ZB Financial Holdings Limited (ZBFH.zw) Q32021 Interim Report
This Trading Update for the third quarter ended 30 September 2021 is issued in terms of the Zimbabwe Stock Exchange (ZSE) Practice Note 9 as a substitute for the requirement to publish quarterly interim financial reports as mandated by section 35(5) of the ZSE Listing Requirements, Statutory Instrument 134 of 2019.
Q3 coincided with the third wave of COVID-19 in Zimbabwe which saw daily recorded cases reaching a peak of 3 110 on 14 July 2021. Consequent lockdown measures once again restricted the operation of business and the movement of people.
On the backdrop of an expansion in money supply and incessant pressure on the exchange rate, the average month-on-month Inflation rate for the quarter surged from 2.67% to 3.83%. Amongst a raft of inflation mitigation measures the Reserve Bank of Zimbabwe (RBZ) continued to issue Non-negotiable Certificates of Deposits (NNCDs) at zero percent in an effort to sterilize excess liquidity with broad money supply having increased by 2.58% from ZW$302.93 billion in June 2021 to ZW4330.66 billion in July 2021.
Meanwhile, the local currency depreciated by 2.62% against the USD from ZW$85.42 on 1 July 2021 to ZW$87.67 on 30 September 2021, per USD, whilst compliance with exchange control regulations was tightened amidst increased exchange rate volatility on the parallel market.
The Zimbabwe Stock Exchange (ZSE) registered a 37% increase in market capitalization from ZW$712.34 billion at the beginning of the quarter to ZW$975.26 billion as at end of September 2021.On a year-on-year basis, the ZSE market capitalization registered a 372% growth.
THIRD QUARTER PERFORMANCE OUTTURN
The analysis is based on inflation adjusted numbers based on principles contained in IAS 29: Financial Reporting in Hyperinflationary Economies.
Despite an 86% reduction in Foreign exchange income, total income for Q3FY21 at ZW$5.9 billion increased slightly by 1% compared to ZW$5.8 billion posted in Q3FY20. Foreign exchange earnings dominated total income in 2020, driven by the wide movements in the official exchange rate as authorities attempted to stabilize the market. Normal business income has become more prominent in FY21.
Net interest and trading income increased by 313% in Q3FY21 compared to Q3FY20