THE Banking sector last year disbursed a total of K21.7 billion to key economic sectors as at end of September 2014.

As at June 30 2013 , the banking and non-bank financial institutions loans and advances increased by 9.1 per cent and 25.0 per cent to K18,135 million and K2,225 million respectively.

Bankers Association of Zambia (BAZ) chairperson Shankardas Gupta said the sector continued to provide to all key sectors of the economy through loans and advances which totalled K21.7 billion.

Mr Gupta said the banking sector remained well capitalised and profitable in 2014 with total assets amounting to K46.8 billion as at September 2014, representing 33 per cent of the country’s Gross Domestic Product (GDP).

As at September 30, 2014, the banking sector performance was solid providing a safe and conducive environment with a total deposit base of K33.7 billion.

In response to a Press query, Mr Gupta said the commercial banks continued to play their intermediary role effectively and to provide competitive banking products to the Zambian public.

“The sector also successfully implemented the T+ 1 Clearing in February and customers are now able to get value for their cheques deposits within 24 hours.

“The economy and the banking sector experienced some turbulence during the first half of the year when the kwacha depreciated sharply against the United State dollar and other currencies, and inflation pressure increased,” he said.

In response, the sector held high level consultations with the regulator, the Bank of Zambia after which the central Bank came up with policy actions, which subsequently stabilised the kwacha and regained about half of its lost value.

Mr Gupta said the local currency had since been trading within range and remained stable and was currently trading at K6.30.

“The overnight lending facility (OLF) was also increased to 12 per cent above the policy rate which has now eased substantially and come down around the policy rate.

“The increase in statutory reserve ratio from 8 to 14 per cent caused an increase in the cost of funds (deposit rates) for the banks.

“Further, the interest rates on Treasury Bills also increased; correspondingly, deposit rates also started increasing taking the cue from these rates,” he said.

Mr Gupta said an easing inflation would bring more liquidity for the banks prompted by the release of funds from the statutory reserves.
This will give a necessary push for credit growth which had slowed down.

Mr Gupta said there was a critical issue of inflation slowly moving from seven to 7.8 per cent by the end of the year and there was need to reverse the same.

“As banks we were challenged with the high cost of funds (deposits), there has been a lower credit dispensation which will affect the economic growth in the long run,” he said.

The economy in Zambia has been resilient and the stability achieved on the exchange over the last seven months shows that the economy has matured and geared to take on the challenges.

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6 COMMENTS

    • Bank interests rates are still prohibitively high, so there is nothing to boast about here.

      Just shows that the banks have become better at extracting blood from stones. This is a win lose situation and is not sustainable in the long run.

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  1. Traditional payments based banking should change in the sector

    Capitalisation should be meaniful trick!inn to the cost of capital and deepening financial services in Zambia to have meaniful growth contribution on the GDP as oppossed to balance sheet as assets and liabilities reflecting in the alco of most of credit and payments oriented banks with weak asset positioning and placement except for well stratergising backs we know who have invested in a well balanced manner

    Some backs are only macro financial institution hiding performance in well performing and positioned banks

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  2. We need to see returns being reinvested in the growth sectors of the economy as opposed to credit creation and defectively making Zambia a credit country susesptical to shocks in an even of fallout

    Total capitalisation against a measure of FdI in total and returns respectively should be a cause to worry whether the banking sector can rise and fund the projected deficit on national accounts without syndication without crutching and affecting the rates effectively

    Currently the banking sector is pure in structure products and initiatives including capacity building
    Always. In reliance of external consultants to calculate and do financial products. Including adverts and broshures

    Its a standalone sector payments oriented with no real support to other seed sectors of the economy…

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  3. Rather poor with poor platforms and weak assets and liabilities to compete with major banks like JP Morgan and other

    Always acting as depository institutions for major foreign banks and earning small margins on those trades and suffocating poor Zambians in loans and mortgages with limited liquited and very high foreclosures in assets and prohibitive indentures thus not effectively contributing to potential GDP

    The structure depth and liquidity must be within reversing the negative FDI flows creating initiatives to save as opposed to paying banks or salary oriented

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  4. How is easy for a small SME to get funding over night say partry 100000 or 5m USD if the scetor as reported had grown and at what terms and period made available over night or arranged thirty days

    Apart from finance banks how many banks have local treasury departments with huge balances to fund local huge entities without syndication

    How many banks do we have arround opening and creating value

    With massive revenue cashflows from mines how much has been tapped and made available by local banks to support and hold value in other sectors

    Most of these banks are simply conduits for foreign without acting as agents to recoshet the massive investments in the traditional to help make cost of business easier

    We have see solutions in funding over 5m dollars made overnight to…

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