The ratio reflects the level of risk that an entity is avoiding from the other borrowers on the market who might be less secure than the state. Steward tops the rankings with 72%, followed by FBC Building Society at 57% and CBZ at 52%, BancABC is fourth with 49%. Those with lower ratios include Stanbic and National Building Society (NBS) at 20%, CABS (18%), FBC (15%), Metbank (8%) and, lastly, ZB Building Society at nil.
Steward has the third-highest holdings of government paper at US$250 million. These are instruments that banks take up when lending to the state, and they can be in the form of Treasury Bills or bonds. They constitute a category of loan that is just classified separately on the financial statements. Their yields are not usually that high owing to the stability or the secureness of the borrower or guarantor. CBZ is the biggest lender to the government with almost US$1 billion worth of government securities, while Standard Chartered comes in second with US$271 million.
Unsurprisingly, Steward has one of the lowest loan-to-deposit ratios in the sector. Building societies are expected to rank highly in this regard as their core business is mainly issuing of mortgage loans.
FBC Building Society came first with a ratio of 82% followed by NBS (70%) and CABS at 64% respectively.
Banks such as Stanbic (27%), Barclays (now known as First capital) (25%), StanChart (22%) and Steward bank (10%) indicate a huge cautious approach to lending, given their significant deposits.
Steward accounts for less than 1% of the financial sector's US$3,4 billion loans in issue as at year end.
Steward, a wholly owned subsidiary of Econet Wireless, ranked fourth overall in the survey which looked at all the 18 banks operating in the country.
The bank is among entities with the highest non-performing loans (NPLs).
This ratio simply indicates the percentage of loans that are not performing and a smaller percentage is ideal and shows a possible good credit vetting of borrowers by the entity. It basically reflects the quality of a bank's loan book.
Agribank has the biggest ratio of NPLs to loans at 14%. Other high ratios are with BancABC (11%), while CBZ, Steward, and ZB all have 12% each. The rest have single-digit ratios and ZB Building Society has nil given the fact that it does not have NPLs.
Steward reported total net income of US$70 million which was the fifth highest in the industry.
At 90%, Steward has the second highest non-interest income-to-total net income ratio. This ratio signifies the extent to which a bank's income is reliant on non-core activity earnings. For the purposes of ranking, the lower this ratio is, the better, even though an entity might be realising more income. This type of income can be fortuitous in nature and hence cannot be relied upon to continue flowing in.
The survey also revealed that Steward has the second-highest capital adequacy ratio, which reflects the ability of the entity to absorb some of the losses that might occur without jeopardising depositors' funds. The Reserve Bank of Zimbabwe-recommended minimum ratio is 12% of the risk-weighted assets, and all banks met this requirement as at December 31, 2017. The capital of a bank consists of three categories or tiers, with tier one being the shareholders' equity and retained earnings; tier two usually consists of reserves such as revaluation, general loss and undisclosed, and tier three includes a variety of debts and is taken to support tier two; subordinated loans are a main feature in tier three capital.
The ranking in this category does not mirror the size of the entity, as evidenced by the top five banks by asset and deposit size not featuring in the top half of the ranking, save for StanChart which comes in a distant 6th with 39%.
NBS leads the pack with 101%, followed by Steward (67%), FBC Building Society (57%), ZB Building Society (55%). Mid-ranking banks in this category are Ecobank (42%), StanChart (39%), Agribank (38,57%), POSB (33%), Nedbank (31%), Barclays (28%), CBZ (27%), ZB Bank (26%), Stanbic (25%) and NMB (24%). The bottom-ranked banks in terms of capital adequacy are BancABC (21%), Metbank (20,7%), FBC 18% and, lastly CABS, with 17%.
Steward also has the second-best return-on-assets ratio after FBC Building Society. Unsurprisingly, it also has the second highest return on equity (ROE).
