Reawakening The Beast – ZANACO’s Bold Move To Reinvent Itself
Banking, ZANACO plc

Following GRZ’s 2007 sale of 49% share sale to Rabo Development Bank, Zanaco has fraught to shake off the ghosts of old that have pulled it back from being a considered front runner in the modern competitive banking industry. Small wonder that Charity Lumpa and her team have embarked on a bold move that is targeting the overhaul of the bank’s strategy.

In the 2014 to 2015 period, the bank, like many others face the tri-challenges of government’s adjustment in the statutory reserve ratio, monitory policy rate changes and tightened liquidity from the central bank. However, we can’t forget that banking system change that caused mayhem for many of its customers which the Managing Director acknowledges was a minor setback which was eventually overcome. The chair lady also acknowledges the macro environment was a vicious one albeit happening in tandem with the bank’s transformation through strategy change, embracing of technology and introduction of Fit2serve (The bank’s master plan of building on old success for the future).

Their current financials also tell an interesting story. In a bid to sure up its profile to investors, although earnings by 18%, their EPS actually improved by over 400% from 0.016 to 0.081. How did they achieve this? Share consolidation. That’s financial speak for, “we value in x number of shares however, we want to reduce that number so that we can appear more attractive”. Very clever. This would make any investor pleased.

The impact by macro factors was felt however, in a slight reduction in the bank’s net interest margin (9%), loans to asset ratio (4%) and return on assets (1%). Furthermore, its 19% increase in total assets is not matched by the bank’s return on non-current assets ergo its branches need to make more money. The banks gearing, although increased during the period under review is still within acceptable limits.

Weathering the macro environmental waves will be critical in the months to come. Perhaps, the timing could not be better for a strategy overhaul. Looking at what they did well and how that can help them in the future is a good move although caution would call for innovation being at the center of their strategic plans. With steady stewardship, the prospects of the bank look very bright.

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