GetBucks Financial Services Limited (GBFS.zw) HY2019 Interim Report

We have extracted the Chairman’s Statement from the 2019 interim financial report for GetBucks Microfinance Bank Limited (GBFS.zw), listed on the Zimbabwe Stock Exchange:

Shareholders,

It is my pleasure to present the audited financial statements of GetBucks Microfinance Bank Limited (“the Bank”) for the year ended 30 June 2019. The year has been marked by numerous monetary policy developments that have significantly changed the operating environment in which we operate in. On 22 February 2019 the Reserve Bank of Zimbabwe (“RBZ”) introduced the interbank foreign exchange trading with rates initially quoted at 1USD:RTGS2.5 as a first step in liberalising the foreign exchange market. As at 30 June 2019 the rate had depreciated to 1USD:RTGS7. On 24 June 2019 Statutory Instrument (“SI”) 142 of 2019 was issued. SI 142 discontinued the multicurrency regime and brought back the Zimbabwe Dollar as the sole legal tender in Zimbabwe. In light of this development, the RBZ moved to increase the scope of bureau de change operators allowing them to buy funds for SMEs. In a bid to assist our clients and expand our product range the bank commenced bureau de change transactions in July2019. This has allowed the provision of services to hitherto clients out of our scope. The bank does not carry significant foreign currency obligations. The capital preservation strategy to purchase fixed property went according to plan and helped boost the Bank’s results.

The period has also seen a rise in the rate of inflation which has put pressure on the cost of business. The bank has responded by rolling out a low-cost business model ensuring that technology is used to service customer requirements. The cost of funding has increased as financiers seek to maintain the value of their money in response to increased overnight accommodation rates that were set at 50% per annum and recently increased to 70% per annum. These developments have put pressure on interest margins and cost to income ratios of the Bank.

Operating results

The bank posted a profit after tax of ZWL$11.4 million (2018: ZWL$4.5 million). This growth was driven by higher fees and commissions on loans of ZWL$7.5 million (2018: ZWL$4.0 million) due to increased loan sales, and fair value gains on investment property of ZWL$8.5 million. Interest margin declined from the previous year due to increased cost of funding. However, the Bank achieved higher fees and commissions to counter the decline. Impairment allowance increa