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Zim bank deposits shoot to $55bn

ZIMBABWE’S total banking deposits rose to $55,19 billion as at May 8, driven by revaluation of forex-denominated deposits, fiscal authorities have said. BY FIDELITY MHLANGA Total banking sector deposits amounted to $47,05 billion as at March 3, 2020, representing an increase of 36,38% from $34,50 billion reported as at December 31 2019, according to the mid-year budget review presented last week. The increase in the deposit base was mainly attributable to revaluation of foreign currency denominated deposits following the introduction of a floating exchange rate in February 2019. “Demand deposits constituted 49,57% of total banking sector deposits, and there transitory is a hurdle to banking institutions’ capacity to meet productive sectors’ long-term funding needs to retool and embark on value-adding production,” Finance minister Mthuli Ncube said in his mid-year budget review. In February last year, the central bank revealed that almost 90% of the nearly four million bank accounts held by Zimbabweans had balances of just $1 000. The average prudential liquidity ratio for the banking sector was 68,20%, against the minimum regulatory requirement of 30%. The high average prudential liquidity ratio was partly due to a cautious lending approach being adopted by banking institutions and preference for securities and investments. The quality of the banking sector loan portfolio continued to improve, reflected by a decline in the non-performing loans (NPLs) ratio to total loans, from 1,75% as at December 31, 2019 to 1,42% as at March 31, 2020. However, credit conditions have changed owing to the effects of COVID-19 and this may result in a surge in non-performing loans in the medium term. Authorities say usage of the credit referencing infrastructure continued to improve against the background of increased coverage by the credit registry and credit bureaus, as well as depth of credit information. As at March 31, 2020 the credit registry held 1,17 million loan records, of which 494 200 were active loan accounts. Individual records represented 97,7% of the active loan records. The Reserve Bank of Zimbabwe continues with its efforts to on-board micro-finance institutions and utility service providers as data providers.