As is the custom with this period, most companies are publishing their annual reports. This time around though, they will be depicting how they performed during a year in which business had been disrupted by the coming of Covid-19.
Among those companies is Zambia National Building Society. ZNBS now amongst the likes of ABSA Zambia and ZANACO that have a female CEO, Mildred Mutesa, which is a great and progressive move showing that indeed women are taking their place in finance as well. This article examines how ZNBS performed during the year ended 31st March, 2020, by analyzing its condensed statement of profit or loss and other comprehensive income.
Known as the ‘Home of Mortgages’, ZNBS in the year under review managed to raise its interest income to K217.5M from the K157.6M recorded in the prior year, indicating a 38% increase. This was quite a feat considering that 2020 was a year in which most persons were expected to default on their interest payment due to loss of business or jobs and ultimately a loss of a steady flow of income. The central bank reported in the periods MPC statements that non-performing loans (NPLs) were on the rise.
However, customer deposits and borrowings increased by 32% and 96% respectively hence causing ZNBS to record a 144% increase in expense payments, from K43M in the prior year to K106.2M in the year under review. The enormous increase in interest payments caused a 2% reduction in net interest income, from K114.5M in year ended 31 March 2019 to K112.3M in the year ended 31 March 2020.
A 20% increase in net interest income after loan impairment, a 10% increase in rental income and a 208% increase in the reversal of provision, made possible profit before tax to increase by 204% from K8.97M to K27.3M despite operating expenses increasing by 13% from K160.9M in the prior year to K182.3M in the year under review. And as noted in the publication made by the Society’s acting Secretary, Womba S. Kankondo, “Total assets of the society increased by 30% year on year.”
With the society well-capitalized, indicated by an increase in the shareholders’ equity from K263.6M in the 2019 period to K291.5M representing an 11% increase which is more than the required 10%, it is no wonder there is a sense of optimism about the future in the Society which turns 50 on 24th December 2020. Having been established in 1970 with the core mandate of providing Zambians with the opportunity to access affordable housing finance, the 2020 financial results indicate that it is well position to keep its promise to its customers.
The development of the Covid-19 vaccine with 95% efficacy has brought a lot of optimism about the coming year’s business environment. The enthusiasm can even be seen through the statement made by the acting secretary of the Society. “Projecting into the future, the Society is expected to experience stable growth from the current business levels despite the Covid 19 pandemic and is set to position itself as the main mortgage finance provider in Zambia. The growth will be precipitated by the huge housing deficit that has kept the demand for housing finance high despite the pandemic.”
Looking at all those developments, the next period might just be an even better financial year than the period that has just ended. It will be interesting to see how things will turn out for the Society.
–article updated to reflect correct financial year-end