Possessing the vision of being the premier banking and housing finance institution with the leading market share in Zambia, ZNBS has been on a mission to provide mortgage finance, banking and property services since its establishment in 1968 (amended 1970) under the Builder’s Society Act. It is the biggest government-owned parastatal in the country. Having 21 branches and 15 properties present all over Zambia with expansion plans in Muchinga and Nyimba Eastern Province.
Among the licensed 119 non-banking institutions in the financial sector, it is the only building society out of 33 microfinance institutions, with about 50 years of existence. At the end of 2019 there were an estimated 10,436 mortgages outstanding in Zambia covering commercial and home loans. Mortgages are not a strong product. Because banks are funded by short term deposits, it makes it difficult to match liabilities to assets. Mortgage interest in June was ranging from 15.25 to 30%.
At the end of 2019, the company received the first tranche of the 25 million 15-year facility loan from African Development Bank at the end of the financial year.
According the ZNBS 2020 annual report the financial indicators were as follows.
- Assets grew from 2018 from k947m 2019 to k1266m in 2020
- Shareholder fund increased from k322m in 2019 to k348m in 2020
- Loans and advance deposits increased from k373.51m to k493.38m
- Revenue in 2020 rose to 162m from 154m in 2019
- Return on equity (ROE) from 3% in 2019 to 8% in 2020
- The liquidity ratio was at 63.99% as compared to 23.76% in 2019
- Net interest income of k106.41m as compared to k88.92 m in 2019
- Profits rose from k8.98 million in 2019 to k27.27 million
Due to covid, forecasted sectoral GDP share declines were expected to translate to significant job losses in formal and informal sectors affecting housing affordability. Strong competition in the market was experienced, inflation doubled to about 14% as compared to 7.5% in 2019. Around the same time, the depreciating Kwacha continued providing opposition towards the mortgage and other banking products.
Despite high inflation and slow economic growth of 2% at the end of 2019 from 3% in 2018, the strong and healthy financial performance was due to the business turnaround strategy backed by the Corporate. Strategy that led to 27.27 million recorded in profit as Mortgages are not a strong product, because banks are funded by short term deposits making it difficult to match liabilities to assets.
Going forward, anticipation of tough economic conditions is expected regarding the Covid-19 pandemic. Reliance is on the society’s ability to deliver, as the competitiveness of the industry is expected to continue. Technological response will be of key influence in improved delivery and strengthening of the society’s services and products. The society seeks to maintain focus on improving their infrastructure and processes while creating new products and services as they intend to build on from the recorded high level deposits, profits and assets recently observed.