Investrust Bank posts huge losses


Investrust Bank Plc recorded a loss after tax of K19.75Mn for the half-year ended 30 June 2016.

Total interest income increased by 9% mainly due to the increase in interest rates adjustments following the increase in the BoZ Policy rate and lifting of interest rate capping in November 2015.

However, total operating income decreased by 20% as a result of high funding costs which saw an increase in total interest expense by 34% due to tight market liquidity in both the local currency money market money market and foreign exchange market.

The high interest expense was attributed to the sustained higher proportion of term deposits on the total deposits portfolio averaging 50% coupled with high interest rates that had hit as much as 34% on major huge amounts placed by institutional investors.

However, total operating and other administrative costs reduced due to prudent cost control measures and interventions that management has put in place.

Its financial position reduced by 12% in 2016, with total assets decreasing to K1 293Mn as at 30 June 2016 against K1 473Mn recorded during the same period in 2015.

The reduction in total assets was largely due to reduction of customer deposits and reduced cash holdings and investments in government securities.

The Bank says despite operating in an environment characterised by tight kwacha liquidity, high funding costs and high interest rates, the bank has focused on expenditure control and sourcing cheaper deposits.

It says focus for the second quarter continues to be on aggressive deposit mobilisation as well as to diversify the deposit base by reducing reliance on expensive term deposits.

“The model of restructuring the bank branches from being processing centres to a more sales oriented model will continue as a key driver for growth during the second quarter of 2016. This is intended to allocate more resources on client portfolio growth through aggressive sales of retail and corporate liability products,” it said in a statement.

It added, “To cope with the likelihood of increased loan defaults due to high interest rates, the Bank has strengthened its credit underwriting processes and intensified staff training in that area to ensure maintenance of a quality loan book.”

“Risk acceptance criteria and policies are also constantly reviewed in line with changing risk trends. Recoveries efforts on all past due loans has been enhanced through a dedicated Recoveries team. In addition, specialised recovery firms are being appointed to ensure focussed recovery efforts. Where necessary, legal action has been instituted.”

The Bank says it anticipates to grow its business in the near future through consolidation of its operations and increasing the client base and product offerings and uptake.
The Bank remains focused on achieving planned operating results through execution of its strategic objectives.

During the first half of the year, the Bank raised K40 million via a Rights offer in order to boost its Regulatory capital.


    • Mere jealousy. Those Jeeps and Double Cabs are leased to the owners and not expense free personal to holder as you suggest.

  1. Bola naikosa! Most institutions have to restructure their operations and cut down on costs in order to survive these tough economic conditions. Failure to do so would mean goind under.

  2. Interest rates 0f 34% …surely how can local businesses compete with foreigners who take out loans for as low a 8 – 12 %.

  3. That’s what happens when your staff has no motivation to work because for starters, you pay your bank clerks stupid low salaries that one can barely survive, then, the upper management are paid stupid fat salaries and drive real expensive cars by the bank and enjoy huge allowances. What do u expect? Your bank clerks will have a bad attitude towards customers making them leave the bank…..and the training they have “given there staff” is all lies. No wonder there is always a mass exodus of staff members leaving the bank. My tantrum has ended.

  4. We are now entering an uncertain economic climate, poor performing banks will fold or require assistance as did Banks in 2008’s, Credit Crunch. Global phenomena just hitting our shores in our reverse financial crisis, BASED on Global factors in the last quarters in 2014/15 beyond our control.

  5. Someone needs to cut the board of directors allowances, restructure investments, plus source out real performing Zambian entities as clients.

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