AFRASIA Zimbabwe Limited (formerly Afasia Kingdom Zimbabwe) has completed the first phase of $100 million recapitalisation exercise of its banking unit.
The initial phase of the recapitalisation exercise involves raising $20 million via a rights offer ($5 million) and $15 million from a private placement.
Sources said the response to the partial capital-raising exercise initiative to boost the bank’s underwriting capacity had been successful. Speaking at the group’s annual general meeting in Harare yesterday, acting board chairperson Charles Wawn said the bank would return to profitability in the coming year driven by strong credit control measures as well as strong shareholder support.
Turning to the performance of the group’s flagship banking unit, Wan said a total revamp of and centralisation of the group risk processes was successfully done with new policies passed to ensure tightening of credit management.
“The consolidated results, therefore, reflect the strain the group endured on the back of largely non-performing bank loans. The key driver of the bank losses is non-performing loans, a staff voluntary separation exercise implemented during the reporting period as well as the liquidity crunch pervading the economy,” Wawn said yesterday.
“As a result, the group posted a loss after taxation of
$16,1 million for the 18 months to June 2013, compared to a profit after taxation of $782 000 recorded for the 12 months ended December 31. This loss was largely driven by the commercial banking arm of the group on the back
of a significant impairment allowance and on the back of the bank’s loan book.”
However, the group’s micro-finance and asset management operations posted profits during the year under review.
During the year under review, the group surrendered an operating licence for its non-performing stockbroking unit.
Last month, minority shareholders lambasted the bank’s management for dishing out loans without taking security into account.
This came after shareholders were to approve the purchase of 30% shareholding previously held by bank’s founder Nigel Chanakira for $12,5 million.
The purchase price was made up of $2,5 million cash and $10 million in non-performing loans which management said had no prospects of being repaid.
Local banks have been hit by a surge in non-performing loans as companies and individuals struggle to repay.
Official figures show that average non-performing loans to total loans ratio increased from 1,8% as at December 31 2009, to 15,64% as at September 30 2013.
In June 2013, non-performing loans were at 14,51%, while regional best practices are below 3%.