If there is a premier company that is reaping the rewards of improved liquidity in the market, it has to be the legacy giant Zanaco. Its performance at half year are impressive for the bank that is in the top 5 in Zambia. According to SENS announcement published on 29th August 2017, profit after tax for the bank was up by 29% as at June 2017. The bank attributed its improved performance to two things: improved income from investments and reductions in cost of doing business.
From a financial statement perspective, the bank clearly targeted Cost of Sales (this most likely included continued use of technology to deliver its products and being prudent in expenditure) on the income statement, whilst exploiting their assets on the balance sheet.
The bank was also proud that it remained well capitalised above the minimum required ratio of 10%. It also saw shareholders’ funds increase by 7% compared to June 2016. A closer look at the condensed balance sheet showed that cash and balances with Bank of Zambia remained relatively stable. However, there was a notable drop in loans and advances to other banks by over 50%.
Customers continued to remain confident in the bank with a 20% increase in deposits during the period. In addition, the bank increased its stake in investment securities. The final year audited results should show what type of assets these are. Signals in the market indicate there could be a mix of numerous securities such as bonds and treasury bills. With the recent auctions from Bank of Zambia being oversubscribed, we would not be surprised if the big bank also took part.
Cash flows from operating activities increased by 3 times the levels of half year 2016. Further evidence of improved liquidity in the market. With improved performance, the bank’s bold ambition of becoming the number one digital and transactional Bank in Zambia by the year 2020 is clearly in sight. Their ambitions are heavily dependent on them achieving balance with their chosen strategy. For example, they hope to align their structure and branches to their strategy. They hope to align their processes with their adopted structure and the way they conduct their business. Furthermore, they will continuously improve their customer service delivery to enrich customer experiences at all service touch points. They will also seek to raise their operating and financial efficiency sustainably. They believe they will achieve this through the development of an enriching high performance culture that aligns compensation and reward with strategy.