------------
------------------- ------------------- ------------------- ------------------
1 369 056 1 289 795 1 369 056 492 304
048 771 048 267
========== ========== ========== =========
------------------- ------------------- ------------------- ------------------
f. INVESTMENT PROPERTIES
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ---------------- ------------------ ----------------
2020 2019 2020 2019
------------------ ---------------- ------------------ ----------------
ZWL ZWL ZWL ZWL
------------------ ---------------- ------------------ ----------------
Restated
------------------ ---------------- ------------------ ----------------
At 1 January 602 234 779 54 888 826 229 867 982 20 950 606
------------------ ---------------- ------------------ ----------------
Additions/Improvements 121 277 460 920 939 79 840 437 351 515
------------------ ---------------- ------------------ ----------------
(13 897
Disposals (262 500) 528) (262 500) (5 304 570)
------------------ ---------------- ------------------ ----------------
509 278 1 053 907 194 387
Fair value gains 640 103 624 434 444 322
------------------ ---------------- ------------------ ----------------
Reclassification from
non-current assets held
for sale - 471 586 - 180 000
------------------ ---------------- ------------------ ----------------
Translation gain on change
in functional currency - 50 572 521 - 19 303 109
------------------ ---------------- ------------------ ----------------
----------------- --------------- ----------------- ---------------
Closing balances 1 363 353 602 234 1 363 353 229 867
363 779 363 982
========== ========= ========== =========
------------------ ---------------- ------------------ ----------------
Investment properties comprise commercial 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 722 165 (2019 - ZWL2 495 821)
was received and no operating expenses were incurred on the
investment properties in the current year due to the net leasing
arrangement on the properties.
Included in investment properties are properties measured at
ZWL4 252 010 as at 30 June 2020 which were acquired as part of the
foreclosure process with marketability restrictions. 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
The fair value of the Bank's investment properties as at 30 June
2020 was 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.
Fair value hierarchy
Level 3
The fair value for investment properties of ZWL1 363 353 624 has
been categorised under Level 3 in the fair value hierarchy based on
the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening
and closing balances for Level 3 fair values:
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
------------------ ---------------- ------------------ ----------------
2020 2019 2020 2019
------------------ ---------------- ------------------ ----------------
ZWL ZWL ZWL ZWL
------------------ ---------------- ------------------ ----------------
Restated
------------------ ---------------- ------------------ ----------------
At 1 January 602 234 779 54 888 826 229 867 982 20 950 606
------------------ ---------------- ------------------ ----------------
Additions/Improvements 121 277 460 920 939 79 840 437 351 515
------------------ ---------------- ------------------ ----------------
(13 897
Disposals (262 500) 527) (262 500) (5 304 570)
------------------ ---------------- ------------------ ----------------
509 278 1 053 907 194 387
Fair value gains 640 103 624 434 444 322
------------------ ---------------- ------------------ ----------------
Reclassification from
non-current assets held
for sale - 471 586 - 180 000
------------------ ---------------- ------------------ ----------------
Translation gain on change
in functional currency - 50 572 522 - 19 303 109
------------------ ---------------- ------------------ ----------------
----------------- --------------- ----------------- ---------------
Closing balances 1 363 353 602 234 1 363 353 229 867
363 779 363 982
========== ========= ========== =========
------------------ ---------------- ------------------ ----------------
The values were arrived at by applying yield rates of 5% on
rental values of between ZWL32 - ZWL70 per square metre. Some of
the properties are leased out under operating leases 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
technique inputs between key unobservable
inputs and fair value
measurement
The The estimated fair
investment * Weighted average expected market rental growth (5%); value would increase
method /(decrease) 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
* Average market yield of 10%.
* the risk adjusted discount rates were lower/
(higher).
The direct
comparison
method was
applied
on all
residential
properties.
----------------------------------------------------------- ----------------------------------------------------------
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 fair value
Change in rate June 2020 31 December 2019
------------- -----------------
ZWL ZWL
------------- -----------------
+5% 68 167 668 48 873 124
------------- -----------------
+3% 40 900 601 29 323 849
------------- -----------------
+1% 13 633 534 9 774 616
------------- -----------------
-1% (13 633 534) (9 774 616)
------------- -----------------
-3% (40 900 601) (29 323 849)
------------- -----------------
-5% (68 167 668) (48 873 124)
------------- -----------------
g. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1 . RESPONSIBILITY
These condensed financial statements are the responsibility of
the directors. This responsibility includes the setting up of
internal control and risk management processes, which are monitored
independently. The information contained in these condensed
financial statements has been prepared on the going concern basis
and is in accordance with the provisions of the Companies Act
(Chapter 24:03), the Banking Act (Chapter 24:20) and International
Financial Reporting Standards.
2. CORPORATE GOVERNANCE
The Bank adheres to some principles of corporate governance
derived from the King IV Report, the United Kingdom Combined Code
and RBZ 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.
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 at NMB Bank Limited Board meetings
Board of Audit Risk and Asset and Loans Human Credit Head Office IT &
Directors Committee Compliance Liability Review Resources, Committee Project Digital
Committee Management Committee Remuneration - Sub-Committee Banking
Committee and Committee
(ALCO) & Nominations
Finance Committee
Committee
Mr. B. A.
Chikwanha 2 2 2 2 2 2 1 1
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Mr. B. P.
Washaya 2 2 2 2 2 2 2 2 1 1
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Mr. J. de la
Fargue 2 2 2 1 2 1 3 2 2 2 7 7
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Mr. C.
Chikaura 2 2 2 2 2 2 2 2 3 3 2 2 7 5
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Mr. J.
Tichelaar 2 2 2 2 2 2 2 2 1 1
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Mr. B.
Ndachena 2 2 2 2 7 7
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Ms. S.
Chitehwe 2 2 2 2 2 2 2 2 7 7 1 1
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Ms. J.
Maguranyanga 2 2 2 2 2 2 2 2 3 3
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Ms. C. Glover 2 2 2 2 2 2 2 2 1 1
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Mr. G.
Taputaira 2 2 2 2 2 2 1 1
--- ------- --- ------- --- -------- --------- --- ------- --- ---------- --- ------- ---- ---------- --- -------
Meetings planned
Meetings attended
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the
establishment and oversight of the Bank's risk management
framework. The Board has established the Board Asset and Liability
Management Committee (ALCO) and Board Risk and Compliance
Committee, which are responsible for defining the Group's risk
universe, developing policies and monitoring implementation.
Risk management is linked logically from the level of individual
transactions to the Bank 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 Bank'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 organization 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 Bank'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
independence 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 Bank has in place a Board Loans
Review Committee responsible for reviewing the quality of the loan
book and adequacy or loan loss provisions.
The Bank has 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 Bank's move into the mass market,
retail credit has become a key area of focus. The Bank has put in
place robust personal loan monitoring systems and structures to
mitigate retail loan delinquencies.
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 Bank 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 Bank 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
Bank, if appropriate (e.g. in relation to deteriorated
credits).
-- Monitors the on-going development and enhancement of credit
risk management across the Bank.
-- Reviews the Internal Credit Rating System.
-- On-going championing of the Basel II methodologies across the Bank.
-- 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 Bank maximizes recoveries from Non-Performing
Loans (NPLs).
4.2 Market risk
This is the exposure of the Bank'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 Bank has in place a Management Asset
and Liability Committee (ALCO) which monitors market risk and
recommends the appropriate levels to which the Bank 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 Bank's ability to withstand stressed market conditions. On
foreign exchange risk, the bank monitors currency mismatches and
makes adjustments depending on exchange rate movement forecast. The
mismatches per currency are contained within 5% of the Bank's
capital position.
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 Bank to fund asset increases or meet obligations
as they fall due without incurring unacceptable costs or losses.
The Bank 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 Bank
also actively monitors its loans to deposit ratio against a set
threshold in a bid to monitor and limit funding risk. The Bank
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 meeting. This is augmented by a monthly
management ALCO and a quarterly board ALCO.
The key measure used by the Bank for managing liquidity risk is
the ratio of net liquid assets to deposits from customers. The Bank
monitors its liquidity ratio in compliance with Banking Regulations
to ensure that it is not less than 30% of the liabilities to the
public. Liquid assets consist of cash and cash equivalents, short
term bank deposits and unencumbered liquid investment securities
available for immediate sale.
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 Bank utilises monthly
Key Risk Indicators to monitor operational risk in all units.
Further to this, the Bank has an elaborate Operational Loss
reporting system in which all incidents with a material impact on
the well-being of the Bank are reported to risk management. The
risk department conducts periodic risk assessments on all the units
within the Bank 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 minimized.
The 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 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 Bank has an independent
compliance function which is responsible for identifying and
monitoring all compliance issues and ensures the Bank 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 Bank conducts its business. To manage this
risk, the Bank 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 Bank 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 Bank'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 Bank 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 Risk Ratings
4.8.1 Reserve Bank of Zimbabwe Ratings
The Reserve Bank of Zimbabwe conducted an onsite inspection on
the Bank in the last quarter of 2016 and detailed below were the
final ratings.
4.8.1.1 CAMELS* Ratings
Latest RBS** Latest RBS Previous
CAMELS Component Ratings Ratings RAS Ratings
24/11/2016 30/06/2013 31/01/2008
Capital Adequacy 2 2 4
------------- ------------ -------------
Asset Quality 3 4 2
------------- ------------ -------------
Management 3 3 3
------------- ------------ -------------
Earnings 2 2 3
------------- ------------ -------------
Liquidity 3 2 3
------------- ------------ -------------
Sensitivity 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
4.8.1.2 Summary RAS ratings
Latest RAS*** Latest RAS Previous RBS
RAS Component Ratings Ratings Ratings
24/11/2016 30/06/2013 31/01/2008
Overall Inherent High Moderate Moderate
Risk
-------------- ------------ -------------
Overall Risk Management Acceptable Acceptable Acceptable
Systems
-------------- ------------ -------------
Overall Composite Moderate Moderate Moderate
Risk
-------------- ------------ -------------
Direction of Overall Stable Stable Stable
Composite Risk
-------------- ------------ -------------
*** RAS stands for Risk Assessment System
4.8.1.3 Summary risk matrix -24 November 2016 on - site
examination
Level of Adequacy of Overall Direction
Type of Risk Inherent Risk Management Composite of Overall
Risk 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
Operational Moderate Acceptable Moderate Stable
Risk
Legal & Compliance Moderate Acceptable Moderate Stable
Reputation Moderate Acceptable Moderate Stable
Strategic Risk 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 recognized 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 organization.
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.
4.8.2 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 2020 2019
Long term BBB- BB-
The current rating which was due to expire in August 2020 was
withdrawn by GCR on 23 June 2020 following the Bank's waiver of
external ratings.
The Bank waived the 2020/2021 external ratings in line with a
general dispensation extended by the Reserve Bank of Zimbabwe due
to the COVID-19 pandemic.
4.9 Regulatory Compliance
There were no instances of regulatory non-compliance in the
period under review. The Bank remains committed to complying with
and adhering 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) 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 30 June 2020 was as
follows:
Inflation adjusted Historical Cost
30 June 31 December 30 June 31 December
-------------------
2020 2019 2020 2019
-------------------
ZWL ZWL ZWL ZWL
-------------------
Restated
Share capital 424 180 424 180 16 506 16 506
Share premium 752 022 609 752 022 609 31 474 502 31 474 502
1 237 590 1 423 285 329 398
Retained earnings 459 569 535 738 471 472
Functional currency translation
reserve 167 928 479 167 928 479 11 619 648 11 619 648
----------------- ----------------- ------------------ ----------------
2 157 965 1 489 911 1 466 396 372 509
727 006 127 128
Less: capital allocated (134 796 (134 796 (13 706
for market and operational 213) (35 909 272) 213) 269)
risk ----------------- ----------------- ---------------- ----------------
2 023 169 1 454 001 1 331 599 358 802
Tier 1 capital 514 734 914 859
Tier 2 capital (subject
to limit as per Banking 194 315
Regulations) 639 783 224 339 959 624 860 039 063 734
Fair valuation gains on 176 079
land and buildings 587 498 371 284 488 233 807 754 210 950
Subordinated debt - 771 144 - 294 339
Stage 1 & 2 ECL provisions
- (limited to 1,25% of
risk weighted assets) 52 284 853 54 700 247 52 284 853 17 941 445
2 662 952 1 793 961 2 191 638 553 118
Tier 1 & 2 capital 738 358 977 593
Tier 3 capital (sum of
market and operational 134 796 134 796 13 706
risk capital) 213 35 909 272 213 269
----------------- ---------------- --------------- ---------------
Total capital base 2 797 748 1 829 870 2 326 435 566 824
951 630 190 862
========== ========== ========== =========
6 373 617 4 110 168 5 905 896 1 435 315
Total risk weighted assets 051 962 304 609
Tier 1 ratio 31.74% 35.38% 22.55% 25.00%
Tier 2 ratio 10.04% 8.2% 14.56% 13.54%
Tier 3 ratio 2.11% 0.87% 2.28% 0.95%
Total capital adequacy
ratio 43.90% 44.52% 39.39% 39.49%
RBZ minimum required 12.00% 12.00% 12.00% 12.00%
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
2020 and 2019.
The following table presents income, profit and certain asset
and liability information regarding the Bank's operating segments
and service units:
Retail Banking Corporate International Digital
Inflation Banking Treasury Banking Banking Other Total
adjusted
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
For the six
months ended
30 June 2020
Income
Third party 113 214 963 561 1 248 545
income 75 785 033 284 14 053 664 3 477 238 78 453 796 833 848
Interest and
similar (22 725 (11 729
expense (2 641 245) 861) 046) - - - (37 096 152)
------------ --------------
- --------------- ---------------- ----------------- -
73 143 90 488 ----------------- ---------------- 78 453 963 561 1 211 449
Net operating 788 423 2 324 618 3 477 238 796 833 696
income ------------- --------------- ----------------- ---------------- ---------------- ----------------- ---------------
Other material
non-cash
items
Impairment
losses on
financial
assets
measured at
amortised 19 514
cost 5 705 854 107 - - - - 25 219 962
Depreciation
of property
and equipment 4 200 614 62 406 53 046 6 997 1 919 673 13 056 952 19 299 688
Depreciation
of right of
use assets - - - - - 1 985 839 1 985 839
Amortisation
of intangible
assets - - - - - 7 238 239 7 238 239
Segment 43 542 60 032 10 451 (6 671 71 890 644 313 823 559
profit/(loss) 563 521 114 254) 644 530 118
Income tax (155 504 (155 504
charge - - - - - 400) 400)
Revaluation of
land and
buildings, 303 010
net of tax - - - - - 138 303 010 138
-------------- ----------------- ----------------- ----------------- ---------------- ----------------- ----------------
Profit/(loss) 43 542 60 032 10 451 (6 671 71 890 791 819 971 064
for the year 563 521 114 254) 644 268 ========== 856
======== ========== ========== ========== ========== =========
As at 30 June
2020
Assets and
liabilities
Capital
expenditure
(property
and equipment
and
intangible
assets) 1 403 854 - 8 094 - 238 680 86 956 406 88 607 034
531 671 1 745 355 877 291 682 3 994 127 6 933 954
Total assets 612 576 500 596 175 15 019 425 307 615
Total 747 608 1 132 269 532 606 155 1 432 771 4 188 490
liabilities 969 422 033 527 377 - 613 518
6. SEGMENT INFORMATION
The following table presents income, profit and certain asset
and liability information regarding the Bank's operating segments
and service units:
For the six months ended 30 June 2019
Retail Banking Corporate International Digital
Inflation adjusted Banking Treasury Banking Banking Unallocated Total
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
For the year ended 30
June
2019
Income
318 294 172 802 172 592 383 753 1 291 433
Third party income 067 228 889 354 415 15 101 724 724 670 954
Interest and similar (44 024 (85 307
expense (7 917 475) (33 365 170) 743) - - - 388)
-------------- --------------
- --------------- ---------------- ----------------- ---------------- ----------------- -
310 376 195 524 128 777 15 101 172 592 383 753 1 206 126
592 184 672 724 724 670 566
Net operating income --------------- --------------- ---------------- ----------------- ---------------- ----------------- ---------------
Other material non-cash
items
Impairment
loss/(reversal)
on financial assets
measured
at amortised cost 3 085 410 (10 981 954) - - - - (7 896 544)
Depreciation of property
and equipment
(excluding right-of-use
assets) 8 583 945 847 430 274 501 75 828 15 702 893 9 279 518 34 764 115
Depreciation of right of
use assets - - - - - 5 967 714 5 967 714
Amortisation of
intangible
assets - - - - - 22 309 322 22 309 322
134 816 105 488 128 032 206 107 666 649
Segment profit/(loss) 844 83 137 690 353 9 066 159 081 939 066
(162 136 (162 136
Income tax charge - - - - - 398) 398)
Revaluation of land and
buildings, net of tax - - - - - 13 103 912 13 103 912
--------------- ----------------- --------------- ----------------- ---------------- ----------------- ---------------
Profit for the period 134 816 83 137 690 105 488 9 066 159 128 032 57 075 517 616
844 ========== 353 ========== 081 453 ========== 580
========= ========= ========== =========
As at 31 December 2019
Assets and liabilities
Capital expenditure
(property
and equipment and
intangible
assets) 17 271 185 - 325 791 52 086 2 789 513 73 775 735 94 214 310
943 848 1 491 232 857 535 290 568 1 852 456 5 467 188
Total assets 936 155 218 843 31 547 085 417 654
1 507 106 1 066 798 684 909 100 884 333 089 3 692 789
Total liabilities 859 326 697 932 - 599 413
7. 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 Services PLC
1 Armagh Avenue The Pavilions
(Off Enterprise Road) Bridgewater Road
Eastlea Bristol
P O Box 11 BS 999 ZZ
Harare United Kingdom
Zimbabwe
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