24 June 2014

Zimbabwe: Bank Loans to Private Sector Marginally Up

LOANS to the private sector marginally rose 0,7 percent in April, signalling constrained lending by local banks on the back of the prevailing liquidity challenges. About $3,59 billion was advanced to the private sector, up from $3,56 billion during the same period last year, according to the latest figures from the Reserve Bank of Zimbabwe.

On a month-on-month basis, credit to the private sector, however, declined by 0,43 percent in April 2014, from $3,61 billion recorded in March, the central bank said.

"The slowdown reflects constrained lending by banks on the back of liquidity challenges, as well as risk aversion in the wake of increasing non-performing loans," said the RBZ.

Loans and advances were largely in respect of agriculture (19,3 percent), distribution (18,5 percent), households (18,2 percent), services (16 percent), manufacturing (14,7 percent), mining (6,6 percent) and construction (1,6 percent).

The RBZ said credit to the private sector continues to be short-term in nature and mainly utilised for recurrent expenditures. About 45 percent of the loans were spend on inventory while only 7,5 percent was spend on capital expenditure, said the central bank.

Annual broad money growth slowed down by 1,13 percentage points from 7,78 percent in March 2014 to 6,65 percent in April. The growth represents a marginal recovery from an average of 1,44 percent recorded in the last quarter of last year.

On a month-on-month basis, broad money increased by $136,5 million (3,33 percent) in April, compared to $72,2 million (1,8 percent) in March.

Largely contributing to the growth in money supply, were expansions of $171 million in over 30-day deposits, $107,2 million in under 30-day deposits, $100,9 million in demand deposits and $92,7 million in saving deposits. Partially offsetting these increases was a decline of $115,4 million in under 30-day deposits.

"The growth in money supply continued to be partly driven by tobacco sales. As at end of April 2014, cumulative tobacco sales amounted to over $330 million, which represents significant inflows into the economy. Inflation is expected to remain subdued in the short term, on anticipated decline in food prices during the harvesting period

The value of transactions processed through the RTGS system in April 2014 increased by 3 percent to $3,4 billion from $3,3 billion in March 2014 while the volume of transactions registered a decrease of 4 percent from 192 020 to 183 626 over the same period.

The total value of card-based transactions increased by 12,75 percent to $379,42 million in April 2014, from $336,52 million in March 2014 while the value of mobile and internet- based transactions also increased by 5,07 percent, from $343,26 million in March 2014 to $360,67 million in April 2014. The value of cheque transactions decreased to $9,65 million in April 2014, from $10,4 million in March 2014.

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