MBCA Unaudited Interim Condensed Financial Statements

For the half year ended 30 June 2014

Economic overview

The economy continues to be subdued as confirmed by a growth rate of only 3.4% recorded in 2013. Tight liquidity conditions continue to persist and demand deposits remain above 70% of the total market deposits. The Bank has, however, positioned itself to take advantage of the limited opportunities that exist in the market through growing the loan book without unduly increasing the risk to the Bank by targeting quality assets. The thrust to move towards a bank for all model supported by an expanding branch network should see the Bank increase its deposit base as branches are located closer to our clients

Performance

In spite of the economic challenges in the country the Bank has continued to respond positively to the need to provide financing to local industries demonstrated by a significant increase in loans and advances of 29% from December 2013. Despite the growth in the loan book, the non- performing loan ratio as at 30 June 2014 remained relatively low at 2.65% against an industry average of around 18% demonstrating the quality of our loan book in an extremely challenging economy. The Bank’s investment in new branches and new product offerings has yielded positive results as demonstrated by the growth in deposits of 22%.

Indigenisation

The Bank’s indigenisation plan was acknowledged by Government and management is currently finalising the operational modalities prior to implementation.

Capitalisation

As at 30 June 2014, the Bank was compliant with the regulatory requirements regarding capitalisation levels. The Bank submitted a plan to the Reserve Bank of Zimbabwe on how it intends to achieve the minimum capital requirement of US$100 million by 31 December 2020. The Board will continue to assess the capital position in order to ensure that capital resources are adequate to meet business demands and that the Bank remains compliant with regulatory requirements.

Corporate Social Investment

In February 2014, the Tokwe-Mukosi area was affected by floods. MBCA Bank assisted the flood victims by drilling a borehole at a school and also donating clothing items for the flood victims at Chingwizi camp. The Bank also donated doors to St Joseph Home for boys in Harare for a housing project aimed at building a hostel for 55 boys who have been abandoned, marginalized and disadvantaged in the community. The house is aimed at empowering these less privileged young adults to be independent by providing them with shelter while they are being equipped with different skills and the knowledge they need to earn a decent living.

The Bank continues to invest in the future generation and to offer mentorship and guidance to students in Zimbabwe. Junior Achievement has been sponsored for the third consecutive year. The students under the MBCA funded Junior Achievement programmes were given an opportunity to visit the Bank and experience life in a business setting. The Bank also sponsored the Mutare Teen Expo for the second consecutive year.

Board of Directors

Following alignment of the Board of Directors with Nedbank Group standards and compliance with governance relating to the retirement of directors, we advise of the following changes to the Board

  • Mrs Juliet Irene Harris retired from the Board with effect from 18 March 2014 after successfully completing her three terms as an independent director of the Bank. Juliet joined the Board as an independent director in February 2005;
  • Mr Joram Matsvimbo stepped down as an Executive Director of MBCA Bank Limited with effect from 18 March 2014. Joram remains a member of the Executive Management of the Bank in his current role as Head of Business Development and Institutional Banking;
  • Mr Antony Makonese was appointed Executive Director responsible for Finance with effect from 25 March 2014. Antony joined the MBCA Executive Team in April 2011 as the Chief Finance Officer; and
  • Mr Albert. M. Sorgdrager resigned from the Board with effect from 30 July 2014. He was representing Nedbank Group Limited (“Group”) on the MBCA Bank Limited Board of Directors. Following his resignation, the Bank appointed Messrs Jan Adriaan du Plessis and Richard William Reeves Buchholz as Non Executive Directors representing the Group with effect from 30 July 2014.

On behalf of the Board, I would like to thank the outgoing directors for their contributions during their tenure of office and welcome the incoming directors.

Outlook

The Bank maintains a positive view of the future and has thus positioned itself to take advantage of opportunities that may be available. Where these opportunities cannot be funded from our balance sheet, the Bank will use the existing lines of credit from regional and international financial institutions namely Afreximbank and Commerzbank. In addition the Bank’s clients will continue to access direct lending from the Nedbank Group.

Appreciation

I extend my appreciation to our valued clients who continue to support the Bank. I would also like to recognise the entire Board for the diligent service and support it has rendered in the first half of 2014. The management team and staff have also displayed outstanding commitment and contribution over the period under review. I thank the Reserve Bank of Zimbabwe for the continued regulatory support provided during the period to 30 June 2014.

V W Zireva
Chairman