TIDMNMB
RNS Number : 0130U
NMBZ Holdings Ld
31 March 2021
NMBZ HOLDINGS
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED AUDITED CONSOLIDATED RESULTS
FOR THE YEARED 31 DECEMBER 2020
FINANCIAL SUMMARY
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------ ------------ ------------ ------------
2020 2019 2020 2019
------------ ------------ ------------ ------------
Restated
------------ ------------ ------------ ------------
2 278 895 3 278 415 2 760 886 464 285
Total income (ZWL) 874 691 768 244
------------ ------------ ------------ ------------
Operating profit before impairment
charge and loss on net monetary 861 655 1 967 489 1 856 058 341 453
position (ZWL) 493 095 489 654
------------ ------------ ------------ ------------
Total comprehensive income 1 030 289 1 151 854 2 704 776 473 463
(ZWL) 817 267 561 396
------------ ------------ ------------ ------------
Basic earnings per share (ZWL
cents) 210.12 96.49 448.72 73.13
------------ ------------ ------------ ------------
6 262 750 5 343 012 6 262 750 1 191 079
Total deposits (ZWL) 864 221 864 845
------------ ------------ ------------ ------------
Total gross loans and advances 2 451 989 2 391 455 2 451 989 533 110
(ZWL) 687 787 687 289
------------ ------------ ------------ ------------
Total shareholders' funds and 4 194 973 3 211 913 3 388 155 579 169
shareholders' liabilities (ZWL) 015 897 345 046
------------ ------------ ------------ ------------
Enquiries:
NMBZ HOLDINGS LIMITED
Benefit P Washaya, Chief Executive Officer, NMBZ Holdings Limited benefitw@nmbz.co.zw
Gerald Gore, Deputy Chief Executive Officer, NMBZ Holdings Limited geraldg@nmbz.co.zw
Benson Ndachena, Chief Finance Officer, NMBZ Holdings Limited bensonn@nmbz.co.zw
Website:
http://www.nmbz.co.zw
Email:
enquiries@nmbz.co.zw
Telephone: +263-8688003347
INTRODUCTION
The 2020 operating environment was largely dogged by the
devastating effects arising out of the outbreak of the COVID-19
pandemic which ravaged global economies. In response to the
COVID-19 pandemic, the Government of Zimbabwe like many other
Governments imposed lockdown measures of varying extents in an
effort to curtail the spread of the deadly Corona virus. A number
of policy pronouncements were made by the Government of Zimbabwe in
response to the pandemic and these affected the operations of the
Group during the period under review. Globally, the focus on
COVID-19 has shifted to vaccination with notable strides having
been made on that front by a number of countries. We remain hopeful
that the vaccination programmes will yield the desired results
which should go a long way in alleviating this global crisis.
Focusing on the local economy, the first half of the year under
review was characterised by hyper-inflation and incessant economic
instability emanating from the deterioration of the country's
foreign exchange rate. However, the introduction of the RBZ
administered Foreign Exchange Auction System on 23 June 2020
appears to have significantly contained the rapid oscillations that
were characterising the country's foreign exchange rate.
Significant trades have been recorded on this platform from its
inception and there has been notable stability in the foreign
exchange regime ever since the auction system was introduced. This
culminated in economic stability largely prevailing in the second
half of the year with the annual inflation rate closing the year at
348.6% down from a peak of 837.5% recorded in July 2020. Our hopes
remain pinned on the sustainability of this stability which will
certainly foster economic growth into the foreseeable future.
The Bank's digital strategy was launched at the most opportune
time as it has been quite instrumental in driving business within
the COVID-19 induced circumstances. The Bank has recorded
significant growth, expansion and improvements on its digital
platforms and this has resulted in enhanced service delivery.
Furthermore, in response to the prevailing hyperinflationary
environment, the Group adopted a number of value preservation
strategies in order to ensure that shareholders' value is not
eroded. These measures culminated in the Group's remarkable
financial performance in spite of the difficult operating
environment.
The key inflation adjusted financial highlights of the Group as
at 31 December 2020 are depicted below:
Shareholders' funds and shareholders' liabilities ZWL4 195.0
million (2019 -- ZWL3 211.9 million)
Total assets ZWL10 957.2 million (2019 -- ZWL9 372.3
million)
Total deposits ZWL6 262.8 million (2019 -- ZWL5 343.0
million)
Basic earnings per share ZWL210.12 cents (2019 -- ZWL96.49
cents)
SUSTAINABILITY REPORTING
With the prevailing Covid-19 pandemic, we continue to build
value adding relationships with our staff and all stakeholders as
well as in the communities which we operate in. The Board upholds
high standards of management and corporate governance, which we
believe are key to delivering sustainable shareholder value and
contribute to the Group's long term success. It is our
responsibility as the Board to ensure that management, not only
delivers on short term objectives, but promotes the long term
growth of the Group. We have fostered and are buttressing our
culture of responsible business practices by paying more attention
to sustainability issues.
Since our inception in 1993, we have opened up opportunities for
our customers, communities, and the broader society. We endeavor to
build a future that prioritises resilience, social mobility and the
environment as well as economic growth. We have a long standing
partnership with the community and the Government in general
through our involvement in a diverse range of social and economic
activities that serve broad community audiences. Our aim is to
continuously strengthen our performance and create our
sustainability strategy anchored on financial inclusion, education,
water, housing, construction, health and climate.
To this end, the Group through its Banking subsidiary remains
committed to financing the education sector, health, property &
construction as well as supporting the SMEs, the youths, the
disadvantaged, vulnerable groups in addition to supporting various
environmental conservation initiatives. Through advancing
affordable loans, support was extended to both educational
institutions and students in pursuit of supporting the education
sector. The Bank also provided support in the construction and
maintenance of roads, dams and houses across the nation.
Furthermore, the Bank extended funding to local authorities in a
bid to ensure the provision of clean water and other critical
amenities to residents. In order to assist in clearing the national
housing backlog, the Bank also continued to advance mortgage
facilities for residential accommodation. In addition, pursuant to
its initiative to support industry and commerce, the Bank continues
to advance mortgage facilities to its Corporate clients and SMEs
towards the construction and acquisition of commercial
properties.
The Group complied with all environmental management and other
related laws, regulations and best practices. Financing to both
corporates and SMEs were done entirely in accordance with the
Banking subsidiary's Statement of Commitment to Responsible
Financing and Exclusion List.
CORPORATE SOCIAL INVESTMENTS
During the period under review, the Group channelled its
Corporate Social Investments towards education, environment
conservation as well as the support of disadvantaged and vulnerable
groups. Donations towards education were to the Ministry of
Education Mashonaland West Provincial Wellness Launch and
Matabeleland North Athletics team NASH/NAPH and the University of
Zimbabwe COVID-19 Awareness Campaign. We sponsored the TM/PnP
Charity Golf tournament where funds raised were channelled towards
the Meikles Foundation, which seeks to promote sustainable
development through initiatives that seek to protect wildlife and
the environment as well as achieve community welfare and education.
Donations were also made to KidzCan for treatment of children
living with cancer, commemoration of World Hearing Day,
commemoration of the World Kidney Day and to Chambuta Children's
Home.
The Group, in conjunction with other banks also channelled its
Corporate Social Investments towards the fight against COVID-19
under the Bankers Association of Zimbabwe.
CORPORATE DEVELOPMENTS
The Bank's strategy remains firmly focused on the enhancement of
its digital offerings to ensure seamless service delivery to the
Bank's existing and future clients via its exciting and refreshing
digital touch points. This strategy resonates very well with the
'new normal', where physical interactions have to be kept at a
minimum in line with the World Health Organisation (WHO) guidelines
on fighting the novel COVID-19 pandemic.
The Bank continues with its financial inclusion drive and has
intensified the opening of a number of low cost accounts via our
NMBLite product. The Bank is also quite excited by its recently
launched self-account opening portal which offers an amazing and
easy self on-boarding experience to the Bank's future customers.
The portal is going through further refinements which will provide
even more exciting insights and convenience to the Bank's valued
customers.
During the period under review, we successfully migrated our
Head Office to the new home along Borrowdale road offering a
refreshing environment for our staff and stakeholders. To enhance
the customer experience, the Bank's Excellence branch previously
located at the Borrowdale, Sam Levy Village, was also moved to the
new Head Office much to the delight of our valued customers.
OUTLOOK AND STRATEGY
The containment of the COVID-19 pandemic continues to be an
imperative for a global and local economic rebound in the short to
medium term. We are confident that the measures adopted by the
Government of Zimbabwe and the imminent vaccination of the
population with the COVID-19 vaccine, coupled with the collective
efforts of all corporates and citizens will continue to minimise
the spread of the virus and its total elimination in the
foreseeable future.
We are encouraged by the exchange rate stability which has been
prevailing in the second half of the period under review and remain
hopeful that the stability will continue prevailing in order to
create a conducive operating environment for business and the
attraction of capital which will go a long way in ensuring economic
growth and stability in the foreseeable future.
The Group's banking subsidiary will continue to enhance its
digital offerings to continuously improve the customer experience
which will also contribute towards the Bank's desire to broaden its
market segments and grow its deposit base.
In pursuit of the revised capitalisation levels announced by the
Central Bank, the Group has been pursuing a number of
value-preservation strategies to ensure the preservation and growth
of the Bank's regulatory capital.
GROUP RESULTS
Hyperinflationary reporting
Following the liberalisation of the exchange rate in February
2019, there has been a significant depreciation in the exchange
rate of the local currency unit which in turn resulted in the
economy plunging into hyper-inflation. In light of this background,
the Directors assessed the impact of International Accounting
Standard (IAS) 29 "Financial Reporting in Hyperinflationary
Economies" and noted that the conditions required to apply IAS 29
had materialized in the Group's operating environment during the
period under review. Furthermore, the Public Accountants and
Auditors Board (PAAB) issued a pronouncement on 11 October 2019
indicating that the economy had become hyper-inflationary. The
Directors have thus prepared the accompanying financial statements
using the hyperinflationary accounting basis to achieve fair
presentation at the reporting date of 31 December 2020. Unless
indicated otherwise, the results commentary below will be primarily
on the Group's hyper-inflationary adjusted financial statements at
the reporting date.
Financial performance
The profit before taxation was ZWL705 414 282 (2019 - ZWL691 317
803) during the period under review and this gave rise to total
comprehensive income of ZWL1 030 289 817 (2019 - ZWL1 151 854 266)
after total other comprehensive income of ZWL181 026 875. The Group
achieved a basic earnings per share of 210.12 cents (2019 - 96.49
cents).
Operating expenses amounted to ZWL1 274 247 625 and these were
up 18% from a prior year amount of ZWL1 079 026 942. The increase
in operating expenditure was mainly due to staff rationalisation
costs and COVID-19 related expenditure to ensure the safety of the
Bank's customers and staff as well as to ensure adherence to the
COVID-19 protocol set by the World Health Organisation.
Impairment losses on financial assets measured at amortised cost
amounted to ZWL127 974 740 for the current period from a prior year
amount of ZWL49 562 276 and the increase was mainly due to the
increase in the Banking subsidiary's assets measured at amortised
cost during the period under review. The bank has continued with
its drive to reduce non-performing loans (NPLs) and the ratio stood
at 0.44% as at 31 December 2020. This was lower than the 31
December 2019 ratio of 1.37% and below the Bank's and regulatory
target of 5% as at 31 December 2020. The decrease in the NPL ratio
was largely due to aggressive collections and stricter credit
underwriting standards.
Financial position
The Group's total assets increased by 17% from ZWL9 372 348 955
as at 31 December 2019 to ZWL10 957 161 610 as at 31 December 2020
mainly due to a 125% increase in investment securities, a 60%
increase in investment properties and an increase of 25% in
property and equipment. These increases were partly offset by a 32%
decrease in intangible assets and an 11% decrease in cash and cash
equivalents.
Investment properties increased from ZWL1 031 154 579 as at 31
December 2019 to ZWL1 653 496 476 as at 31 December 2020 due to
additions and improvements made on the Bank's property portfolio in
line with the value preservation strategies adopted by the Group to
curtail the devastating effects of the prevailing hyperinflationary
environment.
Investment securities (Treasury Bills and Bonds) increased from
ZWL480 731 899 as at 31 December 2019 to ZWL1 081 820 457 as at 31
December 2020 mainly due to the acquisition of Treasury bills and
Bonds. Nevertheless, the bank has set maximum limits for investment
securities in order to ensure that most of the funds are channeled
towards the productive sectors of the economy.
Total deposits increased by 17% from ZWL5 343 012 221 restated
as at 31 December 2019 to ZWL6 262 750 864 as at 31 December 2020
as a result of the Bank's aggressive deposit mobilization efforts
in pursuit of the broadening of the Bank's target market
segments.
The Bank's liquidity ratio closed the period at 67.68% (2019 -
60.72%) and this was above the statutory requirement of a minimum
of 30%.
Capital
The banking subsidiary's capital adequacy ratio stood at 52.56%
(Historical - 43.78%) as at 31 December 2020 (31 December 2019 -
48.46%; Historical - 39.49%). The ratio was above the statutory
minimum of 12%. Our capitalisation level is adequate to cover all
risks and supports the underwriting of new business.
The Group's shareholders' funds and shareholders' liabilities
have increased by 31% from ZWL3 211 913 897 restated as at 31
December 2019 to ZWL4 194 973 017 as at 31 December 2020 largely as
a result of the current year's total comprehensive income.
The Bank's regulatory capital as at 31 December 2020 was ZWL2
186 036 634 and is above the minimum required regulatory capital of
ZWL25 million. The bank remains confident that its plan to meet the
revised minimum capital of the ZWL equivalent of USD30 million for
a Tier 1 bank by 31 December 2021 is achievable.
FUNCTIONAL CURRENCY
As announced in the Group's financial statements for the year
ended 31 December 2019, we continue to closely monitor the
developments in the economic and monetary landscape. On 22 February
2019, the Reserve Bank of Zimbabwe (RBZ) issued an Exchange Control
Directive, RU 28 of 2019 which established an Interbank foreign
exchange market to formalize the buying and selling of foreign
currency through the Banks and Bureaux de change. To operationalize
this, the RBZ denominated the existing RTGS balances as RTGS
dollars and initial trades between the RTGS dollar and the US$ were
pegged at USD/RTGS$1:2.5. On the same date, Statutory Instrument 33
(SI 33) of 2019 was also issued and it specified that all assets
and liabilities that were in USD immediately before 22 February
2019 were deemed to have been valued in RTGS$ at a rate of
USD/RTGS$1:1.
On 24 June 2019, through Statutory Instrument 142 (SI 142) of
2019, the Government of Zimbabwe discontinued the multicurrency
regime which had been in place since February 2009 and also
introduced the Zimbabwe Dollar (ZWL), which was designated as the
country's sole legal tender to be used for all local transactions
and other purposes.
On 26 March 2020, the Reserve Bank of Zimbabwe in a press
statement announced various interventions in response to the
financial vulnerabilities caused by the COVID-19 pandemic. One of
the measures announced therein was the authorization of the use of
free-funds in paying for goods and services, in terms of Statutory
Instrument (SI) 85 of 2020. On 24 July 2020, the Government of
Zimbabwe issued Statutory Instrument (SI) 185 of 2020, which
granted permission to display, quote or offer prices for all goods
and services in both Zimbabwe dollars and foreign currency at the
interbank exchange rate.
On 23 June 2020, the Reserve Bank of Zimbabwe introduced the
Foreign Exchange Auction System, effectively abandoning the fixed
foreign currency exchange rate regime which had been prevailing for
the greater part of 2020. Significant trades have been recorded on
the platform and significant movements in the exchange rate have
been resultantly recorded.
The Directors, having assessed all these developments, concluded
that the Group's functional currency remains the Zimbabwe dollar
having changed from USD to RTGS dollars on 22 February 2019, which
subsequently changed to Zimbabwe Dollars (ZWL) following the
issuance of SI 142 of 2019 on 24 June 2019.
LEGACY DEBTS
The banking subsidiary owed USD13 840 412 to various lines of
credit providers as at 31 December 2020. The Bank registered these
foreign debts with the Reserve Bank of Zimbabwe (RBZ) as required
by the regulatory directives. During the previous financial period,
the Bank transferred to the RBZ the ZWL equivalent of the foreign
debts at a rate of USD/ZWL1:1. The RBZ has indicated that they will
be issuing a USD denominated instrument for these debts and
consequently these debts and the RBZ deposits have been accounted
for at the closing exchange rate of USD/ZWL 1:81.3486 at 31
December 2020. This effectively values the original credit lines at
a rate of 1:1 on a netted off basis. The RBZ approved the line of
credit balances amounting to USD13 840 412.
DIVID
The Board has resolved not to declare a dividend as the Group is
focusing on achieving the minimum regulatory capital requirement of
the ZWL equivalent of USD30 million for a Tier 1 bank by 31
December 2021 for its banking subsidiary.
DIRECTORATE
Mr Givemore Taputaira was appointed to the Board of NMBZ
Holdings Limited and NMB Bank Limited on 2 January 2020. The
directors of both NMBZ Holdings Limited and NMB Bank Limited boards
are as follows: Mr Benedict A. Chikwanha (Board Chairman), Mr
Benefit P. Washaya (Chief Executive Officer), Mr Benson Ndachena
(Chief Finance Officer), Mr Charles Chikaura (Independent
Non-Executive Director and Deputy Chairman), Mr James de la Fargue
(Non-Executive Director), Ms Jean Maguranyanga (Independent
Non-Executive Director), Mr Julius Tichelaar (Non-Executive
Director), Ms Sabinah Chitehwe (Independent Non-Executive
Director), Ms Christine Glover (Non-Executive Director) and Mr
Givemore Taputaira (Independent Non-Executive Director).
APPRECIATION
I wish to express my heartfelt gratitude to all our clients,
shareholders, regulatory authorities and all other valued
stakeholders for their continued support during these unprecedented
times of the global health pandemic. To my fellow Board members,
management and staff, I extend my appreciation for their hard work,
diligence, commitment and focus which has underpinned the
achievement of these commendable results.
May I take this opportunity to encourage all our stakeholders to
stay safe and continue practicing the WHO guidelines in order to
minimize the spread of the deadly corona virus.
MR. B. A. CHIKWANHA
CHAIRMAN
10 March 2021
DIRECTORS' REPORT EXTRACT
for the year ended 31 December 2020
1. RESPONSIBILITY
The Directors of the Group are mandated by the Companies and
Other Business Entities Act (Chapter 24:31) of Zimbabwe to maintain
adequate accounting records and to prepare consolidated and
separate financial statements that present a true and fair view of
the state of affairs of the Group and Company at the end of each
financial year. The information contained in these consolidated and
separate financial statements has been prepared on a going concern
basis and is in accordance with the provisions of the Companies and
Other Business Entities Act (Chapter 24:31) of Zimbabwe, the
Banking Act (Chapter 24:20) of Zimbabwe and International Financial
Reporting Standards (IFRSs).
2. INTERNAL FINANCIAL CONTROLS
The board is responsible for ensuring that effective internal
control systems are implemented within the Group. The Group
maintains internal controls and systems designed to provide
reasonable assurance of the integrity and reliability of its
records, safeguard the assets of the Group and prevent and detect
fraud and errors. The Audit Committee in conjunction with the
external and internal auditors of the Group reviews and assesses
the internal control systems of the Group in key risk areas.
3. GOING CONCERN
The Directors have assessed the ability of the Group and its
subsidiaries to continue operating as a going concern and believe
that the preparation of these financial statements on a going
concern is still appropriate.
4. STATEMENT OF COMPLIANCE
The condensed consolidated financial statements are prepared
with the aim of complying fully with International Financial
Reporting Standards (IFRSs) and have been prepared in the manner
required by the Companies and Other Business Entities Act (Chapter
24:31) of Zimbabwe and the Banking Act (Chapter 24:20) of Zimbabwe.
The detailed impact of this adoption is disclosed in note 3.12
(Changes in accounting policy).
The Directors have been able to achieve full compliance with
IFRSs in previous reporting periods up to 31 December 2017.
However, the 31 December 2020 and the comparative period as well as
the 31 December 2018 financial reporting period could only achieve
partial compliance to the IFRS reporting framework due to
developments detailed below.
The IFRS Conceptual Framework states that to achieve fair
presentation to the financial statements, companies should consider
the underlying economic substance of the transaction over and above
the legal form. International Accounting Standard (IAS 21) "The
Effects of Changes in Foreign Exchange Rates" requires the
Directors to determine the functional currency of the reporting
entity in preparing the entity's financial statements. In arriving
at this conclusion, the entity is required to apply certain
parameters which the Directors duly applied in their judgement.
Furthermore, IAS 21 also requires the reporting entity to make
certain judgements in determining the appropriate exchange rates to
apply for certain transactions conducted in currencies other than
the functional currency of the reporting entity.
As explained in Note 2.4.5, "Determination of the functional
currency", it is our opinion that following the Monetary Policy
pronouncements of 1 October 2018 and 20 February 2019, as well as
the issuance of Exchange Control Directive RU 28 of 2019 on 22
February 2019, the country's functional currency appeared to have
changed from the United States Dollar in terms of the IAS 21
considerations. However, the Government of Zimbabwe issued
Statutory Instrument (SI 33) of 2019 on 22 February 2019, which
prescribes the rate of USD1:RTGS$1 in accounting for all
transactions and events before the effective date of the statutory
instrument.
Furthermore, it is our interpretation that the SI 33 of 2019
issued in terms of the Presidential Powers Temporary Measures Act
[Chapter 10:20], ranks supreme to any contrary legislation
including quasi-legislations, which therefore implies that in
preparing the financial statements, we sought to comply with the
provisions of SI 33 of 2019 ahead of the IAS 21 requirements;
consequently, the Group could not fully apply the requirements of
IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors".
This, in our opinion resulted in non-compliance with IAS 21 and
IAS 8 and that non-compliance had a significant impact on the true
and fair presentation of the Group's financial position and would
therefore urge users of the financial statements to exercise due
caution.
The consolidated and separate financial statements were approved
by the Board of Directors on 10 March 2021.
..................................................
...................................
MR B. A. CHIKWANHA MR B. P. WASHAYA
CHAIRMAN CHIEF EXECUTIVE OFFICER
10 MARCH 2021 10 MARCH 2021
AUDITOR'S STATEMENT
These abridged financial statements have been audited by Ernst
& Young Chartered Accountants (Zimbabwe) and an adverse audit
opinion issued thereon due to non-compliance with International
Accounting Standard 21, "The Effects of Changes in Foreign Exchange
Rates" and International Accounting Standard 8, "Accounting
Policies, Changes in Accounting Estimates and Errors". There are no
key audit matters communicated in the auditor's report. The
Auditor's report is available for inspection at the Holding
Company's registered office. The Audit Partner for this engagement
was Mr Walter Mupanguri (PAAB Practicing Number 0367).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2020
Inflation adjusted Historical Cost*
31 Dec 31 Dec 31 Dec 31 Dec
------- ---------------------- --------------------- ------------------------- ------------------
Note 2020 2019 2020 2019
------- ---------------------- --------------------- ------------------------- ------------------
ZWL ZWL ZWL ZWL
------- ---------------------- --------------------- ------------------------- ------------------
Restated
------- ---------------------- --------------------- ------------------------- ------------------
Interest income 4 760 901 869 808 407 006 501 216 271 70 557 190
------- ---------------------- --------------------- ------------------------- ------------------
(142 992 756) (231 899 654) (90 638 279) (16 894 088)
Interest expense ---------------- ---------------- ---------------- ----------------
------- ---------------------- --------------------- ------------------------- ------------------
Net interest
income 617 909 113 576 507 352 410 577 992 53 663 102
------- ---------------------- --------------------- ------------------------- ------------------
Fee and
commission 1 131 552
income 5.1 573 821 825 071 815 541 357 87 242 303
------- ---------------------- --------------------- ------------------------- ------------------
Net foreign 1 143 047
exchange gains 128 836 005 353 217 274 144 99 863 112
------- ---------------------- --------------------- ------------------------- ------------------
------------------ ----------------- ------------------ ----------------
------- ---------------------- --------------------- ------------------------- ------------------
1 878 297 2 541 379 1 443 393
Revenue 691 776 493 240 768 517
------- ---------------------- --------------------- ------------------------- ------------------
1 226 846
257 605 427 505 136 261 996 206 622 639
Other income 5.2 ------------------ ------------------- ---------------- ----------------
------- ---------------------- --------------------- ------------------------- ------------------
2 135 903 3 046 516 2 670 240
Operating income 118 037 489 447 391 156
------- ---------------------- --------------------- ------------------------- ------------------
(1 274 247 (1 079 026 (814 190 (105 937
Operating 625) 942) 000) 502)
expenditure 6 ------------------ ------------------- ------------------- ----------------
------- ---------------------- --------------------- ------------------------- ------------------
Operating income before
impairment
charge and loss on
monetary 1 967 489 1 856 050
position 861 655 493 095 489 341 453 654
---------------------- --------------------- ------------------------- ------------------
Impairment
losses on
financial
assets measured
at amortised (127 974
cost 16.3 (127 974 740) (49 562 276) 740) (11 048 567)
------- ---------------------- --------------------- ------------------------- ------------------
Loss on net
monetary (1 226 609
position (28 266 471) 016) - -
------- ---------------------- --------------------- ------------------------- ------------------
----------------
Profit before ---------------- ------------------ 1 728 075 ---------------
taxation 705 414 282 691 317 803 749 330 405 087
------- ---------------------- --------------------- ------------------------- ------------------
Taxation 143 848 660 (314 097 585) 85 514 320 (44 504 548)
credit/(charge) 7 ---------------- ----------------- ------------------ ----------------
------- ---------------------- --------------------- ------------------------- ------------------
Profit for the 1 813 590
period 849 262 942 377 220 218 069 285 900 539
------- ---------------------- --------------------- ------------------------- ------------------
Other
comprehensive
income
------- ---------------------- --------------------- ------------------------- ------------------
Items that will not be reclassified to
profit or loss
--------------------- ------------------------- ------------------
Revaluation of
land and
buildings, net
of tax 181 026 875 487 104 622 891 186 492 175 943 209
------- ---------------------- --------------------- ------------------------- ------------------
Items that may be reclassified to profit
or loss
--------------------- ------------------------- ------------------
Translation gain
on change
in
functional
currency,
net of tax - 287 529 426 - 11 619 648
------- ---------------------- --------------------- ------------------------- ------------------
----------------- ------------------ ----------------- ---------------
------- ---------------------- --------------------- ------------------------- ------------------
Total comprehensive 1 030 289 1 151 854 2 704 776
income 817 266 561 473 463 396
for the year ========== ========== ========== =========
---------------------- --------------------- ------------------------- ------------------
Earnings per share (ZWL
cents)
---------------------- --------------------- ------------------------- ------------------
- Basic 9.3 210.12 96.49 448.72 73.13
------- ---------------------- --------------------- ------------------------- ------------------
- Diluted 9.3 198.37 90.92 423.62 67.52
------- ---------------------- --------------------- ------------------------- ------------------
- Headline 9.3 208.41 95.21 443.72 72.73
------- ---------------------- --------------------- ------------------------- ------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
Inflation adjusted Historical Cost*
31 Dec 31 Dec 31 Dec 31 Dec
------- --------------------- ------------------- -------------------- ---------------------
Note 2020 2019 2020 2019
------- --------------------- ------------------- -------------------- ---------------------
ZWL ZWL ZWL ZWL
------- --------------------- ------------------- -------------------- ---------------------
Restated
------- --------------------- ------------------- -------------------- ---------------------
SHAREHOLDERS' FUNDS
------- --------------------- ------------------- -------------------- ---------------------
Share capital 10.2.1 3 574 680 3 574 680 84 116 84 116
------- --------------------- ------------------- -------------------- ---------------------
759 195
Capital reserves 756 522 688 015 19 121 607 19 184 170
------- --------------------- ------------------- -------------------- ---------------------
Functional currency
translation 287 529
reserve 287 529 426 426 11 619 648 11 619 648
------- --------------------- ------------------- -------------------- ---------------------
Revaluation 487 104 1 067 266
reserves 668 131 497 622 442 176 079 950
------- --------------------- ------------------- -------------------- ---------------------
2 332 246 1 482 983 2 143 095
830 888 638 329 505 569
Retained earnings ----------------- ----------------- ----------------- ----------------
------- --------------------- ------------------- -------------------- ---------------------
4 048 005 3 020 387 3 241 187
Total equity 121 631 451 536 473 453
------- --------------------- ------------------- -------------------- ---------------------
Redeemable ordinary
shares 11 14 335 253 64 305 875 14 335 253 14 335 253
------- --------------------- ------------------- -------------------- ---------------------
Subordinated term 127 220
loan 12 132 632 641 391 132 632 641 28 360 340
------- --------------------- ------------------- -------------------- ---------------------
----------------- ---------------- ----------------- ----------------
------- --------------------- ------------------- -------------------- ---------------------
Total shareholders'
funds and 4 194 973 3 211 913 3 388 155
shareholders' 015 897 345 579 169 046
liabilities ----------------- ---------------- ----------------- ----------------
------- --------------------- ------------------- -------------------- ---------------------
LIABILITIES
------- --------------------- ------------------- -------------------- ---------------------
Deposits and other 6 413 943 5 652 133 6 413 943 1 268 146
liabilities 13.1 465 875 465 016
------- --------------------- ------------------- -------------------- ---------------------
Deferred tax 505 497
liabilities 291 040 065 805 174 727 794 97 653 191
------- --------------------- ------------------- -------------------- ---------------------
Current tax 57 205 065 2 803 378 57 205 065 624 937
liabilities ------------------- ----------------- ------------------ -------------------
------- --------------------- ------------------- -------------------- ---------------------
Total shareholders' funds 10 957 161 9 372 348 10 034 031 1 945 593
and liabilities 610 955 669 190
=========== ========== =========== ===========
--------------------- ------------------- -------------------- ---------------------
ASSETS
------- --------------------- ------------------- -------------------- ---------------------
Cash and cash 1 964 637 2 208 405 1 964 637
equivalents 15 240 864 240 492 304 267
------- --------------------- ------------------- -------------------- ---------------------
Investment 1 081 820 480 731 1 081 820
securities 14.1 457 899 457 107 166 155
------- --------------------- ------------------- -------------------- ---------------------
Loans, advances and 3 992 648 3 824 449 3 730 886
other assets 16 603 644 733 817 960 242
------- --------------------- ------------------- -------------------- ---------------------
Trade and other
investments 14.5.1 10 877 672 7 231 788 10 877 672 1 612 131
------- --------------------- ------------------- -------------------- ---------------------
Investment 1 653 496 1 031 154 1 653 496
properties 476 579 476 229 867 982
------- --------------------- ------------------- -------------------- ---------------------
Intangible assets 17 35 509 627 52 097 749 4 133 707 1 397 186
------- --------------------- ------------------- -------------------- ---------------------
Property and 2 218 171 1 768 277 1 588 179
equipment 18 535 432 384 295 285 227
------- --------------------- ------------------- -------------------- ---------------------
------------------- ----------------- ------------------- ------------------
Total assets 10 957 161 9 372 348 10 034 031 1 945 593
610 955 669 190
=========== ========== =========== ==========
------- --------------------- ------------------- -------------------- ---------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Inflation adjusted
Functional
Currency
Translation Share Option Revaluation Retained
Share Capital Share Premium Reserve Reserve Reserve Earnings Total
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Balances at
1 January 1 133 683
2019 3 486 812 728 690 606 - 2 672 327 - 620 1 868 535 365
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Profit for
the year - - - - - 377 220 218 377 220 218
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - - 487 104 622 - 487 104 622
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Share issue
- scrip
dividend 87 868 27 832 082 - - - - 27 919 950
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Dividends
paid - - - - - (27 919 950) (27 919 950)
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Translation
gain on
change
in
functional
currency, 287 529
net - - 426 - - - 287 529 426
of tax ---------------- ---------------- ---------------- ---------------- --------------- ------------------ ------------------
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Restated
balances at
1 January 287 529 1 482 983
2020 3 574 680 756 522 688 426 2 672 327 487 104 622 888 3 020 387 631
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Profit for
the year - - - - - 849 262 942 849 262 942
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - - 181 026 875 - 181 026 875
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Unwinding of
share
option
reserve - - - (2 672 327) - - (2 672 327)
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
---------------- ----------------- ----------------- ----------------- --------------- ------------------ ------------------
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
Balances at 3 574 680 756 522 688 287 529 - 668 131 469 2 332 246 4 048 005 121
31 December ========== ========== 426 ========== ========= 830 ==========
2020 ========== ==========
----------------- ------------------ ------------------ ------------------ ---------------- ------------------- --------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
for the year ended 31 December 2020
Historical Cost*
Functional
Currency
Share Option Translation Revaluation
Share Capital Share Premium Reserve Reserve Reserve Retained Earnings Total
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Balances at
1 January
2019 80 975 16 463 734 62 563 - 136 741 47 377 400 64 121 413
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Profit for
the year - - - - 285 900 539 285 900 539
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Revaluation
of land and
buildings,
net of tax - - - - 175 943 209 - 175 943 209
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Translation
gain on
change in
functional
currency,
net of tax - - - 11 619 648 - - 11 619 648
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Share issue
- scrip
dividend 3 141 2 657 873 - - - - 2 661 014
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Dividends - - - - - (3 772 370) (3 772 370)
paid --------------- --------------- --------------- --------------- ----------------- ----------------- ----------------
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Balances at
31 December
2019 84 116 19 121 607 62 563 11 619 648 176 079 950 329 505 569 536 473 453
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Unwinding of
share
option
reserve - - (62 563) - - - (62 563)
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Profit for 1 813 590 1 813 590
the year - - - - - 069 069
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Revaluation
of land and
buildings,
net of tax - - - - 891 186 492 - 891 186 492
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
--------------- --------------- --------------- --------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
Balances at 84 116 19 121 607 - 11 619 648 1 067 266 442 2 143 095 3 241 187
31 December ========= ========= ========= ========= ========== 638 451
2020 ========== ==========
---------------- ---------------- ---------------- ---------------- ------------------ ------------------- ------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
Inflation adjusted Historical Cost *
31 Dec 31 Dec 31 Dec 31 Dec
---------------------- --------------------- --------------------- --------------------
2020 2019 2020 2019
---------------------- --------------------- --------------------- --------------------
ZWL ZWL ZWL ZWL
---------------------- --------------------- --------------------- --------------------
Restated
--------------------- --------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
--------------------- --------------------- --------------------
691 317 1 728 075 330 405
Profit before taxation 705 414 282 803 749 087
---------------------- --------------------- --------------------- --------------------
Non-cash items:
---------------------- --------------------- --------------------- --------------------
- Depreciation(excluding right
of use assets) 69 161 843 69 204 253 22 310 284 2 307 360
---------------------- --------------------- --------------------- --------------------
- Depreciation - Right of use
assets 11 116 446 13 854 547 8 579 715 1 310 867
---------------------- --------------------- --------------------- --------------------
- Amortisation of intangible
assets 24 416 805 28 513 215 915 580 733 909
---------------------- --------------------- --------------------- --------------------
* Impairment losses on financial assets measured at
amortised costs 127 974 740 49 562 276 127 974 740 11 048 567
---------------------- --------------------- --------------------- --------------------
(228 646 (419 983 (1 182 737 (194 387
* Investment properties fair value gains 579) 776) 157) 322)
---------------------- --------------------- --------------------- --------------------
* Trade and other investments fair value adjustment (3 645 884) (4 097 075) (9 265 541) (1 499 630)
---------------------- --------------------- --------------------- --------------------
* Profit on disposal of property and equipment (7 881 999) - (7 091 399) -
---------------------- --------------------- --------------------- --------------------
- Loss/(p rofit) on disposal
of investment properties 2 198 385 (2 620 407) (10 867 431) (584 149)
---------------------- --------------------- --------------------- --------------------
- Interest capitalised on subordinated
term loan - 16 955 691 - 1 151 954
---------------------- --------------------- --------------------- --------------------
- Impairment reversal on land
and buildings - - - (40 600)
---------------------- --------------------- --------------------- --------------------
(204 729 (414 431 (204 729 (92 386
- Unrealised foreign exchange 321) 455) 321) 267)
gain ------------------ ---------------- ---------------- ----------------
---------------------- --------------------- --------------------- --------------------
Operating cash flows before
changes in operating assets
and liabilities 495 378 718 28 275 072 473 165 219 58 059 776
---------------------- --------------------- --------------------- --------------------
Changes in operating assets
and liabilities
---------------------- --------------------- --------------------- --------------------
Increase/(decrease) in deposits 2 911 107 (8 413 499 2 911 107 552 444
and other liabilities 623 169) 622 546
---------------------- --------------------- --------------------- --------------------
(2 755 618 4 407 969 (1 356 425 (326 882
(Increase)/decrease in loans, 219) 090 376) 932)
advances and other assets ------------------ ------------------ ------------------ -----------------
---------------------- --------------------- --------------------- --------------------
(3 977 255 2 027 847 283 621
Net cash generated/(used) from 650 868 122 007) 465 390
operations ------------------- ------------------ ------------------ ------------------
---------------------- --------------------- --------------------- --------------------
TAXATION
--------------------- --------------------- --------------------
Tax on dividends paid - (5 565 825) - (247 740)
---------------------- --------------------- --------------------- --------------------
(65 138
Corporate tax paid (85 059 033) 185) (73 473 484) (9 079 118)
---------------------- --------------------- --------------------- --------------------
----------------- ----------------- -----------------
------------------- (4 047 959 1 954 373 274 294
Net cash inflow/(outflow) from 565 809 089 017) 981 532
operations ------------------- ----------------- ------------------ ----------------
---------------------- --------------------- --------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
--------------------- --------------------- --------------------
Acquisition of intangible assets (7 828 681) (2 857 048) (3 652 103) (94 320)
---------------------- --------------------- --------------------- --------------------
(Acquisition)/disposal of investment (974 654 2 786 293 (974 654
securities 302) 086 302) 10 083 280
---------------------- --------------------- --------------------- --------------------
Proceeds on disposal of property
and equipment 10 309 948 - 7 122 008 -
---------------------- --------------------- --------------------- --------------------
Acquisition of property and (255 160 (158 457 (110 752 (24 308
equipment 354) 976) 486) 497)
---------------------- --------------------- --------------------- --------------------
Proceeds on disposal of investment
properties 15 381 940 26 415 943 15 381 940 5 888 719
---------------------- --------------------- --------------------- --------------------
(411 275 (245 405
Acquisition of investment properties 642) (8 698 276) 846) (351 515)
---------------------- --------------------- --------------------- --------------------
------------------- ----------------- ------------------ ----------------
---------------------- --------------------- --------------------- --------------------
(1 623 227 2 642 695 (1 311 960
Net cash (used)/generated in 091) 729 789) (8 782 333)
investing activities ------------------- ----------------- ------------------- ----------------
---------------------- --------------------- --------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------- -------------------- ------------------
Payment of interest on
subordinated
term loan - (3 602 420) - (180 450)
------------------- ------------------- -------------------- ------------------
(30 928 (18 782 (14 658
Repayment of lease liabilities 423) 170) 020) (1 276 043)
------------------- ------------------- -------------------- ------------------
(19 739
Cash dividend paid - 519) - (832 659)
------------------- ------------------- -------------------- ------------------
Share issue costs - scrip - (618 030) - (30 958)
dividend ---------------- ---------------- ----------------- ----------------
------------------- ------------------- -------------------- ------------------
(30 928 (42 742 (14 658
Net cash outflow from financing 423) 139) 020) (2 320 110)
activities ---------------- ---------------- ------------------ ----------------
------------------- ------------------- -------------------- ------------------
Net (decrease)/increase in cash (1 088 346 (1 448 005 627 755 263 192
and cash equivalents 425) 427) 172 089
------------------- ------------------- -------------------- ------------------
Net foreign exchange and monetary
adjustments on cash and cash 844 577 523 370 844 577 116 671
equivalents 801 450 801 266
------------------- ------------------- -------------------- ------------------
2 208 405 3 133 040 492 304 112 440
Cash and cash equivalents at 864 841 267 912
beginning of the year ----------------- ----------------- ----------------- ----------------
------------------- ------------------- -------------------- ------------------
Cash and cash equivalents at 1 964 637 2 208 405 1 964 637 492 304
the end of the year 240 864 240 267
========== ========== ========== =========
------------------- ------------------- -------------------- ------------------
ADDITIONAL INFORMATION ON OPERATING CASHFLOWS
FROM INTEREST
757 446
Interest received 729 123 038 936 469 437 446 65 548 752
------------ --------- ------------- -----------
Interest paid (including interest (116 012 (215 571 (15 089
on lease liabilities ) 408) 870) (63 657 930) 895)
------------ --------- ------------- -----------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2020
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe
and is an investment holding company. Its registered office address
is 64 Kwame Nkrumah Avenue, Harare. Its principal operating
subsidiary is engaged in commercial and retail banking. NMB Bank
Limited is a registered commercial bank and was incorporated in
Zimbabwe on 16 October 1992 and commenced trading on 1 June 1993.
The Bank operated as an Accepting House until 6 December 1999 when
the licence was converted to that of a Commercial Bank. The Bank is
exposed to the following risks in its operations: liquidity risk,
credit risk, market risk, operational risk, foreign currency
exchange rate risk and interest rate risk.
2. ACCOUNTING CONVENTION
Statement of compliance
The condensed consolidated financial statements are prepared and
presented on the basis that they reflect the information necessary
to be a fair summary of the annual financial statements from which
they are derived. This includes financial results that agree with
or can be recalculated from the related information in the audited
consolidated financial statements and that contain the information
necessary so as not to be misleading in the circumstances. The
information contained in these consolidated financial results does
not contain all the disclosures required by International Financial
Reporting Standards, the Companies and Other Business Entities Act
(Chapter 24:31) of Zimbabwe and the Banking Act (Chapter 24:20) of
Zimbabwe, which are disclosed in the full consolidated annual
financial statements from which this set of condensed financial
statements were derived. For a better understanding of the Group`s
financial position, its financial performance and cash flows for
the year, these condensed financial statements should be read in
conjunction with the audited consolidated annual financial
statements.
2.1 Basis of preparation
The condensed consolidated financial statements including
comparatives, have been prepared under the inflation adjusted
accounting basis to account for changes in the general purchasing
power of the ZWL. The restatement is based on the Consumer Price
Index at the statement of financial position date. The Public
Accountants and Auditors Board (PAAB) issued a pronouncement on 11
October 2019 indicating the economy had become hyper-inflationary.
The Directors have thus prepared the accompanying financial
statements using the hyperinflationary statements using the
hyper-inflationary accounting basis. The indices are derived from
the monthly inflation rates which are issued by the Zimbabwe
National Statistics Agency (ZIMSTAT). As a result of the change in
the Group's functional currency on 22 February 2019, the CPI
indices for the prior periods are in respect of the USD functional
currency which was prevailing at the time. The indices used are
shown below. These condensed consolidated financial statements are
reported in Zimbabwean dollars and rounded to the nearest
dollar.
Indices Conversion factor
Dates
31 December 2018 88.81 27.8639
31 December 2019 551.63 4.4859
31 December 2020 2 474.52 1.0000
The indices have been applied to the historical costs of
transactions and balances as follows:
-- All comparative figures as of and for the periods ended 31
December 2018, 31 December 2019 and 31 December 2020 have been
restated by applying the change in the index from the date of last
re-measurement to 31 December 2020;
-- Income statement transactions have been restated by applying
the change in the index from the approximate date of the
transactions to 31 December 2020;
-- Gains and losses arising from the monetary assets or
liability positions have been included in the income statement;
-- Non-monetary assets and liabilities have been restated by
applying the change in the index from the date of the transaction
to 31 December 2020;
-- Property and equipment and accumulated depreciation have been
restated by applying the change in the index from the earlier of
February 2009 and date of their purchase or re-assessment to 31
December 2020;
-- Equity has been restated by applying the change in index from
the date of issue to 31 December 2020;
The net impact of applying the procedures above is shown in the
statement of comprehensive income as the gain or loss on net
monetary position.
IAS 29 discourages the publication of historical results as a
supplement to the inflation adjusted results. However, historical
results have been published as additional information for the users
of the Group's financial statements. The Auditors have not
expressed an opinion on the historical results.
2.2 Basis of consolidation
The Group financial results incorporate the financial results of
the Company and its subsidiaries. Subsidiaries are investees
controlled by the Group. The Group controls an investee if it is
exposed to, or has rights to, variable returns from its involvement
with the investee. The financial statements of subsidiaries are
included in the consolidated financial statements from the date on
which control commences until date when control ceases. The
financial results of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting
policies. All intra-group balances, transactions, income and
expenses; profits and losses resulting from intra-group
transactions that are recognised in assets and liabilities are
eliminated in full. When the Group loses control over a subsidiary,
it derecognises the assets and liabilities of the subsidiary, and
any related non-controlling interest and other components of
equity. Any resulting gain or loss is recognised in profit or loss.
Any interest retained in the former subsidiary is measured at fair
value when control is lost.
2.3 Comparative financial information
The comparative information covers a period of twelve
months.
2.4 Use of estimates and judgements
In preparation of the Group financial statements, Directors have
made judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment in
the year ended 31 December 2020 is included in the following
notes:
2.4.1 Deferred tax
Deferred taxation is recognised in respect of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation
purposes. Temporary differences arising out of the initial
recognition of assets or liabilities and temporary differences on
initial recognition of business combinations that affect neither
accounting nor taxable profit are not recognised. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the reporting date. Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
2.4.2 Valuation of properties
Significant judgements and estimates have been applied as
detailed below for the valuation of Investment Properties and of
Land and Buildings held under Property, Plant and Equipment:
Statutory Instrument 142 of 2019 introduced the Zimbabwe Dollar
(ZWL) as the sole legal tender effective 24 June 2019. This appears
to have been a follow up measure to the Monetary Policy Statement
(MPS) of 22 February 2019 which added the RTGS$ to the then basket
of currencies. The MPS established an Inter-Bank Foreign Exchange
market which was subsequently replaced by the Foreign Exchange
Auction System on 23 June 2020, which continued to function up to
the reporting year end date. These events have created complex
valuation challenges for the short term.
Valuations rely on historical market evidence for calculation
inputs. This includes transaction prices for comparable properties,
rents and capitalisation rates. Such market evidence does not exist
at present to calculate ZWL values. Therefore, valuers have adopted
the approach for the meanwhile of converting USD valuation inputs
at the Foreign Exchange Auction Rate of the day to calculate ZWL
property values.
This approach, however, presents a multitude of risks to the
users of the valuation reports. These are detailed below:
Overstating the property values
The key inputs for the valuation of non-residential investment
property are the rent income and the capitalisation rate. No trends
for ZWL rents have yet been established neither is there easily
verifiable market evidence of ZWL transactions to enable analysis
of the yields. It is unlikely that ZWL rent movements will mirror
the activity on the Foreign Exchange Auction System. In addition,
the property market will price the risk associated with the ZWL
which is not a fully convertible currency, and this will be
reflected through the capitalisation rates.
Therefore, a direct conversion of USD valuation inputs likely
results in overstated ZWL property values.
Property sub-sectors will respond differently to the new
currency
To use a single conversion rate for different property
sub-sectors does not recognise the fact that each will respond
differently to the reintroduced ZWL. Non-residential property is
likely to lag behind the economic cycle quite considerably. Whereas
residential property which is more sentiment driven, is likely to
respond positively quicker.
Ignoring market dynamics (supply and demand)
Applying a conversion rate to USD valuation inputs to calculate
ZWL property values is not an accurate reflection of market
dynamics. Risks associated with currency trading do not reflect the
risks associated with property trading. The two markets perceive
and price their respective risks quite differently.
It is, therefore, unlikely that property values will strictly
track the movement in the Foreign Exchange Auction Rate.
2.4.3 Investment securities
The Group has Treasury Bills and Government Bonds for which
there is currently no market information to facilitate the
application of fair value principles in determining fair value
disclosures. Directors have made a significant judgment in
determining that the carrying amount approximates fair value.
(refer to note 14.1).
2.4.4 Impairment losses on loans and advances
The Bank adopted IFRS 9 with effect from 1 January 2018.
The Bank recognises loss allowances for Expected Credit Losses
(ECLs) on the following financial
instruments that are not measured at Fair Value through Profit
or Loss (FVTPL):
-- loans and advances to banks;
-- loans and advances to customers;
-- debt investment securities;
-- lease receivables;
-- loan commitments issued; and
-- financial guarantee contracts issued.
No impairment loss is recognised on equity investments.
With the exception of purchased or originated credit-impaired
(POCI) financial assets (which are considered separately below),
ECLs are measured through a loss allowance at an amount equal
to:
-- 12-month ECL, i.e. lifetime ECL that result from those
default events on the financial instrument that are possible within
12 months after the reporting date, (referred to as Stage 1);
or
-- Full lifetime ECL, i.e. lifetime ECL that result from all
possible default events over the life of the
financial instrument, (referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a
financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition.
For all other financial instruments, ECLs are measured at an amount
equal to the 12-month ECL.
The impairment loss on loans and advances is disclosed in more
detail under note 8 and note 16.3.
2.4.5 Determination of the functional currency
The Government of Zimbabwe adopted a multi-currency regime in
2009. The British Pound, Euro, United States Dollar (USD), South
African Rand (ZAR) and Botswana Pula were adopted as the
multi-currency basket in February 2009. In January 2014, the
Reserve Bank of Zimbabwe (RBZ) issued a Monetary Policy Statement
which added the Chinese Yuan, Australian Dollar, Indian Rupee,
Japanese Yen into the basket of multi-currencies. At the onset, the
USD and the ZAR were the commonly used currencies, with the USD
eventually gaining prominence resulting in it being designated as
the functional and presentation currency by the transacting public
and the Monetary Authorities, including the Group.
Between 2014 and 2016, the Zimbabwean economy experienced a
massive liquidity crisis which eventually prompted the Monetary
Authorities to introduce the bond notes in November 2016 whilst
encouraging the public to continue using the other currencies in
the multi-currency basket. The bond notes were introduced at an
official fixed exchange rate of 1:1 with the USD and the Monetary
Authorities specifically directed financial institutions not to
open separate vault and cash accounts for the USD and the bond
notes. The introduction of the bond notes gave rise to a three (3)
tier pricing system wherein sellers and service providers would
quote three (3) separate prices (USD, bond notes and
RTGS/electronic transfers) for their merchandise and services
respectively. Significant discounts were being offered for USD
payments whilst a premium would be added for prices quoted in bond
notes or electronic settlement via the Real Time Gross Settlement
System (RTGS). These developments triggered a debate around the
functional currency of Zimbabwe. It should be noted that the Group
never participated in the three tier pricing and none of its
products had multiple prices during the same period.
In October 2018, the Monetary Authorities instructed financial
institutions to separate bond notes and USD accounts and indicated
that corporates and individuals could proceed to open Nostro
Foreign Currency Accounts (FCA), for foreign currency holdings,
which were now being exclusively distinguished from the existing
RTGS based accounts. However, it should be noted that at the time
of this policy pronouncement, the Monetary Authorities did not
state that they had introduced a new currency for Zimbabwe, which
actually meant that the USD remained as the currency of reference.
By 31 December 2018, there had been no pronouncement by the
Monetary Authorities to the effect that there had been a new
currency introduced, which could be considered as the country's
functional currency.
On 22 February 2019, the Reserve Bank of Zimbabwe (RBZ) issued
an Exchange Control Directive, RU 28 of 2019 which established an
interbank foreign exchange market to formalise the buying and
selling of foreign currency through the Banks and Bureaux de
change. In order to establish an exchange rate between the current
monetary balances and foreign currency, the Monetary Authorities
denominated the existing RTGS balances in circulation as RTGS
Dollars. Initial trades on 22 February 2019 were at USD1:
RTGS$2.5.
On the same date, Statutory Instrument 33 of 2019 was also
issued and it specified that for accounting and other purposes, all
assets and liabilities that were in USD immediately before the
22(nd) of February 2019 were deemed to have been valued in RTGS
Dollars at a rate of 1:1 with the USD.
On 24 June 2019, the Monetary Authorities announced that the
multi-currency regime, which the country was operating in since
February 2009 had been discontinued and the country had adopted a
mono-currency regime meaning that the sole legal tender would be
the Zimbabwe Dollar (ZWL).
The Government of Zimbabwe adopted a multi-currency regime in
2009. The British Pound, Euro, United States Dollar (USD), South
African Rand (ZAR) and Botswana Pula were adopted as the
multi-currency basket in February 2009. In January 2014, the
Reserve Bank of Zimbabwe (RBZ) issued a Monetary Policy Statement
which added the Chinese Yuan, Australian Dollar, Indian Rupee,
Japanese Yen into the basket of multi-currencies. At the onset, the
USD and the ZAR were the commonly used currencies, with the USD
eventually gaining prominence resulting in it being designated as
the functional and presentation currency by the transacting public
and the Monetary Authorities, including the Group.
On 26 March 2020, the Reserve Bank of Zimbabwe in a press
statement announced various interventions in response to the
financial vulnerabilities caused by the COVID-19 pandemic. One of
the measures announced therein was the authorization of the use of
free-funds in paying for goods and services, in terms of Statutory
Instrument (SI) 85 of 2020. On 24 July 2020, the Government of
Zimbabwe issued Statutory Instrument (SI) 185 of 2020, which
granted permission to display, quote or offer prices for all goods
and services in both Zimbabwe dollars and foreign currency at the
interbank exchange rate.
On 23 June 2020, the Reserve Bank of Zimbabwe introduced the
Foreign Exchange Auction System, effectively abandoning the fixed
foreign currency exchange rate regime which had been prevailing for
the greater part of 2020. Significant trades have been recorded on
the platform and significant movements in the exchange rate have
been resultantly recorded.
In light of the developments summarised above, the Directors
concluded that the Group's functional currency remains the Zimbabwe
dollar (ZWL) following its change from US$ with effect from 22
February 2019.
2.4.6 Lease arrangements
The Directors have exercised significant judgement on
determining whether the various contractual relationships which the
Group is party to, contain lease arrangements which fall into the
scope of IFRS 16. Significant judgement was also exercised in
determining whether the Group is reasonably certain that it will
exercise extension options present in lease contracts as well as
the determination of incremental borrowing rates applied in
determining the lease liability.
2.4.7 COVID-19
The Directors fully acknowledge the unprecedented challenges and
uncertainties posed by the COVID-19 pandemic. In that regard,
significant judgments have generally been applied in light of the
likely impacts of COVID-19 on the Group's activities. The Directors
fully acknowledge the challenges and uncertainties posed by the
COVID-19 pandemic. As such, significant judgements have generally
been applied in light of the potential impacts of COVID-19 on the
Group's activities.
2.5 Going concern
The Directors have assessed the ability of the Group to continue
operating as a going concern and believe that the preparation of
these condensed consolidated financial statements on a going
concern basis is still appropriate.
3. ACCOUNTING POLICIES
The selected principal accounting policies applied in the
preparation of these condensed consolidated financial statements
are set out below. These policies have been consistently applied
unless otherwise stated.
3.1 Fair value measurement principles
The fair value of financial instruments is based on their quoted
market price at the reporting date without any deduction for
transaction costs. If a quoted market price is not available, the
fair value of the instrument is estimated using pricing models or
discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future
cash flows are based on management's best estimates and the
discount rate is a market related rate at the reporting date for an
instrument with similar terms and conditions. Where pricing models
are used, inputs are based on market related measures at the
reporting date.
3.2 Investment properties
Investment properties are measured at fair value. Gains and
losses arising from a change in fair value of investment properties
are recognised in the statement of comprehensive income. The fair
value is determined at the end of each reporting period, by a
registered professional valuer.
3.3 Share based payments
The Group issues share options to certain employees in terms of
the Employee Share Option Scheme. Share options are measured at
fair value at the date of grant. The fair value determined at the
date of grant of the options is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of shares
that will eventually vest. Fair value is measured using the
Black-Scholes option pricing model. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and other
behavioural considerations.
3.4 Property and equipment
The residual value and the useful life of property and equipment
are reviewed at least each financial year-end. If the residual
value of an asset increases by an amount equal to or greater than
the asset's carrying amount, then the depreciation of the asset
ceases. Depreciation will resume only when the residual value
decreases to an amount below the asset's carrying amount.
3.5 Intangible assets
Intangible assets are initially recognised at cost.
Subsequently, the assets are measured at cost less accumulated
amortisation and any accumulated impairment losses.
3.6 Taxation
Income tax
Income tax expenses comprise current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to items recognised directly in equity or in other comprehensive
income.
Current tax
Current tax comprises expected tax payable or receivable on the
taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. It is measured
using rates enacted or substantively enacted at the reporting date
in the country where the Bank operates and generates taxable income
and any adjustment to tax payable in respect of previous years.
Current income tax assets and liabilities for the current period
are measured at the amount expected to be recovered from or paid to
the taxation authorities.
Deferred taxation
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries
to the extent that it is probable that they will not reverse in the
foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow the manner in which the Group expects, at the
reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Group has not rebutted this
presumption. Deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to taxes levied by the same
tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be
realised simultaneously.
Additional taxes that arise from the distribution of dividends
by the Group are recognised at the same time as the liability to
pay the related dividend is recognised. These amounts are generally
recognised in profit or loss because they generally relate to
income arising from transactions that were originally recognised in
profit or loss.
3.7 Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances, and
short term highly liquid investments with maturities of three
months or less when purchased. Cash and cash equivalents are
measured at amortised cost in the statement of financial
position.
3.8 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received
or receivable, taking into account contractually defined terms of
payment and excluding taxes or duty. The specific recognition
criteria described below must also be met before revenue is
recognised.
3.9 Interest income
For all financial instruments measured amortised cost, interest
income or expense is recorded using the effective interest rate
(EIR), which is the rate that exactly discounts the estimated
future cash payments or receipts through the expected life of the
financial instrument or a shorter period, where appropriate, to the
net carrying amount of the financial asset or liability. Interest
income includes income arising out of the banking activities of
lending and investing.
3.10 Interest expense
Interest expense arises from deposit taking. The expense is
recognised in profit or loss as it accrues, taking into account the
effective interest cost of the liability.
3.11 Shareholders' funds and shareholders' liabilities
Shareholders' funds and shareholders' liabilities refer to the
investment made by the shareholders in the Group and it consists of
share capital, share premium, share options reserve, retained
earnings, revaluation reserve, functional currency translation
reserve, redeemable ordinary shares and subordinated term
loans.
3.12 Leases
Lease income from operating leases where the Group is a lessor
is recognised in income on a straight-line basis over the lease
term. The respective leased assets are included in the statement of
financial position based on their nature.
In terms of IFRS 16, the Group recognises lease liabilities in
relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17, Leases. These
liabilities are measured at the present value of the remaining
lease payments, discounted using the Group's incremental borrowing
rate.
The Group has neither enjoyed nor extended any lease payment
holidays in its capacity as either lessee or lessor respectively
due to COVID-19. As such, there are no COVID-19 induced lease
modifications applicable during the period under review.
Measurement of right-of-use assets
The associated right-of-use assets for property leases are
measured on a prospective basis. The right-of-use assets are
measured at the amount equal to the lease liability, adjusted by
the amount of any prepaid or accrued lease payments relating to
that lease recognised in the consolidated statement of financial
position.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. In circumstances where the Group is reasonably certain to
exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life. The Group revalues its
land and buildings that are presented within property and equipment
and it has elected not to do so for the right-of-use buildings held
by the Group.
Lessor accounting
The Group did not need to make any adjustments to the accounting
for lease contracts in which the Group is the lessor under
operating leases as a result of the adoption of IFRS 16.
Short-term leases
The Group does not recognise lease liabilities or Right-of-Use
Assets in respect of short-term leases which are accounted for on a
straight-line basis.
3.13 FINANCIAL INSTRUMENTS
Measurement methods
Amortised cost and effective interest rates
The amortised cost is the amount at which the financial asset or
financial liability is measured at initial recognition minus the
principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between that
initial amount and the maturity amount and, for financial assets,
an adjustment for any loss allowance.
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial asset or financial liability to the gross
carrying amount of a financial asset (i.e. its amortised cost
before any impairment allowance) or to the amortised cost of a
financial liability. The calculation does not consider expected
credit losses and includes transaction costs, premiums or discounts
and fees and points paid or received that are integral to the
effective interest rate, such as origination fees. For purchased or
originated credit-impaired ('POCI') financial assets - assets that
are credit-impaired at initial recognition - the Bank calculates
the credit-adjusted effective interest rate, which is calculated
based on the amortised cost of the financial asset instead of its
gross carrying amount and incorporates the impact of expected
credit losses in estimated future cash flows.
When the Bank revises the estimates of future cash flows, the
carrying amount of the respective financial assets or financial
liability is adjusted to reflect the new estimate discounted using
the original effective interest rate. Any changes are recognised in
profit or loss.
Interest Income
Interest income is calculated by applying the effective interest
rate to the gross carrying amount of financial assets, except
for:
a) Purchased or originated credit-impaired (POCI) financial
assets, for which the original credit-adjusted effective interest
rate is applied to the amortised cost of the financial asset.
b) Financial assets that are not 'POCI' but have subsequently
become credit-impaired (or 'stage 3'), for which interest revenue
is calculated by applying the effective interest rate to their
amortised cost (i.e. net of the expected credit loss
provision).
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the entity becomes a party to the contractual provisions of the
instrument. Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the Bank commits to
purchase or sell the asset.
At initial recognition, the Bank measures a financial asset or
financial liability at its fair value plus or
minus, in the case of a financial asset or financial liability
not at fair value through profit or loss; transaction costs that
are incremental and directly attributable to the acquisition or
issuance of the financial asset or financial liability
respectively, such as fees and commissions. Transaction costs of
financial assets and financial liabilities carried at fair value
through profit or loss are expensed in profit or loss. Immediately
after initial recognition, an expected credit loss allowance (ECL)
is recognised for financial assets measured at amortised cost and
investments in debt instruments measured at FVOCI, which results in
an accounting loss being recognised in profit or loss when an asset
is newly originated.
When the fair value of financial assets and liabilities differs
from the transaction price on initial recognition, the entity
recognises the difference as follows:
(a) When the fair value is evidenced by a quoted price in an
active market for an identical asset or liability (i.e. a Level 1
input) or based on a valuation technique that uses only data from
observable markets, the difference is recognised as a gain or
loss.
(b) In all other cases, the difference is deferred and the
timing of recognition of deferred day one profit or loss is
determined individually. It is either amortised over the life of
the instrument, deferred until the instrument's fair value can be
determined using market observable inputs, or realised through
settlement.
3.13.1 Financial Assets
(i) Classification and subsequent measurement
From 1 January 2018, the Group has applied IFRS 9 and classifies
its financial assets in the
following measurement categories:
-- Fair value through profit or loss (FVPL);
-- Fair value through other comprehensive income (FVOCI); or
-- Amortised cost.
The classification requirements for debt and equity instruments
are described below:
Debt instruments
Debt instruments are those instruments that meet the definition
of a financial liability from the issuer's perspective, such as
loans, government and corporate bonds and trade receivables
purchased from clients in factoring arrangements without
recourse.
Classification and subsequent measurement of debt instruments
depend on:
-- the Bank's business model for managing the asset; and
-- the cash flow characteristics of the asset.
Based on these factors, the Bank classifies its debt instruments
into one of the following three measurement categories:
-- Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent solely
payments of principal and interest ('SPPI'), and that are not
designated at FVPL, are measured at amortised cost. The carrying
amount of these assets is adjusted by any expected credit loss
allowance. Interest income from these financial assets is included
in interest and similar income using the effective interest rate
method
-- Fair value through other comprehensive income (FVOCI):
Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets' cash flows
represent solely payments of principle and interest and that are
not designated at FVPL, are measured at fair value through other
comprehensive income (FVOCI). Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains
or losses, interest revenue and foreign exchange gains and losses
on the instrument's amortised cost which are recognised in profit
or loss. When the financial asset is derecognised, the cumulative
gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in "Other Income'. Interest
income from these financial assets is included in 'Interest Income'
using the effective interest rate method.
-- Fair value through profit or loss: Assets that do not meet
the criteria for amortised cost or FVOCI are measured at fair value
through profit or loss. A gain or loss on a debt investment that is
subsequently measured at fair value through profit or loss and is
not part of a hedging relationship is recognised in profit or loss
and presented in the profit or loss statement within 'Net Trading
Income" in the period in which it arises, unless it arises from
debt instruments that were designated at fair value or which are
not held for trading, in which case they are presented separately
in 'Other Income'. Interest income from these financial assets is
included in "Interest income" using the effective interest rate
method.
Business model: the business model reflects how the Bank manages
the assets in order to generate cash flows. That is, whether the
Bank's objective is solely to collect the contractual cash flows
from the assets or is to collect both the contractual cash flows
and cash flows arising from the sale of assets. If neither of these
is applicable (e.g. financial assets are held for trading
purposes), then the financial assets are classified as part of
'other' business model and measured at FVPL. Factors considered by
the Bank in determining the business model for a group of assets
include past experience on how the cash flows for these assets were
collected, how the asset's performance is evaluated and reported to
key management personnel, how risks are assessed and managed and
how managers are compensated. Securities held for trading are held
principally for the purpose of selling in the near term or are part
of a portfolio of financial instruments that are managed together
and for which there is evidence of a recent actual pattern of
short-term profit-taking. These securities are classified in the
'other' business model and measured at FVPL.
Where the business model is to hold assets to collect
contractual cash flows or to collect contractual cash flows and
sell, the Bank assesses whether financial instruments' cash flows
represent solely payments of
principal and interest (the "SPPI" test). In making this
assessment, the Bank considers whether the
contractual cash flows are consistent with a basic lending
arrangement i.e. interest includes only consideration for the time
value of money, credit risk, other basic lending risks and a profit
margin that is consistent with a basic lending arrangement. Where
the contractual terms introduce exposure to risk or volatility that
are inconsistent with a basic lending arrangement, the related
financial asset is classified and measured at fair value through
profit or loss.
The Bank reclassifies debt investments when and only when its
business model for managing those assets changes. The
reclassification takes place from the start of the first reporting
period following the change. Such changes are expected to be very
infrequent and none occurred during the period.
Equity instruments
Equity instruments are instruments that meet the definition of
equity from the issuer's perspective; that is, instruments that do
not contain a contractual obligation to pay and that evidence a
residual interest in the issuer's net assets. Examples of equity
instruments include basic ordinary shares.
The Bank subsequently measures all equity investments at fair
value through profit or loss, except where the Bank's management
has elected, at initial recognition, to irrevocably designate an
equity investment at fair value through other comprehensive income.
The Bank policy is to designate equity investments as FVOCI when
those investments are held for purposes other than to generate
investment returns. When this election is used, fair value gains
and losses are recognised in OCI and are not subsequently
reclassified to profit or loss, including on disposal. Impairment
losses (and reversal of impairment losses) are not reported
separately from other changes in fair value. Dividends, when
representing a return on such investments, continue to be
recognised in profit or loss as other income when the Bank's right
to receive payments is established.
Gains and losses on equity investments at FVPL are included in
the 'Other Income' line in the statement of profit or loss.
(ii) Impairment
The Bank recognises loss allowances for Expected Credit Losses
(ECLs) on the following financial instruments that are not measured
at Fair Value through Profit or Loss (FVTPL):
-- cash and cash equivalents;
-- loans and advances to customers;
-- investment securities;
-- lease receivables;
-- facilities approved but not drawn down; and
-- financial guarantee contracts issued.
No impairment loss is recognised on equity investments.
With the exception of POCI financial assets (which are
considered separately below), ECLs are measured through a loss
allowance at an amount equal to:
-- 12-month ECL, i.e. lifetime ECL that result from those
default events on the financial instrument that are possible within
12 months after the reporting date, (referred to as Stage 1);
or
-- Full lifetime ECL, i.e. lifetime ECL that result from all
possible default events over the life of the financial instrument,
(referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a
financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition.
For all other financial instruments, ECLs are measured at an amount
equal to the 12-month ECL.
Expected Credit Losses
ECLs are a probability-weighted estimate of the present value of
credit losses. These are measured as the present value of the
difference between the cash flows due to the Bank under the
contract and the cash flows that the Bank expects to receive
arising from the weighting of multiple future economic scenarios,
discounted at the asset's EIR.
For undrawn loan commitments, the ECL is the difference between
the present value of the difference between the contractual cash
flows that are due to the Bank if the holder of the commitment
draws down the loan and the cash flows that the Bank expects to
receive if the loan is drawn down; and
For financial guarantee contracts, the ECL is the difference
between the expected payments to reimburse the holder of the
guaranteed debt instrument less any amounts that the Bank expects
to receive from the holder, the debtor or any other party.
The Bank measures ECL on an individual basis, or on a collective
basis for portfolios of loans that share similar economic risk
characteristics. The measurement of the loss allowance is based on
the present value of the asset's expected cash flows using the
asset's original EIR, regardless of whether it is measured on an
individual basis or a collective basis.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows
of that financial asset have occurred. Evidence that a financial
asset is credit-impaired include observable data about the
following events:
(a) significant financial difficulty of the issuer or the
borrower;
(b) a breach of contract, such as a default or past due
event;
(c) the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower's financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would
not otherwise consider;
(d) it becoming probable that the borrower will enter bankruptcy
or other financial reorganisation;
(e) the disappearance of an active market for that financial
asset because of financial difficulties; or
(f) the purchase or origination of a financial asset at a deep
discount that reflects the incurred credit losses.
It may not be possible to identify a single discrete event -
instead, the combined effect of several events may have caused
financial assets to become credit-impaired.
Purchased or originated credit-impaired (POCI) financial
assets
For POCI the Bank only recognises the cumulative changes in
lifetime expected credit losses since initial recognition. At each
reporting date, the Bank recognises in profit or loss the amount of
the change in lifetime expected credit losses as an impairment gain
or loss. The Bank recognises favourable changes in lifetime
expected credit losses as an impairment gain, even if the lifetime
expected credit losses are less than the amount of expected credit
losses that were included in the estimated cash flows on initial
recognition.
The Bank assesses on a forward-looking basis the expected credit
losses ('ECL') associated with its debt instrument assets carried
at amortised cost and FVOCI and with the exposure arising from loan
commitments and financial guarantee contracts. The Bank recognises
a loss allowance for such losses at each reporting date. The
measurement of ECL reflects:
-- An unbiased and probability-weighted amount that is
determined by evaluating a range of possible outcomes;
-- The time value of money; and
-- Reasonable and supportable information that is available
without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic
conditions.
(ii) Impairment
For loan commitments and financial guarantee contracts, the loss
allowance is recognised as a provision. The Bank keeps track of the
changes in the loss allowance for financial assets separately from
those for loan commitments and financial guarantee contracts.
However, if a financial instrument includes both a loan (i.e.
financial asset) and an undrawn commitment (i.e. loan commitment)
component and the Bank does not separately identify the expected
credit losses on the loan commitment component from those on the
financial asset component, the expected credit losses on the loan
commitment is recognised together with the loss allowance for the
financial asset. To the extent that the combined expected credit
losses exceed the gross carrying amount of the financial asset, the
expected credit losses is recognised in other liabilities.
Definition of default
Critical to the determination of ECL is the definition of
default. The definition of default is used in measuring the amount
of ECL and in the determination of whether the loss allowance is
based on 12-month or lifetime ECL, as default is a component of the
probability of default (PD) which affects both the measurement of
ECLs and the identification of a significant increase in credit
risk.
The Bank considers the following as constituting an event of
default:
-- The borrower is past due more than 90 days on any material credit obligation to the Bank or;
-- The borrower is unlikely to pay its credit obligations to the Bank in full.
The definition of default is appropriately tailored to reflect
different characteristics of different types of assets. Overdrafts
are considered as being past due once the customer has breached an
advised limit or has been advised of a limit smaller than the
current amount outstanding.
When assessing if the borrower is unlikely to pay its credit
obligation, the Bank takes into account both qualitative and
quantitative indicators. The information assessed depends on the
type of the asset, for example in corporate lending a qualitative
indicator used is the breach of covenants, which is not relevant
for retail lending. Quantitative indicators, such as overdue status
and non-payment on another obligation of the same counterparty are
key inputs in this analysis. The Bank uses a variety of sources of
information to assess default which are either developed internally
or obtained from external sources.
Significant increase in credit risk
The Bank monitors all financial assets, undrawn loan commitments
and financial guarantee contracts that are subject to the
impairment requirements to assess whether there has been a
significant increase in credit risk since initial recognition. If
there has been a significant increase in credit risk the Bank will
measure the loss allowance based on lifetime rather than 12-month
ECL. The Bank's accounting policy is not to use the practical
expedient that financial assets with 'low' credit risk at the
reporting date are deemed not to have had a significant increase in
credit risk. As a result the Bank monitors all financial assets,
undrawn loan commitments and financial guarantee contracts that are
subject to impairment for significant increase in credit risk.
In assessing whether the credit risk on a financial instrument
has increased significantly since initial recognition, the Bank
compares the risk of a default occurring on the financial
instrument at the reporting date based on the remaining maturity of
the instrument with the risk of a default occurring that was
anticipated for the remaining maturity at the current reporting
date when the financial instrument was first recognised. In making
this assessment, the Bank considers both quantitative and
qualitative information that is reasonable and supportable,
including historical experience and forward-looking information
that is available without undue cost or effort, based on the Bank's
historical experience and expert credit assessment including
forward-looking information.
Multiple economic scenarios form the basis of determining the
probability of default at initial recognition and at subsequent
reporting dates. Different economic scenarios will lead to a
different probability of default. It is the weighting of these
different scenarios that forms the basis of a weighted average
probability of default that is used to determine whether credit
risk has significantly increased.
For corporate lending, forward-looking information includes the
future prospects of the industries in which the Bank's lenders
operate, obtained from economic expert reports, financial analysts,
governmental bodies and other similar organisations, as well as
consideration of various internal and external sources of actual
and forecast economic information. For the retail portfolio,
forward looking information includes the same economic forecasts as
the corporate portfolio with additional forecasts of local economic
indicators, particularly for regions with a concentration to
certain industries, as well as internally generated information of
customer payment behaviour. The Bank allocates its counterparties
to a relevant internal credit risk grade depending on their credit
quality. The quantitative information is a primary indicator of
significant increase in credit risk and is based on the change in
lifetime PD by comparing:
-- the remaining lifetime PD at the reporting date; with
-- the remaining lifetime PD for this point in time that was
estimated based on facts and circumstances at the time of initial
recognition of the exposure .
The PDs used are forward looking and the Bank uses the same
methodologies and data used to measure the loss allowance for
ECL.
The qualitative factors that indicate significant increase in
credit risk are reflected in PD models on a timely basis. However,
the Bank still considers separately additional qualitative factors
to assess if credit risk has increased significantly. For corporate
lending there is particular focus on assets that are included on
the Bank's 'watch list' and for the retail portfolio the Bank
considers the expectation of forbearance and payment holidays,
credit scores and any other changes in the borrower's circumstances
which are likely to adversely affect one's ability to meet
contractual obligations.
Given that a significant increase in credit risk since initial
recognition is a relative measure, a given change, in absolute
terms, in the PD will be more significant for a financial
instrument with a lower initial PD than compared to a financial
instrument with a higher PD.
The Bank assumes that when an asset becomes 30 days past due,
the Bank considers that a significant increase in credit risk has
occurred and the asset is in stage 2 of the impairment model, i.e.
the loss allowance is measured as the lifetime ECL.
(iii) Modification of loans
The Bank sometimes renegotiates or otherwise modifies the
contractual cash flows of loans to customers. When this happens,
the Bank assesses whether or not the new terms are substantially
different to the
original terms. The Bank does this by considering, among others,
the following factors:
-- If the borrower is in financial difficulty, whether the
modification merely reduces the contractual cash flows to amounts
the borrower is expected to be able to pay.
-- Whether any substantial new terms are introduced, such as a
profit share/equity-based return that substantially affects the
risk profile of the loan.
-- Significant extension of the loan term when the borrower is
not in financial difficulty. Significant change in the interest
rate.
-- Change in the currency the loan is denominated in.
-- Insertion of collateral, other security or credit
enhancements that significantly affect the credit risk associated
with the loan.
3.13.2 Financial Liabilities
If the terms are substantially different, the Bank derecognises
the original financial asset and recognises a 'new' asset at fair
value and recalculates the new effective interest rate for the
asset. The date of renegotiation is consequently considered to be
the date of initial recognition for impairment calculation
purposes, including for the purpose of determining whether a
significant increase in credit risk has occurred. However, the Bank
also assesses whether the new financial asset recognised is deemed
to be credit-impaired at initial recognition, especially in
circumstances where the renegotiation was driven by the debtor
being unable to make the originally agreed payments. Differences in
the carrying amount are also recognised in profit or loss as a gain
or loss on derecognition.
If the terms are not substantially different, the renegotiation
or modification does not result in derecognition, and the Bank
recalculates the gross carrying amount based on the revised cash
flows of the financial asset and recognises a modification gain or
loss in profit or loss. The new gross carrying amount is
recalculated by discounting the modified cash flows at the original
effective interest rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired financial assets).
(iv) Derecognition other than on a modification
Financial assets, or a portion thereof, are derecognised when
the contractual rights to receive the cash flows from the assets
have expired, or when they have been transferred and either
-- the Bank transfers substantially all the risks and rewards of ownership, or
-- the Bank neither transfers nor retains substantially all the
risks and rewards of ownership and the Bank has not retained
control.
The Bank enters into transactions where it retains the
contractual rights to receive cash flows to other entities and
transfers substantially all of the risks and rewards. These
transactions are accounted for as 'pass through' transfers that
result in derecognition if the Bank:
(i) Has no obligation to make payments unless it collects equivalent amounts from the assets;
(ii) Is prohibited from selling or pledging the assets; and
(iii) Has an obligation to remit any cash it collects from the assets without material delay.
3.13.3 Financial guarantee contracts and loan commitments
Collateral (shares and bonds) furnished by the Bank under
standard repurchase agreements and securities lending and borrowing
transactions are not derecognised because the Bank retains
substantially all the risks.
i) Classification and subsequent measurement
In both the current and prior period, financial liabilities are
classified as subsequently measured at amortised cost, except
for:
-- Financial liabilities at fair value through profit or loss:
this classification is applied to financial liabilities held for
trading (e.g. short positions in the trading booking) and other
financial liabilities designated as such at initial recognition.
Gains or losses on financial liabilities designated at fair value
through profit or loss are presented partially in other
comprehensive income (the amount of change in the fair value of the
financial liability that is attributable to changes in the credit
risk of that liability, which is determined as the amount that is
not attributable to changes in market conditions that give rise to
market risk) and partially profit or loss (the remaining amount of
change in the fair value of the liability). This is unless such a
presentation would create, or enlarge, an accounting mismatch, in
which case the gains and losses attributable to changes in the
credit risk of the liability are also presented in profit or
loss;
-- Financial liabilities arising from the transfer of financial
assets which did not qualify for derecognition, whereby a financial
liability is recognised for the consideration received for the
transfer. In subsequent periods, the Bank recognises any expense
incurred on the financial liability.
(ii) Derecognition
Financial liabilities are derecognised when they are
extinguished (i.e. when the obligation specified in the contract is
discharged, cancelled or expires).
The exchange between the Bank and its original lenders of debt
instruments with substantially different terms, as well as
substantial modifications of the terms of existing financial
liabilities, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial
liability. The terms are substantially different if the discounted
present value of the cash flows under the new terms, including any
fees paid net of any fees received and discounted using the
original effective interest rate, is at least 10% different from
the discounted present value of the remaining cash flows of the
original financial liability. In addition, other qualitative
factors, such as the currency that the instrument is denominated
in, changes in the type of interest rate, new conversion features
attached to the instrument and change in covenants are also taken
into consideration. If an exchange of debt instruments or
modification of terms is accounted for as an extinguishment, any
costs or fees incurred are recognised as part of the gain or loss
on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred
adjust the carrying amount of the liability and are amortised over
the remaining term of the modified liability.
Financial guarantee contracts are contracts that require the
issuer to make specified payments to reimburse the holder for a
loss it incurs because a specified debtor fails to make payments
when due, in accordance with the terms of a debt instrument. Such
financial guarantees are given to banks, financial institutions and
others on behalf of customers to secure loans, overdrafts and other
banking facilities.
3.13.4 Critical accounting estimates and judgements
Financial guarantee contracts are initially measured at fair
value and subsequently measured at the higher of:
-- The amount of the loss allowance; and
-- The premium received on initial recognition less income
recognised in accordance with the principles of IFRS 15.
Loan commitments provided by the Bank are measured as the amount
of the loss allowance. The Bank has not provided any commitment to
provide loans at below-market interest rate, or that can be settled
net in cash or by delivering or issuing another financial
instrument.
For loan commitments and financial guarantee contracts, the loss
allowance is recognised as a provision. However, for contracts that
include both a loan and an undrawn commitment and the Bank cannot
separately identify the expected credit losses on the undrawn
commitment component from those on the loan component, the expected
credit losses on the undrawn commitment are recognised together
with the loss allowance for the loan. To the extent that the
combined expected credit losses exceed the gross carrying amount of
the loan, the expected credit losses are recognised as a
provision.
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in
applying the Bank's accounting policies.
Note 2.4 (Use of estimates and judgements) provides an overview
of the areas that involve a higher degree of judgement or
complexity, and major sources of estimation uncertainty that have a
significant risk of resulting in a material adjustment within the
next financial year. Detailed information about each of these
estimates and judgements is included in the related notes together
with information about the basis of calculation for each affected
line item in the financial statements.
3.13.5 Measurement of the expected credit loss allowance
The measurement of the expected credit loss allowance for
financial assets measured at amortised cost and FVOCI is an area
that requires the use of complex models and significant assumptions
about future economic conditions and credit behaviour (e.g. the
likelihood of customers defaulting and the resulting losses). A
number of significant judgements are also required in applying the
accounting requirements for measuring ECL, such as:
-- Determining criteria for significant increase in credit risk;
-- Choosing appropriate models and assumptions for the measurement of ECL;
-- Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and
-- Establishing groups of similar financial assets for the purposes of measuring ECL.
The Bank evaluates ECLs for 7 portfolios of audited corporates
with overdraft limits, audited corporates without overdraft limits,
unaudited corporates with overdraft limits, unaudited corporates
without overdraft limits, SMEs with limits, SMEs without limits and
Retail loans.
The guiding principle of the Expected Credit Loss evaluation is
to reflect the general pattern of
deterioration or improvement in the credit quality of financial
instruments and allocate commensurate
loss provisions. Under the general approach, there are two
measurement bases:
-- 12-month ECLs (Stage 1 ECLs) that is evaluated for all
financial instruments with no significant deterioration in credit
quality since initial recognition.
-- Lifetime ECLs (Stages 2 and 3 ECLs) that is evaluated for
financial instruments for which significant increase in credit risk
or default has occurred on an individual or collective basis.
Probability of Default (PD)
The Bank defines Probability of Default as the likelihood that a
borrower will fail to meet their contractual obligations in the
future. The Bank's PD models have been built using historical
credit default experience, present credit information as well as
forward looking factors which affect the capacity of borrowers to
meet their contractual obligations. The Bank used the logistic
regression approach to construct PD models for Corporate, SME,
Retail and Treasury Bills portfolios while the Merton model was
adopted for Interbank Placements. The PD models are used at entity
level to evaluate 12-month PDs for Day 1 losses and for financial
instruments with no significant deterioration in credit risk since
initial recognition, whilst lifetime PD is used for financial
instruments for which significant increase in credit risk or
default has occurred. 12 - month PDs are derived using borrower
present risk characteristics while lifetime PDs are derived using a
combination of 12-month PDs, present borrower behaviour and forward
looking macroeconomic factors.
Exposure at Default (EAD)
The Bank defines Exposure at Default as an estimation of the
extent to which the Bank will be exposed to a counterparty in the
event of a default. The Bank's EAD models have been built using
historical experience of debt instruments that defaulted. The Bank
used the linear regression approach to construct EAD models for
Corporate, SME and Retail portfolios. For TBs and Interbank
Placements, the Bank took a conservative approach of considering
the full outstanding balance as the EAD at any given point in the
lifetime of an instrument. The Bank's EAD models that use Credit
Conversion Factors (CCFs) are applied on fully drawn down
instruments while models that use Loan Equivalents (LEQs) are
applied on partly drawn instruments. The EAD models are used at
entity level to evaluate the proportion of the exposure that will
be outstanding at the point of default.
Loss Given Default (LGD)
The Bank defines Loss Given Default as an estimate of the
ultimate credit loss in the event of a default. The Bank's LGD
models were built using historical experience of defaulted debt
instruments and observed recoveries. The Bank used the linear
regression approach to construct LGD models for Corporate, SME and
Retail portfolios. For Treasury Bills and Interbank Placements, the
Bank took a conservative approach of taking a fixed 100% as the LGD
at any given point in the lifetime of an instrument. The LGD models
are used at portfolio level to evaluate 12-month LGDs for financial
instruments with no significant increase in credit risk since
initial recognition and lifetime is applied LGDs for financial
instruments for which significant increase in credit risk has
occurred. 12-month LGDs were derived as historical loss rates while
lifetime LGDs were derived using a combination of 12-month LGDs and
forward looking macroeconomic factors such as GDP and
Inflation.
The Bank's ECL model combines the output of the PD, EAD and LGD
and computes an Expected Credit
Loss that takes into account time value of money using the
Effective Interest Rates (EIR) and time to maturity of the debt
instruments. The final ECL is a probability-weighted amount that is
determined by evaluating three (3) possible outcomes of Best Case
ECL, Baseline Case ECL, and Worst Case ECL. The Bank has modelled
these three cases in such a way that the Best Case represents a
scenario of lower than market average default rates, the Base Case
represents scenarios of comparable market average default rates and
the Worst Case represent scenarios of higher than market average
default rates.
3.13.6 Regulatory guidelines and International Financial
Reporting Standards requirements in respect of the Bank's
activities
Renegotiated loans and advances
Where possible, the Bank seeks to restructure loans rather than
to take possession of collateral. This may involve extending the
payment arrangements and the agreement of new loan conditions. Once
the terms have been re-negotiated, any impairment is measured using
the original effective interest rate (EIR) as calculated before the
modification of terms and the loan is no longer considered past
due. Management continuously renews re-negotiated loans to ensure
that all criteria are met and that future payments are likely to
occur. The loans continue to be subject to an individual or
collective impairment assessment, calculated using the loans
original EIR.
Collateral valuation
The Bank seeks to use collateral, where possible, to mitigate
its risks on financial assets. The collateral comes in various
forms such as cash, securities, letters of credit/guarantees, real
estate, receivables, inventories, other non-financial assets and
credit enhancements such as netting agreements. The fair value of
collateral is generally assessed, at a minimum, at inception and
based on the Bank's quarterly reporting schedule, however, some
collateral, for example, cash or securities relating to margining
requirements, is valued daily. To the extent possible, the Bank
uses active market data for valuing financial assets, held as
collateral. Other financial assets which do not have a readily
determinable market value are valued using models. Non-financial
collateral, such as real estate, is valued based on data provided
by third parties such as mortgage brokers, housing price indices,
audited financial statements, and other independent sources.
Collateral repossessed
The Bank's policy is to determine whether a repossessed asset is
best used for its internal operations or should be sold. Assets
determined to be useful for the internal operations are transferred
to their relevant asset category at the lower of their repossessed
value or the carrying value of the original secured asset. Assets
that are determined better to be sold are immediately transferred
to assets held for sale at their fair value at the repossession
date in line with the Bank's policy.
4. INTEREST INCOME
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Loans and advances
to banks 16 542 933 19 190 164 10 198 110 2 368 733
-------------------- -------------------- -------------------- --------------------
Loans and advances
to customers 708 206 922 643 787 970 466 881 802 58 942 089
-------------------- -------------------- -------------------- --------------------
36 152 014 145 428 872 24 136 359 9 246 368
Investment securities ------------------ ------------------ ------------------ ------------------
-------------------- -------------------- -------------------- --------------------
760 901 869 808 407 006 501 216 271 70 557 190
=========== =========== =========== ===========
-------------------- -------------------- -------------------- --------------------
5. non interest income
5.1 FEE AND COMMISSION INCOME
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------- ------------------- -------------------- -------------------
2020 2019 2020 2019
------------------- ------------------- -------------------- -------------------
ZWL ZWL ZWL ZWL
------------------- ------------------- -------------------- -------------------
Restated
------------------- ------------------- -------------------- -------------------
Retail banking customer 312 978 254 814 220 625
fees 016 639 391 24 101 648
------------------- ------------------- -------------------- -------------------
Corporate banking credit
related fees 99 687 124 70 979 783 64 826 957 10 259 457
------------------- ------------------- -------------------- -------------------
Financial guarantee fees 7 268 349 2 236 976 3 858 135 212 188
------------------- ------------------- -------------------- -------------------
International banking
commissions 24 363 557 29 356 098 17 771 535 3 070 999
------------------- ------------------- -------------------- -------------------
687 255 464 437 508 459
527 575 339 49 598 011
Digital banking fees ----------------- ----------------- ------------------ -----------------
------------------- ------------------- -------------------- -------------------
1 131 552 821 825 815 541 87 242 303
573 071 357 ==========
========== ========== ==========
------------------- ------------------- -------------------- -------------------
5.2 Other income
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------- -------------------- ------------------- -------------------
2020 2019 2020 2019
------------------- -------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------- -------------------- ------------------- -------------------
Restated
------------------- -------------------- ------------------- -------------------
Trade and other investments
fair value adjustments 3 645 884 4 097 075 9 265 541 1 499 630
------------------- -------------------- ------------------- -------------------
Fair value gains on investment 228 646 419 983 1 182 737 194 387
properties 579 776 157 322
------------------- -------------------- ------------------- -------------------
(Loss)/profit on disposal
of investment properties (2 198 385) 2 620 407 10 867 431 584 149
------------------- -------------------- ------------------- -------------------
Profit on disposal of property
and equipment 7 881 999 - 7 091 399 -
------------------- -------------------- ------------------- -------------------
5 641 865
Rental income 7 610 897 5 745 809 - 391 885
------------------- -------------------- ------------------- -------------------
Recoveries 5 879 717 66 140 660 3 406 069 9 519 359
------------------- -------------------- ------------------- -------------------
6 138 736 6 548 534 7 837 534 240 294
Other net operating income ----------------- ------------------ ----------------- -----------------
------------------- -------------------- ------------------- -------------------
257 605 505 136 1 226 846 206 622
427 261 996 639
========== =========== ========== ==========
------------------- -------------------- ------------------- -------------------
6. Operating EXPITURE
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- --------------------
The operating profit is
recognised after the
following:
-------------------- -------------------- -------------------- --------------------
618 699 395 919
Administration costs** 280 521 028 863 343 55 318 360
-------------------- -------------------- -------------------- --------------------
Audit fees:
-------------------- -------------------- -------------------- --------------------
- Current year 13 977 416 7 088 694 8 388 890 993 686
-------------------- -------------------- -------------------- --------------------
- Prior year 2 814 505 1 427 391 1 553 413 200 090
-------------------- -------------------- -------------------- --------------------
Impairment reversal on
land and buildings* - - - (40 600)
-------------------- -------------------- -------------------- --------------------
Depreciation - (excluding
right of use assets) 69 161 843 69 204 252 22 310 284 2 307 360
-------------------- -------------------- -------------------- --------------------
Amortisation of intangible
assets 24 416 805 28 513 216 915 580 733 909
-------------------- -------------------- -------------------- --------------------
Depreciation -right of
use assets 11 116 446 13 854 548 8 579 715 1 310 867
-------------------- -------------------- -------------------- --------------------
Directors' remuneration 34 698 537 27 608 198 13 902 765 2 531 536
-------------------- -------------------- -------------------- --------------------
- Fees 13 309 810 7 110 228 3 520 400 644 487
-------------------- -------------------- -------------------- --------------------
* Expenses 237 005 570 374 37 960 80 767
-------------------- -------------------- -------------------- --------------------
- Services rendered 21 151 722 19 927 596 10 344 405 1 806 282
-------------------- -------------------- -------------------- --------------------
Staff costs - salaries, 499 362 362 620
allowances and related 793 410 301 780 010 42 582 294
costs ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------
1 274 247 1 079 026 814 190 105 937
625 942 000 502
========== =========== ========== ===========
-------------------- -------------------- -------------------- --------------------
*The impairment reversal on land and building arose due to fair
value changes in the Group's land and buildings measured using the
revaluation model.
**Included in administration costs are lease finance costs
amounting to ZWL16 443 895 (2019 - 11 561 568) in respect of
property leases which the Group uses for the purpose of carrying on
its trade.
7. taxation
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
Income tax expense 2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Current tax 130 053 612 44 813 146 130 053 612 9 989 877
------------------ ------------------ ------------------ ------------------
(273 902 (215 567
Deferred tax 272) 269 284 439 932) 34 514 671
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
(143 848 314 097 585 (85 514 320) 44 504 548
660) ========== ========== ==========
==========
------------------ ------------------ ------------------ ------------------
8. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment losses are calculated by estimating the expected
credit losses for all financial assets (including loan commitments
and guarantees) measured at amortised cost or fair value through
OCI (FVOCI). ECLs arising from financial assets measured at
amortised cost and at FVOCI are recognized in profit or loss.
However, the loss allowance in respect of assets measured at FVOCI
shall not reduce the carrying amount of the financial asset in the
Statement of Financial Position but will be accumulated in a
reserve through OCI. The aggregate impairment losses which are made
during the year are dealt with as per paragraph 8.3.
8.1 Lifetime expected credit losses
Lifetime ECLs are recognized where the Bank's counterparty to a
financial asset has been classified as default as defined in the
Bank's accounting and credit policies. Financial assets are written
off against lifetime ECL provisions once the probability of
recovering any significant amounts becomes remote.
8.2 Twelve month expected credit losses
The 12-Month ECL relates to the day 1 impairment provisions on
financial assets as well as financial assets which are considered
not to have had a significant increase in credit risk as defined in
the Bank's accounting and credit policies.
8.3 Regulatory guidelines and International Financial Reporting Standards requirements
The Banking Regulations 2000 gives guidance on provisioning for
doubtful debts and stipulates certain minimum percentages to be
applied to the respective categories of the loan book.
IFRS 9, Financial Instruments IFRS 9, prescribes the
provisioning for impairment losses based on the expected credit
losses from the expected cash flows from financial assets held by
the bank, including guarantees and loan commitments.
The two prescriptions are likely to give different results. The
Group has taken the view that where the IFRS 9 charge is less than
the amount provided for in the Banking Regulations, the difference
is recognised directly in equity as a transfer from retained
earnings to a regulatory reserve and where it is more, the full
amount will be charged to the profit or loss.
8.4 Suspended interest
Interest on loans and advances is accrued to income until such
time as reasonable doubt exists about its collectability,
thereafter and until all or part of the loan is written off,
interest continues to accrue on customers' accounts, but is not
included in income. Such suspended interest is deducted from loans
and advances in the statement of financial position. This policy
meets the requirements of the Banking Regulations 2000 issued by
the RBZ. Impairment losses are applied to write off loans and
advances in part or in whole when they are considered partly or
wholly irrecoverable. The aggregate impairment losses which are
made during the year are dealt with as per paragraph 8.3.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
for the year attributable to ordinary equity holders of NMBZ
Holdings Limited by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary equity holders of NMBZ Holdings Limited
adjusted for the after tax effect of: (a) any dividends or other
items related to dilutive potential ordinary shares deducted in
arriving at profit or loss attributable to ordinary equity holders
of the parent entity; (b) any interest recognised in the period
related to dilutive potential ordinary shares; (c) any other
changes in income or expense that would result from the conversion
of the dilutive potential ordinary shares; by the weighted average
number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on
the conversion of all the dilutive potential ordinary shares into
ordinary shares.
9.1 Earnings
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------ ------------ ------------ ------------
2020 2019 2020 2019
------------ ------------ ------------ ------------
ZWL ZWL ZWL ZWL
------------ ------------ ------------ ------------
Restated
------------ ------------ ------------ ------------
849 262 377 220 1 813 590
Profit for the year 942 218 069 285 900 539
------------ ------------ ------------ ------------
Headline earnings for 842 335 372 232 1 793 375
the period 788 488 973 284 353 334
------------ ------------ ------------ ------------
9.2 Number of shares
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
--------------------- -------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
--------------------- -------------------- -------------------- -------------------- --------------------
9.2.1 Basic earnings per
share
--------------------- -------------------- -------------------- -------------------- --------------------
Weighted average number
of ordinary shares for
basic and headline earnings
per share 404 171 689 399 498 150 404 171 689 399 498 150
----------------------------- -------------------- -------------------- -------------------- --------------------
9.2.2 Diluted earnings per share
------------------------------------------- -------------------- -------------------- --------------------
Number of shares at 3 292 955
beginning of period 404 171 689 196 404 171 689 392 955 196
----------------------------- -------------------- -------------------- --------------------
Effect of dilution:
--------------------- -------------------- -------------------- -------------------- --------------------
Share options - - - -
exercised
--------------------- -------------------- -------------------- -------------------- --------------------
Weighted average number
of shares issued - scrip - 6 542 954 - 6 542 954
dividend ----------------- ----------------- ----------------- -----------------
----------------------------- -------------------- -------------------- -------------------- --------------------
404 171 689 399 498 150 404 171 689 399 498 150
----------------------------- -------------------- -------------------- -------------------- --------------------
Share options approved
but not granted 23 942 639 23 942 639 23 942 639 23 942 639
----------------------------- -------------------- -------------------- -------------------- --------------------
----------------- ----------------- ----------------- -----------------
--------------------- -------------------- -------------------- -------------------- --------------------
428 114 328 423 440 789 428 114 328 423 440 789
========== ========== ========== ==========
--------------------- -------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
--------------------- -------------------- -------------------- -------------------- --------------------
Restated
--------------------- -------------------- -------------------- -------------------- --------------------
9.2.3 Headline earnings
--------------------- -------------------- -------------------- -------------------- --------------------
1 813 590
Profit for the period 849 262 942 377 220 218 069 285 900 539
----------------------------- -------------------- -------------------- -------------------- --------------------
Add/(deduct) non-recurring items
------------------------------------------- -------------------- -------------------- --------------------
Trade investments fair
value gains (3 645 884) (4 097 075) (9 265 541) (1 499 630)
----------------------------- -------------------- -------------------- --------------------
Profit on disposal of
property and equipment (7 881 999) - (7 091 399) -
----------------------------- -------------------- -------------------- -------------------- --------------------
Loss/(profit) on disposal
of investment properties 2 198 385 (2 620 407) (10 867 431) (584 149)
----------------------------- -------------------- -------------------- -------------------- --------------------
2 402 344 1 729 752 7 010 275 536 574
Tax thereon ----------------- ----------------- ----------------- -----------------
----------------------------- -------------------- -------------------- -------------------- --------------------
Headline earnings 842 553 788 372 232 488 1 793 375 284 353 334
========== ========== 973 ==========
==========
----------------------------- -------------------- -------------------- -------------------- --------------------
This is calculated in accordance with the Statement of
Investment Practice No. 1 issued by the former Institute of
Investment Management and Research (now the Chartered Financial
Analysts (CFA) Society of the UK).
9.3 Earnings/(losses) per share (ZWL cents)
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------ ------------ ------------ ------------
2020 2019 2020 2019
------------ ------------ ------------ ------------
ZWL ZWL ZWL ZWL
------------ ------------ ------------ ------------
Restated
------------ ------------ ------------ ------------
Basic 210.12 96.49 448.72 73.13
------------ ------------ ------------ ------------
Diluted 198.37 90.92 423.62 67.52
------------ ------------ ------------ ------------
Headline 208.41 95.21 443.72 72.73
------------ ------------ ------------ ------------
10. SHARE CAPITAL
10.1 31 December 31 December 31 December 31 December
2020 2019 2020 2019
------------------------------- ------------ ------------ ------------ ------------
Shares Shares ZWL ZWL
million million
------------------------------- ------------ ------------ ------------ ------------
Authorised
------------------------------- ------------ ------------ ------------ ------------
Ordinary shares of ZWL0.00028
each 600 600 168 000 168 000
-------------------------------------- ------------ ------------ ------------ ------------
========== ========== ========== ==========
-------------------------------------- ------------ ------------ ------------ ------------
10.2 Issued and fully paid
Inflation adjusted
31 December 31 December 31 December 31 December
----------------- --------------- --------------- ------------ ------------
2020 2019 2020 2019
----------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
----------------- --------------- --------------- ------------ ------------
Restated
----------------- --------------- --------------- ------------ ------------
10.2.1 Ordinary shares
----------------- --------------- --------------- ------------ ------------
Ordinary shares 404 404 3 574 680 3 574 680
-------------------------- --------------- --------------- ------------ ------------
========== ========== ========== ==========
-------------------------- --------------- --------------- ------------ ------------
Historical Cost
31 December 31 December 31 December 31 December
----------------- --------------- --------------- ------------ ------------
2020 2019 2020 2019
----------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
----------------- --------------- --------------- ------------ ------------
Ordinary shares
----------------- --------------- --------------- ------------ ------------
Ordinary shares 404 404 84 116 84 116
----------------- --------------- --------------- ------------ ------------
========== ========== ========== ==========
----------------- --------------- --------------- ------------ ------------
Inflation adjusted
31 December 31 December 31 December 31 December
--------------------- --------------- --------------- ------------ ------------
2020 2019 2020 2019
--------------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
Restated
--------------------- --------------- --------------- ------------ ------------
10.2.2 Redeemable ordinary
shares
--------------------- --------------- --------------- ------------ ------------
Redeemable ordinary
shares 104 104 29 040 130 269
------------------------------ --------------- --------------- ------------ ------------
========== ========== ========== ==========
------------------------------ --------------- --------------- ------------ ------------
Historical Cost
31 December 31 December 31 December 31 December
--------------------- --------------- --------------- ------------ ------------
2020 2019 2020 2019
--------------------- --------------- --------------- ------------ ------------
Shares million Shares million ZWL ZWL
--------------------- --------------- --------------- ------------ ------------
10.2.2 Redeemable ordinary
shares
--------------------- --------------- --------------- ------------ ------------
Redeemable ordinary
shares 104 104 29 040 29 040
------------------------------ --------------- --------------- ------------ ------------
========== ========== ========== ==========
------------------------------ --------------- --------------- ------------ ------------
Of the unissued ordinary shares of 196 million shares (2019 -
196 million), options which may be granted in terms of the 2012
ESOS amount to 23 942 639 (2019 - 23 942 639). No share options
were exercised from the Scheme as at 31 December 2020.
Subject to the provisions of section 214 of the Companies and
Other Business Entities Act (Chapter 24:31) of Zimbabwe, the
unissued shares are under the control of the directors.
11. REDEEMABLE ORDINARY SHARES
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ----------------- -----------------
2020 2019 2020 2019
------------------ ------------------ ----------------- -----------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ----------------- -----------------
Restated
------------------ ------------------ ----------------- -----------------
Nominal value (note
10.2.2) 29 040 130 269 29 040 29 040
------------------ ------------------ ----------------- -----------------
Share premium 14 306 213 64 175 606 14 306 213 14 306 213
------------------ ------------------ ----------------- -----------------
----------------- ----------------- ---------------- ----------------
14 335 253 64 305 875 14 335 253 14 335 253
========== ========== ========== ==========
------------------ ------------------ ----------------- -----------------
On 30 June 2013, the Group received USD14 831 145 capital from
Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden
N.V. (FMO), Norwegian Investment Fund for Developing Countries
(Norfund) and AfricInvest Financial Sector Holdings (AfricInvest)
who were allocated 34 571 429 shares each (total 103 714 287) for
individually investing USD4 943 715. This amount, net of share
issue expenses, was used to recapitalise the Bank in order to
contribute towards the minimum capital requirements previously set
by the Reserve Bank of Zimbabwe of ZWL200 million by 31 December
2020. FMO and Norfund came together with Rabobank to form ARISE
which is a development finance institution primarily focusing on
investing in African financial institutions to support and enhance
financial service delivery in Africa.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back
agreement with Norfund, FMO and AfricInvest, where these three
strategic investors have a right at their own discretion at any
time after the 5(th) anniversary (30 June 2018) but before the
9(th) anniversary (30 June 2022) of its first subscription date, to
request NMBZ to buy back all or part of its NMBZ shares at a price
to be determined using the agreed terms as entailed in the share
buy-back agreement. It is a condition precedent that at any point
when the share buy-back is being considered, the proceeds used to
finance the buy-back should come from the distributable reserves
which are over and above the minimum regulatory capital
requirements. Further, no buy-back option can be exercised by any
investor after the 9(th) anniversary (30 June 2022) of the
effective date.
The share buy-back agreement creates a potential obligation for
NMBZ Holdings Limited to purchase its own instruments. The shares
issued gave rise to a potential financial liability and are
classified as redeemable ordinary shares.
12. SUBORDINATED TERM LOAN
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----------------- ----------------- -----------------
2020 2019 2020 2019
----------------- ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
----------------- ----------------- ----------------- -----------------
Restated
----------------- ----------------- ----------------- -----------------
127 220
At 1 January 391 41 953 193 28 360 340 1 505 647
----------------- ----------------- ----------------- -----------------
(98 860 (44 194
Monetary adjustment 051) 322)
----------------- ----------------- ----------------- -----------------
104 272 116 108 104 272
Exchange revaluation 301 249 301 25 883 189
----------------- ----------------- ----------------- -----------------
Interest capitalised - 16 955 691 - 1 151 954
----------------- ----------------- ----------------- -----------------
Interest paid - (3 602 420) - (180 450)
----------------- ----------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------
132 632 127 220 132 632 28 360 340
641 391 641 =========
========== ========== ==========
----------------- ----------------- ----------------- -----------------
In 2013, the Group received a subordinated term loan amounting
to USD1.4 million from a Development Financial Institution which
attracts an interest rate of LIBOR plus 10% and has a seven year
maturity date (13 June 2020) from the first disbursement date.
The above liability would, in the event of the winding up of the
issuer, be subordinated to the claims of depositors and all other
creditors of the issuer. The Group defaulted on a principal
repayments with respect to this subordinated loan during the year
ended 31 December 2019 as a result of the prevailing nostro funding
challenges affecting the economy. There was a breach on the
Aggregate Unhedged Open Foreign Currency Positions Ratio covenant
which stood at 19.05% (instead of a maximum 10%) between the Group
and the Development Financial Institution at the reporting date of
31 December 2020. However, there were no defaults on interest
payments.
On 22 February 2019, the Reserve Bank of Zimbabwe (RBZ) issued
an Exchange Control directive, RU 28 of 2019 which established an
interbank foreign exchange market to formalise the buying and
selling of foreign currency through the Banks and Bureaux de
change. In order to establish an exchange rate between the current
monetary balances and foreign currency, the Monetary Authorities
denominated the existing RTGS balances in circulation, as RTGS
dollars. The RBZ pegged the initial trades at US$/RTGS$1:2.5. In
order to manage the transition, the RBZ also advised on the same
date that all foreign liabilities or legacy debts due to suppliers
and service providers, declared dividends e.t.c would be treated
separately after registering such debts with the RBZ Exchange
Control Department for an orderly expunging of these debts.
Consequently, the Group registered its legacy debts, which
included the subordinated term loan and offshore lines of credit
and transferred the ZWL equivalent of these debts at a rate of
US$/ZWL1:1 to the RBZ in terms of the RBZ directive. As such, in
terms of SI 33 of 2019 and the RBZ directive. These legacy debts
and the related amounts transferred to the RBZ in terms of the RBZ
directive on the legacy debts, have been translated using the
interbank rate at reporting date. T he RBZ approved the legacy debt
in respect of the subordinated term loan during the reporting
period.
13. DepositS and other LIABILITIES
13.1 Deposits and other liabilities
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
Deposits from banks and
other financial 1 603 493 1 386 184 1 603 493 309 012
institutions** 431 358 431 254
-------------------- -------------------- -------------------- --------------------
4 659 257 3 956 827 4 659 257 882 067
Current and deposit accounts 433 863 433 591
from customers* ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- -------------------- --------------------
6 262 750 5 343 012 6 262 750 1 191 079
Total deposits 864 221 864 845
-------------------- -------------------- -------------------- --------------------
151 192 309 121 151 192
Trade and other payables* 601 654 601 77 066 171
-------------------- -------------------- -------------------- --------------------
----------------- ----------------- ----------------- -----------------
6 413 943 5 652 133 6 413 943 1 268 146
465 875 465 016
========== ========== ========== ==========
-------------------- -------------------- -------------------- --------------------
* The carrying amounts of current and deposit accounts and trade
and other payables approximate the related fair values due to their
short term nature .
Included in trade and other payables are lease liabilities in
respect of leased properties in which the Group is a lessee.
Also included in trade and other liabilities are ECL provisions
in respect of guarantees and facilities approved but not drawn
down.
** Included in deposits from banks and other financial
institutions are loan balances of ZWL707 186 403 (2019 - ZWL654 115
604), ZWL365 711 501 (2019 - ZWL330 653 630) and ZWL484 792 463
(2019 - ZWL90 292 554) due to Nederlandse
Financierings-Maatschappij Voor Ontiwikkelingslanden (FMO),
Swedfund and Afreximbank. The carrying amounts of deposits from
other banks and other financial institutions approximate the
related fair values. All the loan balances except for Afreximbank
are part of the Group's legacy debts which were registered with the
Reserve Bank of Zimbabwe (RBZ) for an orderly expunging of the
debts. During the preceding year, the Group transferred the ZWL
equivalent of the legacy debts at a rate of US$/ZWL1:1 to the RBZ
as per requirement of the Exchange Control directive RU 28 of 2019.
There were no breaches to the financial covenants. However, the
Group defaulted on the principal repayments repayments on the FMO
and Swedfund facilities during the period under review due to the
nostro-funding challenges that were prevailing in the economy and
subsequent to period end, the above mentioned lines of credit
balances have since been transferred to the RBZ for an orderly
expunging of the debts. The Bank has been communicating with the
lenders regarding these developments.
The line of credit balances have been translated at 31 December
2020 at the closing rate of USD/ZWL1:81.3486. Consequently, the
amount transferred to the RBZ for the settlement of these debts has
been translated at the same closing rate as it represents the
Bank's right to the settlement of the related lines of credit.
Subsequent to year end, the RBZ approved the legacy debt in respect
of the FMO and Swedfund lines of credit.
13.2 Maturity analysis
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
5 498 905 4 686 461 5 498 905 1 044 719
Less than 1 month 442 205 442 581
------------------ ------------------ ------------------ ------------------
749 093 749 093
1 to 3 months 396 226 671 312 396 50 530 229
------------------ ------------------ ------------------ ------------------
3 to 6 months 9 281 600 151 148 281 9 281 600 33 694 415
------------------ ------------------ ------------------ ------------------
6 months to 1 year 2 145 131 197 063 165 2 145 131 43 929 895
------------------ ------------------ ------------------ ------------------
1 to 5 years 3 160 969 80 807 732 3 160 969 18 013 895
------------------ ------------------ ------------------ ------------------
Over 5 years 164 326 860 526 164 326 191 830
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
6 262 750 5 343 012 6 262 750 1 191 079
864 221 864 845
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
The maturity analysis covers the Group's total deposits only and
does not include the trade payables.
13.3 Sectoral analysis of deposits
Inflation adjusted
31 December 31 December
------------------ -------- ------------------ --------
2020 2019
------------------ -------- ------------------ --------
ZWL ZWL
------------------ -------- ------------------ --------
% Restated %
------------------ -------- ------------------ --------
Agriculture 136 424 405 2 113 854 228 2
------------------ -------- ------------------ --------
Banks and other financial 1 603 493
institutions 431 26 1 386 184 358 26
------------------ -------- ------------------ --------
Distribution 567 405 668 9 535 137 029 10
------------------ -------- ------------------ --------
Individuals 622 092 240 10 462 209 895 9
------------------ -------- ------------------ --------
Manufacturing 742 623 796 12 736 800 679 14
------------------ -------- ------------------ --------
Mining companies 108 883 701 2 90 869 882 2
------------------ -------- ------------------ --------
Municipalities and parastatals 275 200 417 4 260 152 204 5
------------------ -------- ------------------ --------
Other deposits 781 769 028 13 519 515 687 10
------------------ -------- ------------------ --------
1 146 241
Services 726 18 969 121 283 18
------------------ -------- ------------------ --------
Transport and telecommunications 278 616 452 4 269 166 976 4
------------------ -------- ------------------ --------
----------------- ------- ----------------- -------
6 262 750 100 5 343 012 221 100
864 ==== ========== ====
==========
------------------ -------- ------------------ --------
Historical Cost
31 December 31 December
------------------ -------- ------------------ --------
2020 2019
------------------ -------- ------------------ --------
ZWL % ZWL %
------------------ -------- ------------------ --------
Agriculture 136 424 405 2 25 380 717 2
------------------ -------- ------------------ --------
Banks and other financial 1 603 493
institutions 431 26 309 012 254 26
------------------ -------- ------------------ --------
Distribution 567 405 668 9 119 294 305 10
------------------ -------- ------------------ --------
Individuals 622 092 240 10 103 037 176 9
------------------ -------- ------------------ --------
Manufacturing 742 623 796 12 164 249 753 14
------------------ -------- ------------------ --------
Mining companies 108 883 701 2 20 256 979 2
------------------ -------- ------------------ --------
Municipalities and parastatals 275 200 417 4 57 993 887 5
------------------ -------- ------------------ --------
Other deposits 781 769 028 13 115 811 950 10
------------------ -------- ------------------ --------
1 146 241
Services 726 18 216 039 339 18
------------------ -------- ------------------ --------
Transport and telecommunications 278 616 452 4 60 003 485 4
------------------ -------- ------------------ --------
----------------- ------- ----------------- -------
6 262 750 100 1 191 079 845 100
864 ==== ========== ====
==========
------------------ -------- ------------------ --------
13.4 Lease Liabilites
Inflation adjusted Historical
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
At 1 January 14 978 271 30 443 511 3 338 967 3 078 687
------------------ ------------------ ------------------ ------------------
(10 277
Monetary adjustment 836) (3 574 861) - -
------------------ ------------------ ------------------ ------------------
Remeasurements 36 968 582 3 398 610 29 233 252 757 613
------------------ ------------------ ------------------ ------------------
13 205
Finance costs accrual 194 3 493 181 6 031 589 778 710
------------------ ------------------ ------------------ ------------------
(30 928 (14 658
Payment of lease liability 423) (18 782 170) 020) (1 276 043)
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
23 945 788 14 978 271 23 945 788 3 338 967
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
14. FINANCIAL INSTRUMENTS
14.1 Investment securities
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----- ------------------ ----------------- ------------------ -----------------
Note 2020 2019 2020 2019
----- ------------------ ----------------- ------------------ -----------------
ZWL ZWL
----- ------------------ ----------------- ------------------ -----------------
Restated
----- ------------------ ----------------- ------------------ -----------------
Amortised cost 1 086 000 1 086 000
- Gross 591 482 537 469 591 107 568 657
----- ------------------ ----------------- ------------------ -----------------
Impairment allowance
- Stage 1 16.3 (4 180 134) (1 805 570) (4 180 134) (402 502)
----- ------------------ ----------------- ------------------ -----------------
----------------- ---------------- ----------------- ----------------
1 081 820 480 731 899 1 081 820 107 166 155
457 ========= 457 =========
========== ==========
------------------ ----------------- ------------------ -----------------
The Group holds Treasury Bills and Government Bonds amounting to
ZWL1 086 000 591 with interest rates ranging from 5% to 18%. The
Treasury Bills are measured at amortised cost in line with the
Bank's business model to collect contractual cashflows and the
contractual terms are such that the financial assets give rise to
cashflows that are solely payments of principal and interest. Of
the total Treasury Bills balance of ZWL1 081 820 457, a total of
ZWL173 295 710 had been pledged as security against interbank
borrowings.
14.2 Maturity analysis of investment securities - amortised cost
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ----------------- ------------------- -----------------
2020 2019 2020 2019
------------------ ----------------- ------------------- -----------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ------------------- -----------------
Restated
------------------ ----------------- ------------------- -----------------
Less than 1 month 400 000 000 11 214 639 400 000 000 2 500 000
------------------ ----------------- ------------------- -----------------
1 to 3 months 450 000 000 28 664 954 450 000 000 6 390 075
------------------ ----------------- ------------------- -----------------
3 to 6 months 100 360 440 85 231 257 100 360 440 19 000 000
------------------ ----------------- ------------------- -----------------
245 768
6 months to 1 year 124 257 920 444 124 257 920 54 787 417
------------------ ----------------- ------------------- -----------------
1 to 5 years - 60 599 131 - 13 508 934
------------------ ----------------- ------------------- -----------------
11 382 231 51 059 044 11 382 231 11 382 231
Over 5 years ---------------- --------------- ----------------- ---------------
------------------ ----------------- ------------------- -----------------
1 086 000 482 537 1 086 000 107 568
591 469 591 657
------------------ ----------------- ------------------- -----------------
Expected Credit loss
allowance (4 180 134) (1 805 570) (4 180 134) (402 502)
------------------ ----------------- ------------------- -----------------
---------------- --------------- ----------------- ---------------
1 081 820 480 731 1 081 820 107 166
457 899 457 155
========== ========== ========== ==========
------------------ ----------------- ------------------- -----------------
14.3 Fair values of financial instruments
The fair values of financial assets and financial liabilities
that are traded in active markets are based on quoted market prices
or dealer price quotations. For all other financial instruments,
the Group determines fair values using other valuation
techniques.
For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity,
concentration, uncertainty of market factors, pricing assumptions
and other risks affecting the specific instrument.
Valuation models
The Group measures fair values using the following fair value
hierarchy, which reflects the significance of the inputs used in
making the measurements.
-- Level 1: inputs that are quoted market prices (unadjusted) in
active markets for identical instruments.
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes
instruments valued using: quoted market prices in active markets
for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or
other valuation techniques in which all significant inputs are
directly or indirectly observable from market data.
-- Level 3: inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the
instruments.
The objective of valuation techniques is to arrive at a fair
value measurement that reflects the price that would be received to
sell the asset or paid to transfer the liability in an orderly
transaction between market participants at the measurement
date.
14.3.1 Financial instruments measured at fair value - fair value
hierarchy
Inflation adjusted
31 Dec
------------------- ----------------- ----------------- ----------------
2020 Level 1 Level 2 Level 3
------------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
------------------- ----------------- ----------------- ----------------
10 877
Trade and other investments 10 877 672 - - 672
------------------- ----------------- ----------------- ----------------
----------------10 ---------------- ---------------- ---------------
877 672 - - 10 877
========= ========= ========= 672
=========
------------------- ----------------- ----------------- ----------------
31 Dec
------------------- ----------------- ----------------- ----------------
2019 Level 1 Level 2 Level 3
------------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
------------------- ----------------- ----------------- ----------------
Restated
------------------- ----------------- ----------------- ----------------
Trade and other investments 7 231 788 - - 7 231 788
------------------- ----------------- ----------------- ----------------
----------------7 ---------------- ---------------- ---------------
231 788 - - 7 231 788
========= ========= ========= =========
------------------- ----------------- ----------------- ----------------
Historical Cost
31 Dec
------------------- ----------------- ----------------- ----------------
2020 Level 1 Level 2 Level 3
------------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
------------------- ----------------- ----------------- ----------------
10 877
Trade and other investments 10 877 672 - - 672
------------------- ----------------- ----------------- ----------------
----------------10 ---------------- ---------------- ---------------
877 672 - - 10 877
========= ========= ========= 672
=========
------------------- ----------------- ----------------- ----------------
31 Dec
------------------- ----------------- ----------------- ----------------
2019 Level 1 Level 2 Level 3
------------------- ----------------- ----------------- ----------------
ZWL ZWL ZWL ZWL
------------------- ----------------- ----------------- ----------------
Trade and other investments 1 612 131 - - 1 612 131
------------------- ----------------- ----------------- ----------------
----------------1 ---------------- ---------------- ---------------
612 131 - - 1 612 131
========= ========= ========= =========
------------------- ----------------- ----------------- ----------------
During the reporting periods ended 31 December 2020 and 31
December 2019, there were no transfers between Level 1 and Level 2
fair value measurements, and no transfers into and out of Level 3
fair value measurements.
Level 3 fair value measurements
Reconciliation - Trade and other investments
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Balance at 1 January 7 231 788 3 134 713 1 612 131 112 501
------------------ ------------------ ------------------ ------------------
Gain recognised in
profit or loss 3 645 884 4 097 075 9 265 541 1 499 630
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
10 877 672 7 231 788 10 877 672 1 612 131
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
14.3.2 Financial instruments not measured at fair value
Below is a list of the Group's financial investments not
measured at fair value, but whose carrying amounts approximate fair
value.
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Assets
------------------ ------------------ ------------------ ------------------
1 964 637 2 208 405 1 964 637 492 304
Cash and cash equivalents 240 864 240 267
------------------ ------------------ ------------------ ------------------
Loans, advances and 3 992 648 3 824 449 3 730 886 817 960
other accounts 603 644 733 242
------------------ ------------------ ------------------ ------------------
1 081 820 1 081 820 107 166
Investment securities 457 480 731 899 457 155
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
Total 7 039 106 6 513 587 6 777 344 1 417 430
300 407 430 664
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
Liabilities
------------------ ------------------ ------------------ ------------------
Deposits and other 6 413 943 5 652 133 6 413 943 1 268 146
liabilities 465 875 465 016
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
6 413 943 5 652 133 6 413 943 1 268 146
465 875 465 016
========== ========== ========== ==========
------------------ ------------------ ------------------ ------------------
15. CASH AND CASH EQUIVALENTS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------- ------------------ ------------------ ------------------ -----------------
2020 2019 2020 2019
------- ------------------ ------------------ ------------------ -----------------
ZWL ZWL ZWL ZWL
------- ------------------ ------------------ ------------------ -----------------
Restated
------- ------------------ ------------------ ------------------ -----------------
Balances with the 1 197 870 267 032
Central Bank 416 178 289 374 416 178 289 753
------- ------------------ ------------------ ------------------ -----------------
Current, nostro accounts* 1 394 496 1 394 496 160 209
and cash 343 718 678 470 343 897
------- ------------------ ------------------ ------------------ -----------------
Interbank placements
(see below) 155 000 000 293 823 543 155 000 000 65 500 000
------- ------------------ ------------------ ------------------ -----------------
Expected Credit loss
allowance 16.3 (1 037 392) (1 966 523) (1 037 392) (438 383)
------- ------------------ ------------------ ------------------ -----------------
----------------- ----------------- ----------------- ----------------
1 964 637 2 208 405 1 964 637 492 304
240 864 240 267
========== ========== ========== =========
------- ------------------ ------------------ ------------------ -----------------
*Nostro accounts are foreign domiciled bank accounts operated by
the Bank for the facilitation of offshore transactions on behalf of
clients.
Balances with the Central Bank, other banks and cash are used to
facilitate customer and the Bank's transactions which include
payments and cash withdrawals.
16. TOTAL LOANS, ADVANCES AND OTHER ASSETS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ------------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------
Restated
------------------ ------------------ ------------------ ------------------
Fixed term loans - 1 562 652 1 187 356 1 562 652
Corporate 442 239 442 264 688 911
------------------ ------------------ ------------------ ------------------
Fixed term loans - 425 135
Retail 281 313 339 512 281 313 339 94 772 446
------------------ ------------------ ------------------ ------------------
Mortgages 93 469 773 262 816 821 93 469 773 58 587 891
------------------ ------------------ ------------------ ------------------
Overdrafts 361 361 619 437 823 811 361 361 619 97 600 959
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ----------------- -----------------
2 298 797 2 313 132 2 298 797 515 650
173 383 173 207
------------------ ------------------ ------------------ ------------------
1 693 851 1 511 317 1 432 089
Other assets 430 261 560 302 310 035
------------------ ------------------ ------------------ ------------------
----------------- ----------------- ---------------- ----------------
3 992 648 3 824 449 3 730 886 817 960 242
603 644 733 ==========
========== ========== ==========
------------------ ------------------ ------------------ ------------------
16.1 Maturity analysis
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
-------------------- -------------------- -------------------- --------------------
2020 2019 2020 2019
-------------------- -------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- --------------------
Restated
-------------------- -------------------- -------------------- --------------------
1 033 855 1 033 855
Less than 1 month 947 621 004 551 947 138 436 142
-------------------- -------------------- -------------------- --------------------
289 817 289 817
1 to 3 months 298 287 785 692 298 64 154 025
-------------------- -------------------- -------------------- --------------------
123 458 123 458
3 to 6 months 690 97 071 834 690 21 639 536
-------------------- -------------------- -------------------- --------------------
285 085 285 085
6 months to 1 year 872 473 261 772 872 105 500 893
-------------------- -------------------- -------------------- --------------------
601 281 601 281
1 to 5 years 710 689 385 946 710 153 679 923
-------------------- -------------------- -------------------- --------------------
118 490 118 490
170 222 945 992 170 49 699 770
Over 5 years ---------------- ---------------- ----------------- ----------------
-------------------- -------------------- -------------------- --------------------
2 451 989 2 391 455 2 451 989
Total advances 687 787 687 533 110 289
-------------------- -------------------- -------------------- --------------------
Allowances for impairment (152 784 (152 784
losses on loans and advance 373) (76 776 964) 373) (17 115 343)
-------------------- -------------------- -------------------- --------------------
(76 776 (370 608 (17 115
ECL at 1 January 964) 882) 343) (13 300 690)
-------------------- -------------------- -------------------- --------------------
Monetary adjustment 59 661 621 310 943 909 - -
-------------------- -------------------- -------------------- --------------------
ECL charge through profit (139 000 (139 000
or loss 331) (22 113 552) 331) (4 929 615)
-------------------- -------------------- -------------------- --------------------
Bad debts written off 3 331 301 5 001 561 3 331 301 1 114 962
-------------------- -------------------- -------------------- --------------------
Suspended interest on
credit impaired financial (408 141) (1 546 440) (408 141) (344 739)
assets ----------------- ----------------- - --------------- -----------------
-------------------- -------------------- -------------------- --------------------
2 298 797 2 313 132 2 298 797
173 383 173 515 650 207
-------------------- -------------------- -------------------- --------------------
1 693 851 1 511 317 1 432 089
Other assets 430 261 560 302 310 035
-------------------- -------------------- -------------------- --------------------
---------------- ---------------- ---------------- -----------------
3 992 648 3 824 449 3 730 886 817 960 242
603 644 733 ==========
========== ========== ==========
-------------------- -------------------- -------------------- --------------------
The Bank is continuing recovery efforts in respect of loans
written off in the year under review amounting to ZWL3 331 301.
16.2 Sectoral analysis of utilisations
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
2020 2019 2020 2019
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
ZWL % ZWL % ZWL % ZWL %
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Restated
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Agriculture
and 576 171 434 087 576 171
horticulture 487 23 244 18 487 23 96 767 992 18
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Conglomerates 41 000 000 2 10 754 380 1 41 000 000 2 2 397 398 1
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
244 984 393 795 244 984
Distribution 807 10 281 16 807 10 87 785 991 16
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Food & 220 830 132 143 220 830
beverages 811 9 741 6 811 9 29 457 868 6
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
386 873 566 169 386 873 126 212
Individuals 236 16 298 24 236 16 109 24
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
303 504 273 362 303 504
Manufacturing 490 12 783 11 490 12 60 715 905 11
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
Mining 1 169 804 - 5 190 674 - 1 169 804 - 1 157 120 -
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
677 455 576 952 677 455 128 615
Services 052 28 386 24 052 28 906 24
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
2 451 989 100 2 391 455 100 2 451 989 100 533 110 100
687 === 787 === 687 === 289 ===
========== ========== ========== ==========
----------------- ----- ----------------- ----- ----------------- ----- ----------------- -----
The material concentration of loans and advances is with
services sector at 28% (2019 - 24%) and the agriculture and
horticulture sector at 23 % (2019 - 18%).
16.3 Impairment analysis of financial assets measured at amortised cost
Inflation adjusted
Stage 1 Stage 2 Stage 3 Total
-------------------- ----------------- ----------------- -------------------
Gross carrying amount at 3 998 366 32 665 4 083 650
1 January 2020 764 52 618 440 167 371
-------------------- ----------------- ----------------- -------------------
(3 107 039 (25 383 (3 173 311
Monetary adjustment 200) (40 888 584) 353) 137)
-------------------- ----------------- ----------------- -------------------
Transfers
-------------------- ----------------- ----------------- -------------------
3 106
(18 745 248) 15 638 978 270 -
-------------------- ----------------- ----------------- -------------------
- to 12 months to ECL 11 520 254 (11 255 119) (265 135) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (27 771 744) 27 935 519 (163 775) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (2 493 758) (1 041 422) 3 535 180 -
-------------------- ----------------- ----------------- -------------------
Net movement in financial 2 924 011 2 937 704
assets 632 13 364 320 328 726 678
-------------------- ----------------- ----------------- -------------------
------------------ ---------------- ---------------- -----------------
Balance as at 31 December 3 796 593 40 733 154 10 716 3 848 043
2020 948 ========= 810 912
========== ========= ==========
-------------------- ----------------- ----------------- -------------------
Loss allowance analysis
-------------------- ----------------- ----------------- -------------------
At 1 January 2020
-------------------- ----------------- ----------------- -------------------
17 862
89 981 483 3 677 029 444 111 520 956
-------------------- ----------------- ----------------- -------------------
- ECL - Loans, advances 17 862
& guarantees 55 237 491 3 677 029 444 76 776 964
-------------------- ----------------- ----------------- -------------------
* Guarantees and facilities approved not drawn down 30 971 903 - - 30 971 903
-------------------- ----------------- ----------------- -------------------
- ECL - Investment securities 1 805 566 - - 1 805 566
-------------------- ----------------- ----------------- -------------------
- ECL - Interbank placements 1 966 523 - - 1 966 523
-------------------- ----------------- ----------------- -------------------
(13 880
Monetary adjustment (69 922 552) (2 857 335) 496) (86 660 383)
-------------------- ----------------- ----------------- -------------------
Transfers (5 544 987) 4 604 170 940 818 -
-------------------- ----------------- ----------------- -------------------
- to 12 month ECL 1 144 087 (1 123 468) (20 619) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (6 211 014) 6 247 125 (36 111) -
-------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (478 060) (519 487) 997 548 -
-------------------- ----------------- ----------------- -------------------
Net increase/(decrease) 2 005
in ECL 122 188 399 3 780 921 420 127 974 740
-------------------- ----------------- ----------------- -------------------
5 336
Loans and advances 122 735 705 3 780 921 721 131 853 347
-------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down (4 923 947) - - (4 923 947)
-------------------- ----------------- ----------------- -------------------
Investment securities 3 777 631 - - 3 777 631
-------------------- ----------------- ----------------- -------------------
Interbank placements 599 010 - - 599 010
-------------------- ----------------- ----------------- -------------------
(3 331
Bad debts written off - - 301) (3 331 301)
-------------------- ----------------- ----------------- -------------------
Revaluation exchange on
loans and advances ECL 7 146 984 - - 7 146 984
-------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
Balance as at 31 December 143 849 326 9 204 785 6 928 159 982 297
2020 ========= ========== 186 =========
==========
-------------------- ----------------- ----------------- -------------------
Loans and advances 136 651 402 9 204 785 6 928 186 152 784 373
-------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down 1 980 398 - - 1 980 398
-------------------- ----------------- ----------------- -------------------
Investment securities 4 180 134 - - 4 180 134
-------------------- ----------------- ----------------- -------------------
Interbank placements 1 037 392 - - 1 037 392
-------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
143 849 326 9 204 785 6 928 159 982 297
========= ========= 186 ==========
=========
-------------------- ----------------- ----------------- -------------------
16.3 Impairment analysis of financial assets measured at amortised cost
Inflation adjusted
Stage 1 Stage 2 Stage 3 Total
------------------- ----------------- ----------------- -------------------
Gross carrying amount at 10 372 667 445 219 11 387 107
1 January 2019 341 569 220 752 314 406
------------------- ----------------- ----------------- -------------------
(8 657 895 (632 066 (455 393 (9 745 354
Monetary adjustment 019) 397) 530) 946)
------------------- ----------------- ----------------- -------------------
Transfers
------------------- ----------------- ----------------- -------------------
(44 193 878) 50 132 828 (5 938 950)
------------------- ----------------- ----------------- -------------------
- to 12 months to ECL 6 023 795 (5 527 068) (496 728) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit (11 228
impaired (46 356 437) 57 584 624 186) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (3 861 236) (1 924 728) 5 785 964 -
------------------- ----------------- ----------------- -------------------
Net movement in financial 2 327 788 2 441 897
assets 320 65 331 257 48 778 333 910
------------------- ----------------- ----------------- -------------------
------------------ ---------------- ---------------- ------------------
Balance as at 31 December 3 998 366 52 618 440 32 665 167 4 083 650
2019 764 ========= ========= 371
=========== ===========
------------------- ----------------- ----------------- -------------------
Loss allowance analysis
------------------- ----------------- ----------------- -------------------
23 367
At 1 January 2019 34 762 887 3 828 104 674 61 958 665
------------------- ----------------- ----------------- -------------------
- ECL - Loans, advances
& guarantees 32 469 190 3 828 104 23 367 674 59 664 968
------------------- ----------------- ----------------- -------------------
- ECL - Investment securities 1 993 469 - - 1 993 469
------------------- ----------------- ----------------- -------------------
- ECL - Interbank placements 300 228 - - 300 228
------------------- ----------------- ----------------- -------------------
Transfers (3 881 638) 3 930 852 (49 214) -
------------------- ----------------- ----------------- -------------------
- to 12 month ECL 157 593 (146 903) (10 690) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL not credit
impaired (3 040 060) 4 593 817 (1 553 757) -
------------------- ----------------- ----------------- -------------------
- to lifetime ECL credit
impaired (999 171) (516 062) 1 515 233 -
------------------- ----------------- ----------------- -------------------
Net increase/(decrease) (5 456
in ECL 59 100 228 (4 081 927) 025) 49 562 276
------------------- ----------------- ----------------- -------------------
Loans and advances 26 649 947 (4 081 927) (454 464) 22 113 553
------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down 30 971 885 - - 30 971 885
------------------- ----------------- ----------------- -------------------
Investment securities (187 900) - - (187 900)
------------------- ----------------- ----------------- -------------------
Interbank placements 1 666 296 - - 1 666 296
------------------- ----------------- ----------------- -------------------
Bad debts written off - - (5 001 561) (5 001 561)
------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
Balance as at 31 December 89 981 477 3 677 029 17 862 111 520
2019 ========= ========= 435 941
========= =========
------------------- ----------------- ----------------- -------------------
Loans and advances 55 237 500 3 677 029 17 862 435 76 776 964
------------------- ----------------- ----------------- -------------------
Guarantees and facilities
approved not drawn down 30 971 885 - - 30 971 885
------------------- ----------------- ----------------- -------------------
Investment securities 1 805 570 - - 1 805 570
------------------- ----------------- ----------------- -------------------
Interbank placements 1 966 523 - - 1 966 523
------------------- ----------------- ----------------- -------------------
---------------- ---------------- ---------------- ----------------
89 981 477 3 677 029 17 862 111 520
========= ========= 435 941
========= =========
------------------- ----------------- ----------------- -------------------
16.4 Credit-impaired financial assets
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
---------------- ---------------- ---------------- ----------------
2020 2019 2020 2019
---------------- ---------------- ---------------- ----------------
ZWL ZWL ZWL ZWL
---------------- ---------------- ---------------- ----------------
Restated
---------------- ---------------- ---------------- ----------------
Total credit impaired financial
assets 10 716 808 32 665 167 10 716 808 7 281 814
---------------- ---------------- ---------------- ----------------
Expected credit losses
on credit impaired financial (17 862
assets (6 928 186) 444) (6 928 186) (3 981 948)
---------------- ---------------- ---------------- ----------------
Retail loans insurance (499 057) (2 238 696) (499 057) (499 057)
---------------- ---------------- ---------------- ----------------
Suspended interest on credit-impaired
financial assets (408 141) (1 546 440) (408 141) (344 739)
---------------- ---------------- ---------------- ----------------
--------------- --------------- --------------- ---------------
Net credit impaired financial 2 881 424 11 017 587 2 881 424 2 456 070
assets ========= ========== ========= =========
---------------- ---------------- ---------------- ----------------
The net credit impaired financial assets represents recoverable
portions covered by realisable security, which includes guarantees,
cessation of debtors, mortgages over properties, equities and
promissory notes all fair valued at ZWL1 276 250 (2019 - ZWL42 146
249).
16.5 Loans to related parties (included under loans, advances and other assets)
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------- ------------------ ------------------- -------------------
2020 2019 2020 2019
------------------- ------------------ ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------- ------------------ ------------------- -------------------
Restated
------------------- ------------------ ------------------- -------------------
Executive directors 950 501 3 347 229 950 501 746 174
------------------- ------------------ ------------------- -------------------
Officers 68 885 501 134 337 317 68 885 501 26 946 866
------------------- ------------------ ------------------- -------------------
Officers' companies - - - -
----------------- ---------------- ----------------- -----------------
------------------- ------------------ ------------------- -------------------
69 836 002 137 684 546 69 836 002 27 693 040
------------------- ------------------ ------------------- -------------------
ECL on staff loans
- Stage 1 (5 067 579) (218 685) (5 067 579) (48 750)
------------------- ------------------ ------------------- -------------------
---------------- ---------------- ----------------64 ----------------27
64 768 423 137 465 861 768 423 644 290
========== ========== ========== =========
------------------- ------------------ ------------------- -------------------
17. INTANGIBLE ASSETS
Inflation adjusted
Computer
Software Total
---- ------------------- ----------------
ZWL ZWL
---- ------------------- ----------------
Cost
---- ------------------- ----------------
211 223 211 223
Balance at 1 January 2019 328 328
------------------- ----------------
Acquisitions 2 857 048 2 857 048
------------------- ----------------
Capitalisation - -
----------------- --------------
---- ------------------- ----------------
214 080 214 080
Balance at 31 December 2019 376 376
------------------- ----------------
Acquisitions 7 828 681 7 828 681
------------------- ----------------
---------------- ---------------
Balance at 31 December 2020 221 909 221 909
057 057
========= =========
---- ------------------- ----------------
Accumulated amortisation
---- ------------------- ----------------
133 469 133 469
Balance at 1 January 2019 410 409
------------------- ----------------
28 513 215 28 513 216
Amortisation for the year ---------------- --------------
------------------- ----------------
161 982 161 982
Balance at 31 December 2019 625 625
------------------- ----------------
Amortisation for the year 24 416 805 24 416 805
------------------- ----------------
---------------- ---------------
Balance at 31 December 2020 186 399 186 399
430 430
========= =========
------------------- ----------------
Carrying amount
------------------- ----------------
At 31 December 2020 35 509 627 35 509 627
========== ========
------------------- ----------------
Restated at 31 December 2019 52 097 749 52 097 749
========= ========
------------------- ----------------
At 1 January 2019 - Restated 77 753 918 77 753 918
========== ========
------------------- ----------------
Historical Cost
Computer
Software Total
---- ------------------- -------------------
ZWL ZWL
---- ------------------- -------------------
Cost
---- ------------------- -------------------
Balance at 1 January 2019 5 375 405 5 375 405
------------------- -------------------
Acquisitions 94 320 94 320
------------------- -------------------
Capitalisation - -
----------------- -----------------
---- ------------------- -------------------
Balance at 1 January 2019 5 469 725 5 469 725
------------------- -------------------
Acquisitions 3 652 103 3 652 103
------------------- -------------------
-----------------9 -----------------9
Balance at 31 December 2020 121 828 121 828
========== ==========
---- ------------------- -------------------
Accumulated amortisation
---- ------------------- -------------------
Balance at 1 January 2019 3 338 632 3 338 632
------------------- -------------------
733 909 733 909
Amortisation for the year ----------------- -----------------
------------------- -------------------
Balance at 1 January 2019 4 072 541 4 072 541
------------------- -------------------
Amortisation for the year 915 580 915 580
------------------- -------------------
----------------- -----------------
Balance at 31 December 2019 4 988 121 4 988 121
========== ==========
------------------- -------------------
Carrying amount
------------------- -------------------
At 31 December 2019 4 133 707 4 133 707
========== ==========
------------------- -------------------
At 1 January 2020 1 397 186 1 397 186
========== ==========
------------------- -------------------
At 1 January 2019 2 036 773 2 036 773
========== ==========
------------------- -------------------
18. PROPERTY AND EQUIPMENT
Inflation adjusted
Capital
work in Furniture Right of Freehold
progress Computers Motor Vehicles & Equipment Use Assets** Land & Buildings* Total
-------------------- ------------------ ------------------- ------------------- ------------------- ------------------
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Cost/Revaluation amount Restated Restated Restated Restated Restated Restated Restated
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
At 1 January 2019 - 299 956 929 130
restated 370 284 611 050 51 149 660 181 066 977 - 112 346 127 184
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
158 457
Additions 82 249 874 51 491 608 5 205 185 19 511 309 - - 976
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
(64 658
Capitalisations 100) 5 502 543 1 317 424 4 566 022 - 53 272 111 -
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
656 033
Revaluation gain - - - - - 656 033 161 161
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Translation gains on
change 387 245
in functional - - - - - 387 245 018 018
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Initial recognition -
Right
of use assets - - - - 67 778 565 - 67 778 565
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Remeasurement - Right of
use assets - - - - 3 398 610 - 3 398 610
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
----------------- ------------------ ------------------ ----------------- -----------------
At 31 December 2019 - 317 548 341 605 ----------------- 205 144 ------------------ 1 208 896 2 202 043
restated 144 201 57 672 269 308 71 177 176 417 514
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
182 930 255 160
Additions 656 69 629 485 - 2 600 213 - - 354
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Remeasurement - Right of
use assets - - - - 36 968 582 - 36 968 582
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
(69 856
Capitalisations 376) 23 034 417 2 738 632 36 227 221 - 7 856 106 -
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
240 471
Revaluations - - - - - 240 471 407 407
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
(29 712
Disposals - (904 038) (15 076 762) (13 731 577) - - 377)
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
----------------- ------------------ ----------------- ------------------ ------------------ ------------------ -----------------
At 31 December 2020 430 622 433 365 45 334 139 230 240 108 145 1 457 223 2 704 931
424 065 =========== 165 757 930 480
=========== =========== =========== =========== =========== ===========
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Accumulated depreciation
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
At 1 January 2019 - 350 707
restated - 148 685 254 40 815 524 150 293 775 - 10 912 729 282
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Charge for the year - 47 588 166 7 737 014 11 168 351 - 2 710 722 69 204 253
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Right of use Assets - - - - 13 854 547 - 13 854 547
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
----------------- ------------------ ---------------
At 31 December 2019 - ----------------- 196 273 ----------------- 161 462 ------------------ ---------------- 433 768
restated - 420 48 552 538 126 13 854 547 13 623 451 082
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Charge for the year -
Property
and equipment - 48 910 965 3 900 074 14 744 475 - 1 606 329 69 161 843
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Charge for period - Right
of use assets - - - - 11 116 446 - 11 116 446
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
(27 284
Disposals - (904 038) (15 076 760) (11 303 628) - - 426)
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
------------------ ------------------- ----------------- ------------------ ------------------ ---------------- ----------------
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
At 31 December 2020 - 244 280 347 37 375 852 164 902 973 24 970 993 15 229 780 486 759
========== =========== ========== =========== =========== ========== 945
=========
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
Carrying amount
At 31 December 2020 430 622 189 084 7 958 287 65 337 191 83 174 764 1 441 994 2 218 171
424 718 ========== =========== =========== 151 535
========== =========== ========== ==========
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
At 1 December 2019 - 317 548 145 331 781 9 119 731 43 682 182 57 322 628 1 195 272 1 768 277
Restated 144 =========== ========== =========== =========== 966 432
========== ========== =========
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
At 1 January 2019 - 299 956 135 925 796 10 334 136 30 773 202 - 101 433 398 578 422
Restated 370 =========== ========== =========== =========== ========== 902
========== =========
-------------------------------------------- -------------------- ------------------ ------------------- ------------------- ------------------- ------------------
*Assets measured using the revaluation model.
** Right-of-Use Assets recognised in respect of leased
properties in which the Group is a lessee. The Right-of-Use Assets
are depreciated over the shorter of the lease term including
extension options where the Group is certain to exercise such and
the useful life of the underlying asset.
18. PROPERTY AND EQUIPMENT
Historical Cost
Capital Computers Motor Vehicles Furniture Right of Freehold Total
work in & Equipment Use Assets Land & Buildings
progress
------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Cost/Revaluation amount ZWL ZWL ZWL ZWL ZWL ZWL ZWL
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
At 1 January 2019 9 463 995 7 413 351 1 269 770 4 478 223 - 3 852 998 26 478 337
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Additions 19 774 151 2 975 151 206 348 1 352 847 - - 24 308 497
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Initial recognition - Right
of use assets - - - - 3 338 967 - 3 338 967
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Remeasurement - Right of
use assets - - - - 757 613 - 757 613
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
(14 413
Capitalisations 772) 1 226 643 293 684 1 017 871 - 11 875 574 -
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
236 960 236 960
Revaluation gain - - - - - 551 551
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Translation gain on change
in functional currency - - - - - 15 653 157 15 653 157
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Reclassification from
Investment
properties - - - - - 40 600 40 600
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
------------------ ---------------- ---------------
14 824 ------------------ ----------------- ------------------ ------------------ 268 382 307 537
At 31 December 2019 374 11 615 145 1 769 802 6 848 941 4 096 580 880 722
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
110 752
Additions 52 381 396 56 223 172 - 2 147 918 - - 486
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Remeasurement - Right of
use assets - - - - 29 233 252 - 29 233 252
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
(58 590
Capitalisations 341) 15 356 278 1 994 819 36 227 220 - 5 012 023 -
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Disposals - (46 837) (372 492) (396 841) - - (816 170)
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
1 183 829 1 183 829
Revaluation gain - - - - - 028 028
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
------------------ ------------------ ----------------- ------------------ ------------------ ------------------ -----------------
At 31 December 2020 8 615 429 83 147 758 3 392 129 44 827 238 33 329 832 1 457 223 1 630 536
=========== =========== =========== =========== =========== 931 318
=========== ===========
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Accumulated depreciation
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
At 1 January 2019 - 3 607 903 1 008 262 3 626 458 - 391 644 8 634 267
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Charge for the year - Property
and equipment - 1 427 692 222 449 481 383 - 175 836 2 307 360
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Charge for the year - Right
of use assets - - - - 1 310 867 - 1 310 867
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
---------------
----------------- ----------------- ------------------ ------------------- ----------------- 12 252
At 31 December 2018 ------------------- 5 035 595 1 230 711 4 107 841 1 310 867 567 480 494
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Charge for the year - 5 048 413 341 867 2 257 704 - 14 662 300 22 310 284
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Charge for period - Right
of Use Asset - - - - 8 579 715 - 8 579 715
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Disposals - (40 080) (372 492) (372 989) - - (785 561)
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
------------------ ------------------ ------------------ ------------------ ------------------- ------------------ ----------------
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
At 31 December 2020 - 10 043 928 1 200 086 5 992 556 9 890 582 15 229 42 356 932
=========== =========== =========== =========== =========== 780 ===========
===========
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Carrying amount
At 31 December 2020 8 615 429 73 103 831 2 192 043 38 834 681 23 439 250 1 441 994 1 588 179
=========== =========== =========== =========== =========== 151 384
=========== ===========
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
At 1 December 2019 14 824 373 6 579 550 539 092 2 741 099 2 785 713 267 815 295 285
========== =========== ========== =========== =========== 400 227
=========== ==========
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
At 1 January 2019 9 463 994 3 805 448 261 508 851 764 - 3 461 354 17 844 069
=========== =========== =========== =========== =========== =========== ===========
------------------------------------------- ------------------- ------------------- ------------------- -------------------- ------------------- -----------------------
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2020 on the
basis of valuations carried out by independent professional
valuers, PMA Real Estate (Private) Limited. The valuation which
conforms to International Valuation Standards, was in terms of the
policy as set out in the accounting policies section. All movable
assets are measured at their carrying amounts which are arrived at
by the application of a depreciation charge on their cost values
over the useful lives of the assets.
The valuation of land and buildings was arrived by applying
yield rates of 10% on rental levels of between ZWL332 - ZWL574 per
square metre.
Level 3
The fair value of immovable properties of ZWL1 441 994 151 (2019
- ZWL1 193 666 636) has been categorised under level 3 in the fair
value hierarchy based on the inputs used for the valuation
technique described below.
The following shows reconciliation between the opening and
closing balances for level 3 fair values:
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------- ------------------ --------------------
2020 2019 2020 2019
------------------ ------------------- ------------------ --------------------
ZWL ZWL ZWL ZWL
------------------ ------------------- ------------------ --------------------
Restated
------------------ ------------------- ------------------ --------------------
1 195 272
At 1 January 966 112 346 127 267 815 400 3 461 354
------------------ ------------------- ------------------ --------------------
Translation gains on
change in functional
currency - 387 245 018 - 15 649 358
------------------ ------------------- ------------------ --------------------
Transfers from work
in progress 7 856 106 53 272 111 5 012 023 11 875 574
------------------ ------------------- ------------------ --------------------
1 183 829
Revaluation gain 240 471 407 656 033 161 028 236 960 551
------------------ ------------------- ------------------ --------------------
Impairment reversal - - - 40 600
------------------ ------------------- ------------------ --------------------
Depreciation (1 606 328) (13 623 451) (14 662 300) (172 037)
------------------ ------------------- ------------------ --------------------
----------------- ------------------ ----------------- ---------------(267
Balance at 31 December 1 441 994 (1 195 272 1 441 994 815 400)
151 966) 151 =========
========== =========== ==========
------------------ ------------------- ------------------ --------------------
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of immovable properties, as well as the
significant unobservable inputs used.
Valuation Significant Unobservable Inter-relationship between
Technique Inputs key unobservable inputs and
fair value measurement
The Direct The estimated fair value would
Comparison * Weighted average expected market rental growth (5%); increase /(decrease) if:
Method was and * expected market rental growth were higher/ (lower);
applied and
on all
residential * Average market yield of 10%.
properties * the risk adjusted discount rates were lower/
(higher).
Below is an indication of
the sensitivity analysis at
different discount rates:-
--------------------------------------------------------------- ----------------------------------------------------------
Below is an indication of the sensitivity analysis following
changes on the significant unobservable inputs:
Changes in fair value following changes
in:
Change in rate Expected market rental Discount rates
growth
------------------------- ---------------
+5% 16 964 637 59 683 332
------------------------- ---------------
+3% 10 178 782 35 809 999
------------------------- ---------------
+1% 3 392 927 11 936 666
------------------------- ---------------
-1% (3 392 927) (11 936 666)
------------------------- ---------------
-3% (10 178 728) (35 809 999)
------------------------- ---------------
-5% (16 964 637) (59 683 332)
------------------------- ---------------
19. CAPITAL COMMITMENTS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ----------------- ------------------ ------------------
2020 2019 2020 2019
------------------ ----------------- ------------------ ------------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ------------------ ------------------
Restated
------------------ ----------------- ------------------ ------------------
Capital expenditure
contracted for - 26 145 307 - 5 828 388
------------------ ----------------- ------------------ ------------------
Capital expenditure
authorised but not yet 290 414 527 401 290 414 117 569
contracted for 317 476 317 873
------------------ ----------------- ------------------ ------------------
----------------- ---------------- ----------------- -----------------
Balance at 31 December 290 414 553 546 290 414 123 398
317 783 317 261
========== ========== ========== ==========
------------------ ----------------- ------------------ ------------------
The capital expenditure will be funded from the Group's own
resources.
20. CONTINGENT LIABILITIES
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
--------------------- ----------------- --------------------- ---------------------
2020 2019 2020 2019
--------------------- ----------------- --------------------- ---------------------
ZWL ZWL ZWL ZWL
--------------------- ----------------- --------------------- ---------------------
Restated
--------------------- ----------------- --------------------- ---------------------
107 418 569 489 107 418 126 952
Guarantees 549 191 549 189
--------------------- ----------------- --------------------- ---------------------
Facilities approved
but not drawn down 47 635 086 90 021 971 47 635 086 20 067 960
--------------------- ----------------- --------------------- ---------------------
Expected credit losses
on facilities approved
but not drawdown (1 490 863) (6 525 618) (1 490 863) (1 477 002)
--------------------- ----------------- --------------------- ---------------------
Expected credit losses (24 346
on guarantees (489 529) 282) (489 529) (5 427 344)
--------------------- ----------------- --------------------- ---------------------
-----------------153 ---------------- -----------------153 -----------------140
Balance at 31 December 073 243 628 539 073 243 115 803
========== 262 ========== ==========
==========
--------------------- ----------------- --------------------- ---------------------
21. EXCHANGE RATES
The following exchange rates have been used to translate the
foreign currency balances to Zimbabwe dollars at year end:
31 December 31 December
2020 2019
Mid - rate Mid - rate
----- ------------ ------------
ZWL ZWL
----- ------------ ------------
United States Dollar USD 81.3486 16.7734
----- ------------ ------------
British Sterling GBP 111.5978 22.1677
----- ------------ ------------
South African Rand ZAR 5.5919 0.8350
----- ------------ ------------
European Euro EUR 100.3522 18.8164
----- ------------ ------------
Botswana Pula BWP 7.5734 0.6302
----- ------------ ------------
22 . EVENTS AFTER REPORTING DATE
Subsequent to the Group's year end date of 31 December 2020, the
Government of Zimbabwe announced more stringent COVID-19 induced
lockdown measures in an attempt to contain the spread of the novel
Corona virus. The Directors assessed this development and concluded
that this had no impact on the Group's operations, largely due to
the fact that the nation had been operating under lockdown
conditions of varying degrees for the greater part of the year and
no material adverse impact was noted in terms of the Group's
operations.
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2020
Inflation adjusted Historical Cost*
31 December 31 December 31 December 31 December
----- ------------------- --------------------- -------------------- -------------------
2020 2019 2020 2019
----- ------------------- --------------------- -------------------- -------------------
ZWL ZWL ZWL ZWL
----- ------------------- --------------------- -------------------- -------------------
Restated
----- ------------------- --------------------- -------------------- -------------------
Interest income 760 901 869 808 407 006 501 216 271 70 557 190
------------------- --------------------- -------------------- -------------------
(16 894
(142 992 756) (231 899 654) (90 638 279) 088)
Interest expense ----------------- ----------------- ----------------- ----------------
------------------- --------------------- -------------------- -------------------
Net interest income 617 909 113 576 507 352 410 577 992 53 663 102
------------------- --------------------- -------------------- -------------------
1 131 552
Fee and commissions income 573 821 825 071 815 541 357 87 242 303
------------------- --------------------- -------------------- -------------------
1 143 047
128 836 005 353 217 274 144 99 863 112
Net foreign exchange gains ---------------- ---------------- ----------------- ----------------
------------------- --------------------- -------------------- -------------------
1 878 297 2 541 379 1 443 393 240 768
Revenue 691 776 493 517
------------------- --------------------- -------------------- -------------------
1 226 846 206 622
257 605 427 505 136 261 996 639
Other income a ---------------- ---------------- ----------------- ----------------
----- ------------------- --------------------- -------------------- -------------------
2 135 903 3 046 516 2 670 240 447 391
Operating income 118 037 489 156
------------------- --------------------- -------------------- -------------------
(1 276 919 (1 078 732 (814 252 (105 925
952) 397) 563) 077)
Operating expenditure b ----------------- ----------------- ------------------ -----------------
----- ------------------- --------------------- -------------------- -------------------
Operating income before
impairment
charge and loss on net
monetary 1 967 783 1 855 987 341 466
position 858 983 166 640 926 079
------------------- --------------------- -------------------- -------------------
Impairment losses on loans
and advances financial
assets measured at amortised (127 974 (11 048
cost (127 974 740) (49 562 276) 740) 567)
------------------- --------------------- -------------------- -------------------
(1 531 074
(33 913 732) 030) - -
Loss on net monetary position ----------------- ------------------- ----------------- ----------------
------------------- --------------------- -------------------- -------------------
1 728 013 330 417
Profit before taxation 697 094 694 387 147 334 186 512
------------------- --------------------- -------------------- -------------------
(44 513
143 895 722 (314 036 945) 85 514 320 700)
Taxation ----------------- ----------------- ------------------ -----------------
------------------- --------------------- -------------------- -------------------
1 813 527 285 903
Profit for the period 840 990 416 73 110 389 506 812
------------------- --------------------- -------------------- -------------------
Other comprehensive
income
----- ------------------- --------------------- -------------------- -------------------
Items that will not be
reclassified to profit
or loss
----- ------------------- --------------------- -------------------- -------------------
Revaluation of land and 175 943
buildings, net of tax c 181 026 875 487 104 622 891 186 492 209
----- ------------------- --------------------- -------------------- -------------------
Items that may be
reclassified
to profit or loss
----- ------------------- --------------------- -------------------- -------------------
Translation gain on change
in functional currency - 287 529 426 - 11 619 648
------------------- --------------------- -------------------- -------------------
Total comprehensive ----------------- ---------------- ----------------- ----------------
income 1 022 017 847 744 437 2 704 713 473 466
for the year 291 ========= 998 669
========== ========== =========
----- ------------------- --------------------- -------------------- -------------------
Earnings per share (ZWL cents)
------------------- --------------------- -------------------- -------------------
- Basic and diluted d 5 095.04 442.93 10 987.05 1 732.12
----- ------------------- --------------------- -------------------- -------------------
- Headline d 5 043.08 412.71 10 852.93 1 722.74
----- ------------------- --------------------- -------------------- -------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
Inflation adjusted Historical Cost*
31 December 31 December 31 December 31 December
------ ------------------ ------------------- -------------------- --------------------
Note 2020 2019 2020 2019
------ ------------------ ------------------- -------------------- --------------------
ZWL ZWL ZWL ZWL
------ ------------------ ------------------- -------------------- --------------------
Restated
------ ------------------ ------------------- -------------------- --------------------
SHAREHOLDER'S FUNDS
------ ------------------ ------------------- -------------------- --------------------
Share capital e 726 287 726 287 16 506 16 506
------ ------------------ ------------------- -------------------- --------------------
1 287 623
Share premium 1 287 623 341 341 31 474 502 31 474 502
------------------ ------------------- -------------------- --------------------
Functional currency translation 287 529
reserve 287 529 426 426 11 619 648 11 619 648
------------------ ------------------- -------------------- --------------------
487 104
Revaluation reserve 668 131 497 622 1 067 266 442 176 079 950
------------------ ------------------- -------------------- --------------------
975 166
1 816 157 257 841 2 142 925 978 329 398 472
Retained earnings ----------------- ---------------- ------------------ ------------------
------------------ ------------------- -------------------- --------------------
3 038 150
4 060 167 808 517 3 253 303 076 548 589 078
Total shareholder's funds ----------------- ---------------- ------------------ ------------------
------------------ ------------------- -------------------- --------------------
LIABILITIES
------ ------------------ ------------------- -------------------- --------------------
5 677 309
Deposits and other liabilities 6 411 399 844 617 6 411 399 844 1 265 602 395
------------------ ------------------- -------------------- --------------------
Current tax liabilities 57 280 584 3 142 149 57 280 584 700 457
------------------ ------------------- -------------------- --------------------
505 558
Deferred tax liabilities 291 053 567 370 174 741 298 97 666 693
------------------ ------------------- -------------------- --------------------
127 220
Subordinated term loan 132 632 641 391 132 632 641 28 360 340
------------------ ------------------- -------------------- --------------------
Amount owing to Holding 2 143 122 9 613 735 2 143 122 2 143 122
company ----------------- ----------------- ----------------- -----------------
------------------ ------------------- -------------------- --------------------
6 322 844
6 894 509 758 262 6 778 197 489 1 394 473 007
Total liabilities ----------------- ----------------- ----------------- -----------------
------------------ ------------------- -------------------- --------------------
Total shareholder's 10 954 677 9 360 994 10 031 500 565 1 943 062 085
funds 566 779 =========== ===========
and liabilities =========== ==========
------ ------------------ ------------------- -------------------- --------------------
ASSETS
------ ------------------ ------------------- -------------------- --------------------
Cash and cash 2 208 405
equivalents f 1 964 637 240 864 1 964 637 240 492 304 267
------ ------------------ ------------------- -------------------- --------------------
480 731
Investment securities 1 081 820 457 898 1 081 820 457 107 166 155
------------------ ------------------- -------------------- --------------------
Loans, advances and other 3 813 095
assets 3 990 164 559 469 3 728 355 629 815 429 137
------------------ ------------------- -------------------- --------------------
Unquoted investments 10 877 672 7 231 787 10 877 672 1 612 131
------------------ ------------------- -------------------- --------------------
1 031 154
Investment properties g 1 653 496 476 580 1 653 496 476 229 867 982
------ ------------------ ------------------- -------------------- --------------------
52 097
Intangible assets 35 509 627 750 4 133 707 1 397 186
------------------ ------------------- -------------------- --------------------
1 768 277
Property and equipment 2 218 171 535 431 1 588 179 384 295 285 227
------------------ ------------------- -------------------- --------------------
------------------ --------------- ------------------ -----------------
-------------------------------- ------------------ ------------------- -------------------- --------------------
Total assets 10 954 677 9 360 994 10 031 500 565 1 943 062 085
566 779 =========== ==========
========== ==========
------------------ ------------------- -------------------- --------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Inflation adjusted
Functional
Currency
Translation Revaluation Retained
Share Capital Share Premium Reserve Reserve Earnings Total
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
ZWL ZWL ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Balances at
1 January 1 287 623 2 218 326
2019 726 287 341 - - 929 976 402 030
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Profit for
the year - - - - 73 110 389 73 110 389
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - 487 104 622 - 487 104 622
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Change in
functional
currency - - 287 529 426 - - 287 529 426
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Dividends - - - - (27 919 950) (27 919 950)
paid ----------------- ----------------- ----------------- ----------------- ------------------ ------------------
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Balances at
31 December 1 287 623 3 038 150
2019 726 287 341 287 529 426 487 104 622 975 166 841 517
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Profit for
the year - - - - 840 990 416 840 990 416
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Revaluation
of land and
buildings,
net of tax - - - 181 026 875 - 181 026 875
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
---------------- ----------------- ----------------- ----------------- ----------------- -----------------
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
Balances at 726 287 1 287 623 287 529 426 668 131 497 1 816 157 4 060 167
31 December ========== 341 ========== ========== 257 808
2020 ========== ========== ==========
------------------ ------------------ ------------------ ------------------ -------------------- --------------------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Historical Cost*
Functional
Currency
Translation Revaluation Retained
Share Capital Share Premium Reserve Reserve Earnings Total
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
ZWL ZWL ZWL ZWL ZWL ZWL
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Balances at
1 January
2019 16 506 31 474 502 - 136 741 47 267 030 78 894 779
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Profit for
the year - - - - 285 903 812 285 903 812
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Revaluation
of land and
buildings,
net of tax - - - 175 943 209 - 175 943 209
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Dividend
paid - - - - (3 772 370) (3 772 370)
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Translation
gain on
change in
functional
currency, - - 11 619 648 - - 11 619 648
net of tax ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Balances at
31 December
2019 16 506 31 474 502 11 619 648 176 079 950 329 398 472 548 589 078
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Profit of 1 813 527 1 813 527
the year - - - - 506 506
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Revaluation
of land and
buildings,
net of tax - - - 891 186 492 - 891 186 492
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
---------------- ----------------- ----------------- ----------------- ----------------- -----------------
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
Balances at 16 506 31 474 502 11 619 648 1 067 266 2 142 925 3 253 303
31 December ========== ========== ========== 442 978 076
2020 ========== ========== ==========
-------------------- -------------------- --------------------- -------------------- -------------------- ---------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
STATEMENT OF CASHFLOWS
for the year ended 31 December 2020
Inflation adjusted Historical Cost*
31 December 31 December 31 December 31 December
----------------------- -------------------------- ---------------------- ----------------------
2020 2019 2020 2019
----------------------- -------------------------- ---------------------- ----------------------
ZWL ZWL ZWL ZWL
----------------------- -------------------------- ---------------------- ----------------------
Restated
-------------------------- ---------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
-------------------------- ---------------------- ----------------------
1 728 013 330 417
Profit before taxation 697 094 694 387 147 334 186 512
----------------------- -------------------------- ---------------------- ----------------------
Non-cash items
----------------------- -------------------------- ---------------------- ----------------------
* Impairment losses on financial assets measured at 127 974
amortised cost 127 974 740 49 562 276 740 11 048 567
----------------------- -------------------------- ---------------------- ----------------------
(228 646 (419 983 (1 182 737 (194 387
* Investment properties fair value adjustment 579) 776) 157) 322)
----------------------- -------------------------- ---------------------- ----------------------
* Profit on disposal of property and equipment (7 881 999) - (7 091 399) -
----------------------- -------------------------- ---------------------- ----------------------
(10 867
* Loss/(profit) on disposal of investment properties 2 198 385 (2 620 407) 431) (584 149)
----------------------- -------------------------- ---------------------- ----------------------
* Trade and other investments fair value gains (3 645 884) (4 097 075) (9 265 541) (1 499 630)
----------------------- -------------------------- ---------------------- ----------------------
* Impairment reversal on land and buildings - - - (40 600)
----------------------- -------------------------- ---------------------- ----------------------
* Depreciation (excluding Right of use assets) 69 161 843 69 204 253 22 310 284 2 307 360
----------------------- -------------------------- ---------------------- ----------------------
* Depreciation - Right of use assets 11 116 446 13 854 547 8 579 715 1 310 867
----------------------- -------------------------- ---------------------- ----------------------
* Interest capitalised on subordinated term loan - 16 955 691 - 1 151 954
----------------------- -------------------------- ---------------------- ----------------------
* Amortisation of intangible assets 24 416 805 28 513 216 915 580 733 909
----------------------- -------------------------- ---------------------- ----------------------
(204 729 (414 431 (204 729 (92 386
322) 455) 321) 267)
* Unrealised foreign exchange gains -------------------- ------------------- ------------------- -------------------
----------------------- -------------------------- ---------------------- ----------------------
Operating cash flows before
changes in operating assets (275 895 473 102
and liabilities 487 059 129 395) 656 58 072 201
----------------------- -------------------------- ---------------------- ----------------------
Changes in operating assets
and liabilities
----------------------- -------------------------- ---------------------- ----------------------
Increase/(decrease) in deposits 2 911 107 (8 118 094 2 911 107 523 624
and other liabilities 621 629) 622 534
----------------------- -------------------------- ---------------------- ----------------------
(2 747 298 4 416 537 (1 356 362 (298 115
(Increase)/decrease in loans, 628) 017 812) 759)
advances and other assets -------------------- ------------------- ------------------- -------------------
----------------------- -------------------------- ---------------------- ----------------------
(3 977 453 2 027 847 283 580
Net cash generated/(used) from 650 868 122 008) 466 977
operations ------------------- ------------------- ------------------ ------------------
----------------------- -------------------------- ---------------------- ----------------------
Taxation
----------------------- -------------------------- ---------------------- ----------------------
(73 473
(85 059 033) (65 138 187) 484) (9 079 118)
Corporate tax paid -------------------- ------------------- ------------------- -------------------
----------------------- -------------------------- ---------------------- ----------------------
(4 042 591 1 954 373 274 501
Net cash inflow/(outflow) from 565 809 089 194) 982 860
operating activities -------------------- ------------------- ------------------ ------------------
----------------------- -------------------------- ---------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
----------------------- -------------------------- ---------------------- ----------------------
Proceeds on disposal of property
and equipment 10 309 948 - 7 122 008 -
----------------------- -------------------------- ---------------------- ----------------------
Acquisition of intangible assets (7 828 681) (2 857 048) (3 652 103) (94 320)
----------------------- -------------------------- ---------------------- ----------------------
Acquisition of property and (255 160 (158 457 (110 752 (24 308
equipment 354) 976) 486) 497)
----------------------- -------------------------- ---------------------- ----------------------
(411 275 (245 405
Acquisition of investment properties 642) (8 698 276) 846) (351 515)
----------------------- -------------------------- ---------------------- ----------------------
(Disposal)/Acquisition of investment (974 654 2 786 293 (974 654
securities 302) 082 303) 10 083 280
----------------------- -------------------------- ---------------------- ----------------------
Decrease in amount owing from
Holding Company - 15 556 477 - 558 303
----------------------- -------------------------- ---------------------- ----------------------
Increase in amount owing to
Holding Company - 48 148 236 - 2 143 122
----------------------- -------------------------- ---------------------- ----------------------
Proceeds on disposal of investment 15 381 940 26 415 941 15 381 940 5 888 719
properties ------------------- ------------------ ------------------ ------------------
----------------------- -------------------------- ---------------------- ----------------------
(1 623 227 2 706 400 (1 311 960
Net cash(outflow)/inflow from 090) 436 790) (6 080 908)
investing activities ------------------- ------------------- ------------------- -------------------
----------------------- -------------------------- ---------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------- ------------------- ------------------
Dividend paid - (89 430 083) - (3 772 370)
-------------------- ------------------- ------------------- ------------------
Payment of interest on
subordinated
term loan - (3 602 420) - (180 450)
-------------------- ------------------- ------------------- ------------------
Repayment of lease (30 928 423) (18 782 169) (14 658 019) (1 276 043)
liabilities ------------------ ---------------- ----------------- ----------------
-------------------- ------------------- ------------------- ------------------
Net cash outflow from
financing (30 928 423) (111 814 672) (14 658 019) (5 228 863)
activities ------------------ ---------------- ----------------- ----------------
-------------------- ------------------- ------------------- ------------------
Net (decrease)/ increase
in cash and cash (1 088 346 (1 448 005 263 192
equivalents 425) 430) 627 755 172 089
-------------------- ------------------- ------------------- ------------------
Net foreign exchange and
monetary adjustments on
cash 116 671
and cash equivalents 844 577 801 523 370 454 844 577 801 266
-------------------- ------------------- ------------------- ------------------
2 208 405 3 133 040 492 304 112 440
Cash and cash equivalents 864 840 267 912
at beginning of the year ------------------ ----------------- ---------------- ---------------
-------------------- ------------------- ------------------- ------------------
Cash and cash equivalents
at the end of the year 1 964 637 2 208 405 1 964 637 492 304
(note 240 864 240 267
f) ========== ========== ========== =========
-------------------- ------------------- ------------------- ------------------
ADDITIONAL INFORMATION ON OPERATING
CASHFLOWS FROM INTEREST
757 446 65 548
Interest received 729 123 038 936 469 437 446 752
-------------------- ------------------- ------------------- ------------------
Interest paid (including
interest (116 012 (215 571 (15 089
on lease liabilities ) 408) 870) (63 657 930) 895)
-------------------- ------------------- ------------------- ------------------
*The Historical Cost information has been shown as supplementary
information for the benefit of users. These are not required in
terms of International Accounting Standard (IAS) 29 "Financial
Reporting in Hyperinflationary Economies". The Auditors have not
expressed an opinion on the Historical Cost information.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2020
There are no material differences between the Bank and the
Holding company as the Bank is the principal operating subsidiary
of the Group. The notes to the financial statements under NMBZ
Holdings Limited are therefore the same as those of the Bank in
every material respect where applicable.
a. OTHER income
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------- ------------------- -------------------
2020 2019 2020 2019
------------------ ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------ ------------------- ------------------- -------------------
Restated
------------------ ------------------- ------------------- -------------------
Unquoted investments
fair value gains 3 645 884 4 097 075 9 265 541 1 499 630
------------------ ------------------- ------------------- -------------------
(Loss)/profit on disposal
of investment properties (2 198 385) 2 620 407 10 867 431 584 149
------------------ ------------------- ------------------- -------------------
Profit on disposal
of property and equipment 7 881 999 - 7 091 399 -
------------------ ------------------- ------------------- -------------------
Fair value gains on 1 182 737
investment properties 228 646 579 419 983 776 157 194 387 322
------------------ ------------------- ------------------- -------------------
Rental income 7 610 897 5 745 809 5 641 865 391 885
------------------ ------------------- ------------------- -------------------
Bad debts recovered 5 879 717 66 140 660 3 406 069 9 519 359
------------------ ------------------- ------------------- -------------------
Other operating income 6 138 736 6 548 534 7 837 534 240 294
------------------ ------------------- ------------------- -------------------
----------------- ------------------ ------------------ ------------------
257 605 505 136 1 226 846 206 622
427 261 996 639
========== ========== ========== ==========
------------------ ------------------- ------------------- -------------------
b. Operating EXPITURE
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ----------------- ----------------- -----------------
2020 2019 2020 2019
------------------ ----------------- ----------------- -----------------
ZWL ZWL ZWL ZWL
------------------ ----------------- ----------------- -----------------
Restated
------------------ ----------------- ----------------- -----------------
The operating profit is after recognising
the following:
----------------- ----------------- -----------------
395 981
Administration costs** 621 371 606 520 734 317 906 55 305 935
------------------ ----------------- ----------------- -----------------
Audit fees:
------------------ ----------------- ----------------- -----------------
- Current year 13 977 416 7 088 694 8 388 890 993 686
------------------ ----------------- ----------------- -----------------
- Prior year 2 814 505 1 427 391 1 553 413 200 090
------------------ ----------------- ----------------- -----------------
Impairment reversal on
land and buildings* - - - (40 600)
------------------ ----------------- ----------------- -----------------
Depreciation - (excluding
Right of use assets) 69 161 843 69 204 253 22 310 284 2 307 360
------------------ ----------------- ----------------- -----------------
Amortisation of intangible
assets 24 416 806 28 513 216 915 580 733 909
------------------ ----------------- ----------------- -----------------
Depreciation - Right
of use assets 11 116 446 13 854 548 8 579 715 1 310 867
------------------ ----------------- ----------------- -----------------
Directors' remuneration 34 698 537 27 608 198 13 902 765 2 531 536
------------------ ----------------- ----------------- -----------------
- Fees for services as
directors 13 309 810 7 110 228 3 520 400 644 487
------------------ ----------------- ----------------- -----------------
- Expenses 237 005 570 374 37 960 80 767
------------------ ----------------- ----------------- -----------------
- Services rendered 21 151 722 19 927 596 10 344 405 1 806 282
------------------ ----------------- ----------------- -----------------
Staff costs - salaries,
allowances and related 362 620
costs 499 362 793 410 301 780 010 42 582 294
------------------ ----------------- ----------------- -----------------
----------------- ---------------- ---------------- ----------------
1 276 919 1 078 732 814 252 105 925
952 397 563 077
========== ========== ========== ==========
------------------ ----------------- ----------------- -----------------
*The impairment reversal on land and buildings arose due to fair
value changes in the Bank's land and buildings measured using the
revaluation model.
**Included in administration costs are lease finance costs
amounting to ZWL16 443 895 (2019 - ZWL11 561 568) in respect of
property leases which the Group uses for the purpose of carrying on
its trade.
c. Other comprehensive income
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ---------------- ------------------ ----------------
2020 2019 2020 2019
------------------ ---------------- ------------------ ----------------
ZWL ZWL ZWL ZWL
------------------ ---------------- ------------------ ----------------
Restated
------------------ ---------------- ------------------ ----------------
Revaluations of land 1 183 829
and buildings 240 471 407 656 029 331 028 236 950 551
------------------ ---------------- ------------------ ----------------
(168 924 (292 642
Tax effect (59 444 532) 709) 538) (61 007 342)
------------------ ---------------- ------------------ ----------------
--------------- --------------- ----------------- ---------------
181 026 487 104 891 186 175 943
875 622 492 209
========= ========= ========== =========
------------------ ---------------- ------------------ ----------------
Translation gain on
change in functional
currency - 387 248 848 - 15 649 358
------------------ ---------------- ------------------ ----------------
Tax effect - (99 719 422) - (4 029 710)
------------------ ---------------- ------------------ ----------------
----------------- --------------- ----------------- ---------------
- 287 529 426 - 11 619 648
------------------ ---------------- ------------------ ----------------
--------------- --------------- ----------------- ---------------
181 026 774 634 891 186 187 562
875 048 492 857
========= ========= ========== =========
------------------ ---------------- ------------------ ----------------
d. EARNINGS PER SHARE
The calculation of earnings per share is based on the following
figures:
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------------- ------------------- ------------------- ------------------- -------------------
2020 2019 2020 2019
------------------------- ------------------- ------------------- ------------------- -------------------
ZWL ZWL ZWL ZWL
------------------------- ------------------- ------------------- ------------------- -------------------
Restated
------------------------- ------------------- ------------------- ------------------- -------------------
d.1 Earnings
------------------------- ------------------- ------------------- ------------------- -------------------
Profit for the 1 813 527
year 840 990 416 73 110 389 506 285 903 812
------------------------------- ------------------- ------------------- ------------------- -------------------
1 791 390
Headline earnings 832 412 839 68 122 659 811 284 356 607
------------------------------- ------------------- ------------------- ------------------- -------------------
d.2 Number of shares
------------------------- ------------------- ------------------- ------------------- -------------------
Weighted average
shares in issue 16 506 050 16 506 050 16 506 050 16 506 050
------------------------------- ------------------- ------------------- ------------------- -------------------
d.3 Headline earnings
---------------------------------------------- ------------------- ------------------- -------------------
Profit for the 1 813 527
period 840 990 416 73 110 389 506 285 903 812
------------------------------- ------------------- ------------------- -------------------
Add/(deduct) non-recurring
items
---------------------------------------------- ------------------- ------------------- -------------------
Unquoted investments
fair value gains (3 645 885) (4 097 075) (9 265 541) (1 499 630)
------------------------------- ------------------- ------------------- -------------------
Profit on disposal
of property and
equipment (7 881 999) - (7 091 399) -
------------------------------- ------------------- ------------------- ------------------- -------------------
Loss/(profit) on
disposal of investment
properties 2 198 385 (2 620 407) (10 867 431) (584 149)
------------------------------- ------------------- ------------------- ------------------- -------------------
751 922 1 729 752 5 087 676 536 574
Tax thereon ----------------- ----------------- ----------------- -----------------
------------------------------- ------------------- ------------------- ------------------- -------------------
Headline earnings 832 412 839 68 122 659 1 791 390 284 356 607
=========== =========== 811 ===========
===========
------------------------- ------------------- ------------------- ------------------- -------------------
d.4 Earnings per share (ZWL cents)
---------------------------------------------- ------------------- ------------------- -------------------
Basic and diluted 5 095.04 442.93 10 987.05 1 732.12
------------------------------- ------------------- ------------------- -------------------
Headline 5 043.08 412.71 10 852.93 1 722.74
------------------------------- ------------------- ------------------- ------------------- -------------------
e. SHARE CAPITAL
e.1 Authorised
The authorised ordinary share capital at 31 December 2020 is at
the historical cost figure of ZWL25 000 (2019 - ZWL25 000)
comprising 25 million ordinary shares of ZWL0.001 each.
e.2 Issued and fully paid
The issued share capital at 31 December 2020 is at the inflation
adjusted figure of ZWL726 287 (2019 restated - ZWL726 287) and
historical cost of ZWL16 506 (2019 - 16 506) comprising 16 506 050
(2019 - 16 506 050) ordinary shares of ZWL0.001 each in historical
cost terms.
f. CASH AND CASH EQUIVALENTS
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
--------------------- --------------------- --------------------- --------------------
2020 2019 2020 2019
--------------------- --------------------- --------------------- --------------------
ZWL ZWL ZWL ZWL
--------------------- --------------------- --------------------- --------------------
Restated
--------------------- --------------------- --------------------- --------------------
Balances with the Central 1 197 870
Bank* 416 178 289 374 416 178 289 267 032 753
--------------------- --------------------- --------------------- --------------------
Current, nostro accounts 1 394 496 1 394 496
and cash 343 718 678 470 343 160 209 897
--------------------- --------------------- --------------------- --------------------
Interbank placements
(see below) 155 000 000 293 823 543 155 000 000 65 500 000
--------------------- --------------------- --------------------- --------------------
Expected Credit loss (1 037 392) (1 966 523) (1 037 392) (438 383)
allowance (Stage 1) ------------------ ------------------ ------------------ -----------------
--------------------- --------------------- --------------------- --------------------
1 964 637 2 208 405 1 964 637 492 304 267
240 864 240 =========
========== ========== ==========
--------------------- --------------------- --------------------- --------------------
*Nostro accounts are foreign domiciled bank accounts operated by
the Bank for the facilitation of offshore transactions on behalf of
clients.
Balances with the Central Bank, other banks and cash are used to
facilitate customer and the Bank's transactions which include
payments and cash withdrawals.
g. INVESTMENT PROPERTIES
Inflation adjusted Historical Cost
31 December 31 December 31 December 31 December
------------------ ------------------ ------------------ ----------------
2020 2019 2020 2019
------------------ ------------------ ------------------ ----------------
ZWL ZWL ZWL ZWL
------------------ ------------------ ------------------ ----------------
Restated
------------------ ------------------ ------------------ ----------------
1 031 154
At 1 January 580 583 765 312 229 867 982 20 950 606
------------------ ------------------ ------------------ ----------------
Additions 411 275 642 8 698 276 245 405 846 351 515
------------------ ------------------ ------------------ ----------------
Disposals (17 580 325) (23 795 535) (4 514 509) (5 304 570)
------------------ ------------------ ------------------ ----------------
1 182 737
Fair value gains 228 646 579 419 983 776 157 194 387 322
------------------ ------------------ ------------------ ----------------
Reclassification from
non-current assets
held for sale - 807 453 - 180 000
------------------ ------------------ ------------------ ----------------
Translation gain on
change in functional
currency - 41 695 297 - 19 303 109
------------------ ------------------ ------------------ ----------------
----------------- ----------------- ----------------- ---------------
At 31 December 2020 1 653 496 1 031 154 1 653 496 229 867
476 579 476 982
========== ========== ========== =========
------------------ ------------------ ------------------ ----------------
Investment properties comprise commercial properties and
residential properties that are leased out to third parties and
land held for future development. No properties were
encumbered.
Rental income amounting to ZWL7 610 897 (2019 - ZWL5 745 809)
was received and no operating expenses were incurred on the leased
investment properties in the current year due to the net leasing
arrangement on the properties.
The Bank has no restrictions on the realisability of its
investment properties and no contractual obligations to purchase,
construct or develop the investment properties or for repairs,
maintenance and enhancements.
Measurement of fair value
Fair value hierarchy
The fair value of the Bank's investment properties as at 31
December 2020 has been arrived at on the basis of valuations
carried out by independent professional valuers, PMA Real Estate
(Private) Limited. The valuation which conforms to International
Valuation Standards, was in terms of the policy as set out in the
accounting policies section and was derived with reference to
market information close to the date of the valuation.
Level 3
The fair value for investment properties of ZWL1 653 496 476
(2019 - restated ZWL1 031 154 580) has been categorised under level
3 in the fair value hierarchy based on the inputs used for the
valuation technique described below.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of investment properties, as well as the
significant unobservable inputs used.
Valuation Significant unobservable inter-relationship between
technique inputs key unobservable inputs
and fair value measurement
The The estimated fair value
investment * Weighted average expected market rental growth (5%); would increase /(decrease)
method if:
Discounted * expected market rental growth were higher/ (lower);
cash flows * Void period (average 3 months after the end of each
was used to lease);
value all * void periods were shorter/(longer);
income
producing * Occupancy rate (55%); and
properties. * the occupancy rates were higher /(lower); and
The direct * Average market yield of 10%.
comparison * the risk adjusted discount rates were lower/
method was (higher).
applied on * Marketability restrictions for level 3 items due to
all underlying contractual agreements with third parties
residential .
properties.
----------------------------------------------------------- ----------------------------------------------------------
Below is an indication of the changes in fair values following
change to the key unobservable limits:
Changes in fair value following changes in:
Expected market Occupancy rates Risk adjusted
rental growth discount rates
---------------- ---------------- ----------------
+5% 82 674 824 177 364 674 217 959 661
---------------- ---------------- ----------------
+3% 49 604 894 106 418 804 130 775 796
---------------- ---------------- ----------------
+1% 16 534 965 35 472 935 43 591 932
---------------- ---------------- ----------------
-1% - 16 534 965 (35 472 935) (43 591 932)
---------------- ---------------- ----------------
-3% - 49 604 894 (106 418 804) (130 775 796)
---------------- ---------------- ----------------
-5% - 82 674 824 (177 364 674) (217 959 661)
---------------- ---------------- ----------------
Below is an indication of the sensitivity analysis at different
void periods.
Void periods Change in fair value
1 month 444 365 259
---------------------
2 months 253 650 555
---------------------
4 months (127 778 851)
---------------------
h. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These financial statements are the responsibility of the
directors. This responsibility includes the setting up of internal
controls and risk management processes, which are monitored
independently. The information contained in these financial
statements has been prepared on the going concern basis and is in
accordance with the provisions of the Companies and Other Business
Entities Act (Chapter 24:31) of Zimbabwe, the Banking Act (Chapter
24:20) of Zimbabwe and International Financial Reporting
Standards.
2. CORPORATE GOVERNANCE
The Bank adheres to principles of corporate governance derived
from the National Code on Corporate Governance Zimbabwe, King IV
Report, the United Kingdom Combined Code and Reserve Bank of
Zimbabwe corporate governance guidelines. The Bank is cognisant of
its duty to conduct business with due care and in good faith in
order to safeguard all stakeholders' interests.
Board and Director evaluations are carried out an annual basis,
wherein the effectiveness of the Board is reviewed, including its
gender and skills mix. Furthermore, the independence of Independent
Non-Executive Directors is reviewed on an annual basis.
The Bank has in place an Ethics Charter ("Code of Ethics") that
all Board and staff members are required to adhere to. Also the
Bank adheres to its Environmental and Social Risk Management
Framework, wherein its main objectives are to:
-- Identify and assess environmental and social risks and
opportunities associated with a Client's activities and its sphere
of influence;
-- Promote improved social and environmental performance of a Client's companies; and
-- Avoid, or where avoidance is not possible, minimize,
mitigate, or compensate for adverse impacts on workers, affected
communities, and the environment.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and
expertise on the Board. Non-executive directors are of such calibre
as to provide independence to the Board. The Chairman of the Board
is an independent non-executive director. The Board is supported by
mandatory committees in executing its responsibilities. The Board
meets at least quarterly to assess risk, review performance and
provide guidance to management on both operational and policy
issues.
The Board conducts an annual peer based evaluation on the
effectiveness of its activities. The process involves the members
evaluating each other collectively as a board and individually as
members. The evaluation, as prescribed by the RBZ, takes into
account the structure of the board, effectiveness of committees,
strategic leadership, corporate social responsibility, attendance
and participation of members and weaknesses noted. Remedial plans
are invoked to address identified weaknesses with a view to
continually improve the performance and effectiveness of the Board
and its members.
3.1 Directors' attendance (NMB Bank Limited Board is the same as
the NMBZ Holdings Limited Board)
Human
Asset and Resources,
Liability Remuneration Head IT &
Management Loans and Office Digital
Board of Audit Risk Committee Review Nominations Credit Project Banking
Directors Committee Management (ALCO) Committee Committee Committee Sub-Committee Committee
& Finance
Committee
Mr. B. A.
Chikwanha 5 5 1 1 4 4 4 4 3 3
Mr. B.
Ndachena (E) 5 5 4 4 9 9
Mr. B. P.
Washaya (E) 5 5 4 4 4 4 4 4 3 3
Ms. S.
Chitehwe 5 5 4 4 4 4 4 4 9 9 3 3
Mr. J.
Tichelaar 5 5 4 4 4 3 4 4 3 3
Mr. J. de la
Fargue 5 5 4 3 4 3 6 6 4 4 9 9
Ms. J.
Maguranyanga 5 4 4 4 3 3 4 4 6 6
Mr. C.
Chikaura 5 5 4 4 4 4 4 4 6 6 4 4 9 8
Ms. C. Glover 5 5 4 4 4 4 4 4 3 3
Mr. G.
Taputaira 5 5 4 4 4 4 4 4 3 3
KEY
Meetings planned
(E) Executive.
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Board has established the Board Asset and Liability
Management Committee (ALCO) and the Board Risk and Compliance
Committee, which are responsible for defining the Group's risk
universe, developing policies and monitoring implementation. The
Board also has the Board Credit Committee (BCC) which is
responsible for sanctioning credits and the Board Loans Review
Committee (LRC), which is responsible for monitoring asset quality
and adherence to the credit risk management policy.
Risk management is linked logically from the level of individual
transactions to the Group level. Risk management activities broadly
take place simultaneously at the following different hierarchy
levels:
a) Strategic Level: This involves risk management functions
performed by senior management and the board of directors. It
includes the definition of risk, ascertaining the Group's risk
appetite, formulating strategy and policy for managing risk and
establishes adequate systems and controls to ensure overall risk
remains within acceptable levels and is adequately compensated.
b) Macro Level: It encompasses risk management within a business
area or across business lines. These risk management functions are
performed by middle management.
c) Micro Level: This involves "On-the-line" risk management
where risks are actually created. These are the risk management
activities performed by individuals who assume risk on behalf of
the organisation such as Treasury Front Office, Corporate Banking,
Retail banking etc. The risk management in these areas is confined
to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing
pillars, namely:
a) adequate board and senior management oversight;
b) adequate strategy, policies, procedures and limits;
c) adequate risk identification, measurement, monitoring and information systems; and
d) comprehensive internal controls and independent reviews.
4.1 Credit risk
Credit risk is the risk that a financial contract will not be
honoured according to the original set of terms. The risk arises
when borrowers or counterparties to a financial instrument fail to
meet their contractual obligations. The Group's general credit
strategies centre on sound credit granting process, diligent credit
monitoring and strong loan collection and recovery. There is a
separation between loan collection and recovery. There is a
separation between loan granting and credit monitoring to ensure
independency and effective management of the loan portfolio. The
Board has put in place sanctioning committees with specific credit
approval limits. The Credit Management department does the initial
review of all applications before recommending them to the
Executive Credit Committee and finally the Board Credit Committee
depending on the loan amount. The Group has in place a Board Loans
Review Committee responsible for reviewing the quality of the loan
book and adequacy of loan loss provisions.
The Group has an automated credit processes from loan
origination, appraisal, monitoring and collections. The system has
a robust loan monitoring and reporting module which is critical in
managing credit risk. In view of the group's move into the mass
market, retail credit has become a key area of focus. The group has
put in place robust personal loan monitoring systems and structures
to mitigate retail loan delinquencies. This includes a rigorous
scheme assessment and a dedicated pre-delinquency team and a
separate recoveries team.
Credit Management
-- Responsible for evaluating & approving credit proposals from the business units.
-- Together with business units, has primary responsibility on
the quality of the loan book.
-- Reviewing credit policy for approval by the Board Credit Committee.
-- Reviewing business unit level credit portfolios to ascertain
changes in the credit quality of individual c ustomers or other
counterparties as well as the overall portfolio and detect unusual
developments.
-- Approve initial customer internal credit grades or recommend
to the Credit Committees for approval.
-- Setting the credit risk appetite parameters.
-- Ensure the Group adheres to limits, mandates and its credit policy.
-- Ensure adherence to facility covenants and conditions of
sanction e.g. annual audits, gearing levels, management
accounts.
-- Manage trends in asset and portfolio composition, quality and
growth and non-performing loans.
-- Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits.
Credit Monitoring and Financial Modelling
-- Independent credit risk management.
-- Independent on-going monitoring of individual credit and portfolios.
-- Triggers remedial actions to protect the interests of the
Group, if appropriate (e.g. in relation to deteriorated
credits).
-- Monitors the on-going development and enhancement of credit
risk management across the Group.
-- Reviews the Internal Credit Rating System.
-- On-going championing of the Basel II methodologies across the Group.
-- Ensures consistency in the rating processes and performs
independent review of credit grades to ensure they conform to the
rating standards.
-- Confirm the appropriateness of the credit risk strategy and
policy or recommends necessary revisions in response to
changes/trends identified.
Credit Administration
-- Prepares and keeps custody of all facility letters.
-- Security registration.
-- Safe custody of security documents.
-- Ensures all conditions of sanction are fulfilled before
allowing drawdown or limit marking.
-- Review of credit files for documentation compliance e.g. call
reports, management accounts.
Recoveries
The recoveries unit is responsible for all collections and
ensures that the Group maximises recoveries from Non-Performing
Loans (NPLs) and loans and advances written off.
4.2 Market risk
This is the exposure of the Group's on and off balance sheet
positions to adverse movement in market
prices resulting in a loss in earnings and capital. The market
prices will range from money market
(interest rate risk), foreign exchange and equity markets in
which the bank operates. The Group has in place a Management Asset
and Liability Committee (ALCO) which monitors market risk and
recommends the appropriate levels to which the Group should be
exposed at any time. Net Interest
Margin is the primary measure of interest rate risk, supported
by periodic stress tests to assess the
Group's ability to withstand stressed market conditions. On
foreign exchange risk, the bank monitors
currency mismatches and make adjustments depending on exchange
rate movement forecast. The
mismatches per currency are contained within 5% of the Group's
capital position.
Management ALCO meets on a monthly basis and operates within the
prudential guidelines and policies established by the Board ALCO.
The Board ALCO is responsible for setting exposure thresholds and
limits, and meets on a quarterly basis.
4.3 Liquidity risk
Liquidity risk is the risk of financial loss arising from the
inability of the Group to fund asset increases or meet obligations
as they fall due without incurring unacceptable costs or losses.
The Group identifies this risk through maturity profiling of assets
and liabilities and assessment of expected cash flows and the
availability of collateral which could be used if additional
funding is required.
The daily liquidity position is monitored and regular liquidity
stress testing is conducted under a variety of scenarios covering
both normal and more severe market conditions. All liquidity
policies and procedures are subject to review and approval by the
Board ALCO.
The key measure used by the bank for managing liquidity risk is
the ratio of net liquid assets to deposits to customers. The Group
also actively monitors its loans to deposit ratio against a set
threshold in a bid to monitor and limit funding risk. The group
monitors funding concentration risk by reviewing the ratio of top
20 depositors to the total funding. Funding mix is also monitored
by monitoring the contribution of wholesale and demand deposits to
the total funding for the bank. Liquidity risk is monitored through
a daily liquidity reports produced by the Risk Management
department. This is augmented by a monthly management ALCO and a
quarterly board ALCO meetings.
4.4 Operational risk
This risk is inherent in all business activities and is the risk
of loss arising from inadequate or failed
internal processes, people, systems or from external events. The
Group utilises monthly Key Risk Indicators to monitor operational
risk in all units. Further to this, the Group has an elaborate
Operational Loss reporting system in which all incidents with a
material impact on the well-being of the Group are reported to risk
management. The risk department conducts periodic risk assessments
on all the units within the Group aimed at identifying the top
risks and ways to minimise their impact. There is a Board Risk and
Compliance Committee whose function is to ensure that this risk is
minimised. The Risk Committee with the assistance of the internal
audit function and the Risk Management department assesses the
adequacy of the internal controls and makes the necessary
recommendations to the Board.
4.5 Legal and compliance risk
Legal risk is the risk from uncertainty due to legal actions or
uncertainty in the applicability or interpretation of contracts,
laws or regulations. Legal risk may entail such issues as contract
formation, capacity and contract frustration. Compliance risk is
the risk arising from non - compliance with laws and regulations.
To manage this risk, permanent relationships are maintained with
firms of legal practitioners and access to legal advice is readily
available to all departments. The Group has an independent
compliance function which is responsible for identifying and
monitoring all compliance issues and ensures the Group complies
with all regulatory and statutory requirements.
4.6 Reputational risk
Reputation risk is the risk of loss of business as a result of
negative publicity or negative perceptions
by the market with regards to the way the Group conducts its
business. To manage this risk, the Group
strictly monitors customers' complaints, continuously train
staff at all levels, conducts market surveys
and periodic reviews of business practices through its Internal
Audit department. The directors are
satisfied with the risk management processes in the Group as
these have contributed to the minimisation
of losses arising from risky exposures.
4.7 Strategic risk
This refers to current and prospective impact on a Group's
earnings and capital arising from adverse business decisions or
implementing strategies that are not consistent with the internal
and external environment. To manage this risk, the Group always has
a strategic plan that is adopted by the Board of Directors.
Further, attainment of strategic objectives by the various
departments is monitored periodically at management level.
4.8 Environmental, Social & Governance (ESG) Risk
Environment, Social and Governance (ESG) or sustainability risk
is the consideration of non-financial risks arising from the
environment (flora and fauna) as well as societal issues. The Group
is not only concerned about making profits, but is also keen on
assessing the impact it has on the planet and the people it
interacts with. There is a growing number of frameworks and
standards aimed at addressing global concerns on sustainability.
Global risk reports show that environmental and societal risks have
overtaken economic and geopolitical risks in terms of both
likelihood and impact.
To manage this risk, during the reporting period, the Bank
appointed an ESG risk manager within the Risk Department. This
function is responsible for ESG policy implementation,
coordination, reviews and reporting. The Group commits to
responsible financing through abiding to its Exclusion List and
continues to enhance its ESG policies, processes and procedures as
well as to train staff on sustainability issues. The Group conducts
risk reviews to identify and measure sustainability risks and in
the process implement relevant and adequate controls around these
risks.
4.9 Risk Ratings
4.9.1 Reserve Bank of Zimbabwe Ratings
The Reserve Bank of Zimbabwe conducted an onsite inspection on
the Group's banking subsidiary on 24 November 2016. Below are the
final ratings from the onsite examination.
4.9.1.1 CAMELS* Ratings
Latest RBS** Previous RBS Previous RBS
CAMELS Component Ratings Ratings Ratings
24/11/2016 30/06/2013 31/01/2008
C apital Adequacy 2 2 4
A sset Quality 3 4 2
M anagement 3 3 3
E arnings 2 2 3
L iquidity 3 2 3
S ensitivity to
Market Risk 2 2 3
Composite Rating 3 3 3
*CAMELS is an acronym for Capital Adequacy, Asset quality,
Management, Earnings, Liquidity and Sensitivity to Market Risk.
CAMELS rating system uses a rating scale of 1-5, where '1' is
Strong, '2' is Satisfactory, '3' is Fair, '4' is Weak and '5' is
Critical.
**RBS stands for Risk-Based Supervision.
4.9.1.2 Summary RAS ratings
Latest RAS*** Previous RAS Previous
RAS Component Ratings Ratings RAS Ratings
24/11/2016 30/06/2013 31/01/2008
Overall Inherent Risk High Moderate Moderate
------------
Overall Risk Management Acceptable Acceptable Acceptable
Systems
------------
Overall Composite Risk Moderate Moderate Moderate
------------
Direction of Overall Composite Stable Stable Stable
Risk
------------
*** RAS stands for Risk Assessment System.
4.9.1.3 Summary risk matrix - 24 November 2016 on - site
examination
Level of Inherent Adequacy of Overall Direction
Type of Risk Risk Risk Management Composite of Overall
Systems Risk Composite
Risk
Credit High Acceptable High Stable
Liquidity High Acceptable High Stable
Interest Rate Moderate Acceptable Moderate Stable
Foreign Exchange Low Acceptable Low Stable
Strategic Risk Moderate Acceptable Moderate Stable
Operational Risk Moderate Acceptable Moderate Stable
Legal & Compliance Moderate Acceptable Moderate Stable
Reputation High Acceptable Moderate Stable
Overall Moderate Acceptable Moderate Stable
KEY
Level of Inherent Risk
Low - reflects a lower than average probability of an adverse
impact on a banking institution's capital and earnings. Losses in a
functional area with low inherent risk would have little negative
impact on the banking institution's overall financial
condition.
Moderate - could reasonably be expected to result in a loss
which could be absorbed by a banking institution in the normal
course of business.
High - reflects a higher than average probability of potential
loss. High inherent risk could reasonably be expected to result in
a significant and harmful loss to the banking institution.
Adequacy of Risk Management Systems
Weak - risk management systems are inadequate or inappropriate
given the size, complexity and risk profile of the banking
institution. Institution's risk management systems are lacking in
important ways and therefore a cause of more than normal
supervisory attention. The internal control systems will be lacking
in important aspects particularly as indicated by continued control
exceptions or by the failure to adhere to written policies and
procedures.
Acceptable - management of risk is largely effective but lacking
to some modest degree. While the institution might be having some
minor risk management weaknesses, these have been recognised and
are being addressed. Management information systems are generally
adequate.
Strong - management effectively identifies and controls all
types of risk posed by the relevant functional areas or per
inherent risk. The board and senior management are active
participants in managing risk and ensure appropriate policies and
limits are put in place. The policies comprehensively define the
bank's risk tolerance, responsibilities and accountabilities are
effectively communicated.
Overall Composite Risk
Low - would be assigned to low inherent risk areas. Moderate
risk areas may be assigned a low composite risk where internal
controls and risk management systems are strong and effectively
mitigate much of the risk.
Moderate - risk management systems appropriately mitigates
inherent risk. For a given low risk area, significant weaknesses in
the risk management systems may result in a moderate composite risk
assessment.
On the other hand, a strong risk management system may reduce
the risk so that any potential financial loss from the activity
would have only a moderate negative impact on the financial
condition of the organisation.
High - risk management systems do not significantly mitigate the
high inherent risk. Thus, the activity could potentially result in
a financial loss that would have a significant impact on the bank's
overall condition.
Direction of Overall Composite Risk
Increasing - based on the current information, risk is expected
to increase in the next 12 months.
Decreasing - based on current information, risk is expected to
decrease in the next 12 months.
Stable - based on the current information, risk is expected to
be stable in the next 12 months.
4.9.2 External Credit Ratings
The external credit ratings were given by Global Credit Rating
(GCR), a credit rating agency accredited with the Reserve Bank of
Zimbabwe.
Security class 2020 2019
Long term - BB-
The current rating which was due to expire in August 2020 was
withdrawn by GCR on 23 June 2020 following the Bank's waiver of
external ratings.
The Bank waived the 2020/2021 external ratings in line with a
general dispensation extended by the Reserve Bank of Zimbabwe due
to the COVID-19 pandemic.
4.10 Regulatory Compliance
There was no regulatory breach resulting in penalties during the
period under review. The Bank is committed to comply with and
adhere to all regulatory requirements.
5. CAPITAL MANAGEMENT
The primary objective of the Bank's capital management is to
ensure that the Bank complies with the RBZ requirements. In
implementing the current capital requirements, the RBZ requires the
Banking subsidiary to maintain a prescribed ratio of total capital
to total risk weighted assets.
Regulatory capital consists of Tier 1 capital, which comprises
share capital, share premium, retained earnings (including current
year profit), statutory reserve and other equity reserves. The
other component of regulatory capital is Tier 2 capital, which
includes subordinated term debt, revaluation reserves and portfolio
provisions.
Tier 3 capital relates to an allocation of capital to market and
operational risk.
Various limits are applied to elements of the capital base. The
core capital (Tier 1) shall comprise not less than 50% of the
capital base and the regulatory reserves and portfolio provisions
are limited to 1.25% of total risk weighted assets.
The Bank's regulatory capital position at 31 December was as
follows:
Inflation adjusted Historical Cost
2020 2019 2020 2019
-------------------- -------------------- -------------------- ------------------
ZWL ZWL ZWL ZWL
-------------------- -------------------- -------------------- ------------------
Restated
Share capital 726 287 726 287 16 506 16 506
1 287 623 1 287 623
Share premium 341 341 31 474 502 31 474 502
1 816 157 2 142 925
Retained earnings 257 975 166 841 648 329 398 472
Functional currency 287 529 426 287 529 426 11 619 648 11 619 648
translation reserve ------------------ ------------------ ----------------- ----------------
3 392 036 2 551 045 2 186 036
311 895 634 372 509 128
Less: capital allocated (192 509 (192 509
for market and operational 961) (61 484 344) 961) (13 706 269)
risk ------------------ ------------------ ------------------ ----------------
3 199 526 2 489 561 1 993 526
Tier 1 capital 350 551 673 358 802 859
Tier 2 capital (subject
to limit as per Banking 1 162 890
Regulations) 765 139 640 568 942 764 432 194 315 734
Fair valuation gains 1 067 266
on land and buildings 668 131 497 487 104 622 443 176 079 950
Subordinated debt - 1 355 410 - 294 339
Stage 1 & 2 ECL provisions
- (limited to 1,25%
of risk weighted assets) 97 008 143 80 482 732 95 623 989 17 941 445
3 964 665 3 058 504 3 156 417
Tier 1 & 2 capital 990 315 105 553 118 593
Tier 3 capital (sum
of market and operational 192 509 192 509
risk capital) 961 61 484 344 961 13 706 269
------------------ ----------------- ----------------- ---------------
Total capital base 4 157 175 3 119 988 3 348 927 566 824
951 659 066 862
=========== ========== ========== =========
Total risk weighted 7 909 196 6 438 618 7 649 919 1 435 315
assets 976 594 150 609
Tier 1 ratio 40.45% 38.67% 26.06% 25.00%
Tier 2 ratio 9.67% 8.84% 15.20% 13.54%
Tier 3 ratio 2.43% 0.95% 2.52% 0.95%
Total capital adequacy
ratio 52.56% 48.46% 43.78% 39.49%
RBZ minimum required 12.00% 12.00% 12.00% 12.00%
6. SEGMENT INFORMATION
For management purposes, the Bank is organised into five
operating segments based on products and services as follows:
Retail Banking Individual customer's deposits and consumer
overdrafts, credit card facilities and
funds transfer facilities.
Corporate Banking Loans and other credit facilities and
deposit and current accounts for corporate
and institutional customers.
Treasury Money market investment, securities trading,
accepting and discounting of instruments
and foreign currency trading.
International Banking Handles the Bank's foreign currency denominated
banking business and manages relationships
with correspondent.
Digital Banking Handles the Bank's Digital Banking products
including Card and POS Services.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss which in certain
respects is measured differently from operating profit or loss in
the financial statements. Income taxes are managed on a bank wide
basis and are not allocated to operating segments.
Interest income is reported net as management primarily relies
on net interest revenue as a performance measure, not the gross
income and expense.
Transfer prices between operating segments are on arm's length
basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or
counterparty amounted to 10% or more of the Bank's total revenue in
2020 and 2019.
The following table presents income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
Inflation adjusted
Retail Banking Corporate Treasury International Digital
Inflation Banking Banking Banking Banking Other Total
adjusted
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
For the year
ended 31
December
2020
Income
Third party 354 598 13 499 406 363 1 184 316 2 278 895
income 279 996 668 051 40 121 452 451 423 829 874
Interest and
similar
expense (10 181 079) (54 034 392) (78 777 285) - - - (142 992 756)
----------------- ----------------- ---------------- ---------------- ----------------- ----------------
--------------- 300 563 (38 655 13 499 406 363 1 184 316 2 135 903
Net operating 269 815 589 659 833) 451 423 829 118
income --------------- ---------------- ----------------- ---------------- ---------------- ----------------- ----------------
Other material
non-cash items
Impairment
losses on
financial
assets
measured at
amortised
cost (51 030 789) (71 726 425) (5 217 526) - - - (127 974 740)
Depreciation
of property (46 790
and equipment (15 053 208) (223 637) (190 094) (25 073) (6 879 288) 543) (69 161 843)
Depreciation
of right of (11 116
use assets - - - - - 446) (11 116 446)
Amortisation
of intangible (24 416
assets - - - - - 805) (24 416 805)
Segment (5 505 468 344
profit/(loss) 35 931 847 49 539 559 89 459 383 199) 59 325 022 079 697 094 694
Income tax 143 895
charge - - - - - 722 143 895 722
Revaluation of
land and
buildings, 181 026
net of tax - - - - - 875 181 026 875
--------------- ----------------- ----------------- ---------------- ---------------- ----------------- -----------------
Total 35 931 847 49 539 559 89 459 383 (5 505 59 325 022 793 266 1 022 017
comprehensive ========= ========== ========== 199) ========== 676 291
income ========== ========== ==========
for the year
As at 31
December 2020
Assets and
liabilities
Capital
expenditure
(property
and equipment
and
intangible 254 555
assets) 7 375 151 - 139 120 22 242 1 191 180 538 263 283 231
1 745 604 2 757 964 1 585 971 537 393 4 269 398 10 954 677
Total assets 620 372 421 534 58 344 865 754 566
Total 2 787 323 1 972 993 1 266 708 186 581 680 901 6 894 509
liabilities 898 786 566 982 - 525 757
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2020
6. SEGMENT INFORMATION (c ontinued)
The following table presents income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
Inflation adjusted
Retail Banking Corporate Banking Treasury Banking International Digital
Inflation Banking Banking Other Total
adjusted
ZWL ZWL ZWL ZWL ZWL ZWL ZWL
For the year
ended 31
December
2019
Income
35
Third party 817 378 406 1 945 123 3 278 415
income 362 242 474 398 189 898 158 636 488 248 384 199 691
Interest and
similar
expense (18 576 590) (88 964 312) (124 358 752) - - - (231 899 654)
----------------
35 ---------------- ----------------- ----------------
-------------- ----------------- ----------------- 817 378 406 1 945 123 3 046 516
Net operating 343 665 884 309 225 586 34 277 736 248 384 199 037
income ---------------- --------------- ----------------- ---------------- ---------------- ----------------- ----------------
Other material
non-cash
items
Impairment
losses on
financial
assets
measured at
amortised
cost 11 240 532 36 467 556 1 854 188 - - - 49 562 276
Depreciation
of property 258
and equipment 33 342 940 1 506 221 463 517 662 30 470 889 3 162 023 69 204 252
Depreciation
of right of
use assets - - - - - 13 854 548 13 854 548
Amortisation
of intangible
assets - - - - - 28 513 216 28 513 216
(9
Segment 113 335 647 (781 233
profit/(loss) 368 734 573 225 132 646 247 979 418 644) 679 338) 387 147 334
Income tax (314 036
charge - - - - - 945) (314 036 945)
Revaluation of
land and
buildings,
net of tax - - - - - 487 104 622 487 104 622
Translation
gain on
change
in functional - - - - - 287 529 426 287 529 426
currency ---------------- ----------------- ----------------- ----------------- ---------------- ------------------- ----------------
Total 368 734 573 225 132 646 247 979 418 (9 335 647 (320 636 847 744 437
comprehensive ========= ========== ========== 113 679 235) =========
income 644) ========== ===========
for the year ==========
As at 31
December 2019
Assets and
liabilities
Capital
expenditure
(property
and equipment
and
intangible 89
assets) 29 571 958 - 557 825 183 4 776 243 126 319 814 161 315 024
497
515 3 171 801 9 360 994
Total assets 1 616 070 988 2 553 307 980 1 468 283 466 926 54 015 350 069 779
172
Total 736 6 322 844
liabilities 2 580 488 865 1 826 586 605 1 172 711 701 554 - 570 320 537 262
6.1 GEOGRAPHICAL INFORMATION
The Bank operates in one geographical market, Zimbabwe.
Registered Offices
4(th) Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1(st) Street/Kwame Nkrumah Avenue Leopold Takawira Street
Harare Bulawayo
Zimbabwe Zimbabwe
Telephone +(263) (242) 759651 +263 (2922) 70169
Facsimile +(263) (242) 759648 +263 (2922) 68535
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Investor Services
PLC
1 Armagh Avenue The Pavilions
(Off Enterprise Road) Bridgewater Road
Eastlea Bristol
P O Box 11 BS99 9ZZ
Harare United Kingdom
Zimbabwe
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