In their summarized and unaudited results published for the
period ended 30 June 2016, Zanaco faced a challenging first half of the year
with net profit margin down from 19% a year ago to 14%. A positive though was
the bank being well capitalized above the minimum ratio of 10% requirement.
Earnings and EBIT were down 15% and 13% respectively.
However, comprehensive income for the same period rose by 11%. Accounts show
the bank was able to grow its total assets by 14% while its cash stockpile at
Bank of Zambia grew by 20%. Furthermore, deposits also grew by 12% signaling
confidence by consumers in the bank.
A lower EPS may be a concern for shareholders at this point
as it means reduced value, however, shareholder equity actually grew by 9% in
this period (and we are only in the middle of the year). Operating cash flow is
one area the bank may be focusing on as it tries to retain competitive advantage
as the bank adjusts to the macro environment. Interest income can also help
fuel value as loans to customers have increased by 17.4%. Other areas to look
at will be the loans to assets ratio which only improved by 1% and return on
total assets which marginally fell by 0.3%.
The bank remains steadfast on its transformation program.
They indicate that they will be staying the course despite all the challenges. Tight
liquidity remains the critical threat to the bank but they hope through their
transformation they will be able to realize efficiency that will see the bank
through this period.
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