POSB Records Massive Profit

Government owned, People's Own Savings Bank (POSB) said on Wednesday it had recorded a massive jump in net profit to U.S.$7,9 million for the full year ended December 2015 from U.S.$1,25 million the previous year, and declared a U.S.$2 million dividend to the shareholder.

The bank, which was once targeted for privatisation, said a $20 million capital boost by the shareholder in the last half of 2015 had helped improve its performance.During the period, the bank saw its net interest income increase to $9,5 million from $7,5 million. POSB chief executive Admore Kandlela said the bank had targeted a net profit of $4 million for the period but exceeded the target.

"Business growth in terms of effective utilisation of existing products as well as introduction of new products and delivery channels resulted in favourable bottom line," Kandlela said at the bank's second annual general meeting.

During the period, the bank recorded a 37 percent jump in revenue as its growth initiatives paid off while its loan book grew 26 percent.

POSB Records Massive Profit

Mr Kandlela said the bank was doing its best to contain non-performing loans which stood at 10.8 percent of the loan book. He said there was now increasing competition by banks for low end clients given the tough operating environment, an area that had previously been its stronghold.

"We have so far managed to retain 99,3 percent of our clients," he said.

In the period, POSB saw its asset base grow to $133,7 million from $105.2 million in the comparable period.

Finance and Economic Development Minister, Patrick Chinamasa who was present at the meeting, received the $1.98 million dividend cheque on behalf of the shareholder. He applauded the board, which was appointed last September for holding the AGM, a feat that remains a dream for most government owned institutions.

"I am happy that your financial position has improved compared to last year," he said.

Chinamasa, however, took exception of the fact that POSB was yet to recover $1,4 million which was loaned to a former director.

"Non-executive board members should not be granted loans because it compromises their effectiveness in playing their oversight role," he said.

Current board chairperson, Matilda Dzumbunu said the new board was against such practises and was making efforts to recover the money.

Going forward, she said, the bank had approved a plan to pay out 25 percent of its earnings to the shareholder.