So much has changed from the time Investrust Bank published its 2016 annual report. For example, Dr Jacob Mwanza’s statement to shareholders cites the BOZ rates that have since been subsequently reduced twice in the first two quarters in 2017. This changes the dynamics of how his bank will perform in a competitive market. However, what must be revered is the faith that shareholders have shown in the bank despite year on year losses since 2013 (with no dividend being declared during the perilous years). Dr Mwanza lamented at the operating environment being characterized by tight liquidity, high lending rates, and constrained margins on lending in 2016. For 2017 however, we anticipate a new dynamic as the central bank continues to reduce statutory policy rates in order to fuel growth.
According to their 2016 AR, the bank issued 3.4 million ordinary shares through a renounceable Rights Offer (RO) on the basis of 3 (three) new ordinary shares for every 4 (four) ordinary shares at a subscription price of K11.44 per new ordinary share. The AR explains that the purpose of the RO was to raise K40 million to be applied towards attaining the minimum regulatory capital requirement for a locally owned Zambian commercial bank (K104 million is the minimum BOZ demands).
Stewardship has now steadied at the bank with Simangolwa Shakalima getting the nod as the new Managing Director effective November 2016. He arrived at the time the bank had weathered global growth south of 3%, numerous geopolitical risks and a stubborn El Nino that threatened agriculture. In the African region, things were more challenging with growth stagnating to 1.1% according to the banks Annual Report(requires verification on a country by country basis). In addition to raising capital from the market, the bank shed off 51% of Zambia Home Loans (ZHL) Limited. According to the AR, the board decided that ZHL would not be an integral part of the bank in the longer term and resolved to dispose it off to existing shareholders (African Life Financial Services Limited and a new management backed vehicle in Highgate Investments Limited). The 51% stake was valued at ZMK 6.9 Million in the sale and purchase agreement of 29 December 2016 in.
On performance, the bank equivalent of revenue (Fee and Commission expense + Net Interest Income + Net trading income + Net income from financial instruments)dropped by 17.6% from 2015 to 2016. Equity was down by 7% whilst earnings remained negative. Total assets and total liabilities also reduced by 7% and 13.7% respectively. All these are indicators of contraction of business in the financial sector. However, interest income was up by 16.8%.
Going forward the bank will be placing technology at the heart of its strategy. InvestGo Visa Prepaid Card was launched in a hope to spur deposit mobilization. The bank will continue to focus on its core business. In addition, they will also be looking at the banks internet banking, agency banking and mobile banking services to feed customers appetite for financial technology products. Lastly, Brand promotion will also be something they will be looking at as everyone loves a successful Zambian offering.