Dear Valued Shareholders,
Greetings.
On behalf of the Board of Directors I am pleased to present the 2020 Zanaco Plc Annual Report to the March 31, 2021 Annual General Meeting (AGM).
As I was reflecting on the events of 2020 and what Zanaco achieved, I did so from home like millions of other people. The Novel Coronavirus 2019 (Covid-19) has transformed our lives, business and the country as a whole. It has also presented unprecedented medical, economic and human challenges. The implications of the Covid-19 outbreak for our clients, employees and shareholders have been profound, and will reverberate for many more years to come.
As challenging as the events of 2020 were, Zanaco was poised to weather the storm on account of a forwarding looking strategy that was approved in 2018. The strategy focused the Bank on being a digital bank and significant investment was made to prepare Zanaco to become the Top Transactional Bank by 2020. Therefore, the Bank was well positioned to tackle the challenges posed by the virus. This saw the Bank make significant strides in achieving the milestones much sooner than planned and recorded progress on all fronts. The Bank therefore delivered improved and industry leading financial results and weathered the downside effects of the COVID-19 pandemic due to having implemented a good and proactive digital strategy.
The key highlights of the year include:
Growth in Revenue: revenues grew by 51% to K2.4 billion.
Historical profit was generated: K207 million.
Accelerating Innovation: innovation has always been fundamental to Zanaco and is our way of doing business. The Bank continued to improve its innovation framework and thus its continued proactive stance and responsiveness to changing customer trends to ensure the provision of the right solutions.
Actively Managing Our Portfolio: the Bank Management remained focused on ensuring the achievement of the 2025 vision of being the Top Transaction Bank and the universal financial institution that caters for all customers.
In the midst of the challenges that 2020 presented, opportunities were identified, maximised and aligned with the strategic initiatives to achieve the 2025 ambitions. It is from these opportunities that value was created for the delivery of the excellent results that were attained at the end of 2020.
The recorded Profit After Tax (PAT) of K207 million has been the highest ever achieved in the history of the Bank. Recognising that we could have done more, we are confident we have started this decade on an extremely good note, and that the Bank is well on its way to achieving its strategic objective of being the most commercially successful, top transaction bank by 2025.
Financial Performance
The Bank’s performance continued on a strong growth trajectory. The above record PAT was mainly attributed to increased revenue generation due to the consolidation of existing business, as well as incremental value derived from new opportunities, effective cost containment and rationalisation.
The credit risk processes continued to be improved whilst carefully growing the loan book to support our esteemed clients.
The Bank remains adequately capitalised and is above the statutory requirement in both Basel I and Basel II.
Risk Management
The Bank considers risk management to be a critical aspect of the Bank’s financial and operational management so as to promote a robust risk culture that delivers consistent and sustainable results to all our stakeholders.
The main direction of the Bank is to take calculated risks, consciously and methodically, for the efficient delivery of the strategic and business objectives. This has been achieved by strong and proactive management of the material risks in order to enhance both financial and operational resilience. This continues to be done in a manner which ensures the ongoing confidence of our key stakeholders.
In an industry that faces significant disruption, we recognise that threats to our business are constantly emerging and therefore will continue to explore all available opportunities and learn from emerging challenges to effect improvements that are enduring and sustainable.
Business Resilience
Our enterprise risk management framework includes an analysis of all non-financial risks affecting the business and this has been enhanced in recent years. We have built strong systems for business resilience and are thus able to quickly adapt to and manage disruptions for business continuity, whilst safeguarding our people, customers, assets and overall brand equity.
The most significant reminder in the first quarter of 2020, was the progress made in improving our resilience to external shocks, especially relating to the Corona virus (Covid-19) outbreak. Covid-19 has challenged the business world and has had major impact on the ways of conducting business due to its destructive and distractive nature.
Consequently, this saw inevitable measures put in place to support the well-being, health and lives of our people, be they staff or customers. The Board and Management admirably responded to the duty of care towards our people, customers, stakeholders and the community at large, by ensuring the strong implementation of the approved Digital Strategy.
Furthermore, the Business Continuity Plans (BCPs) were enhanced to effectively address the threats posed by the pandemic whilst ensuring sustainability in the Bank. We further tested all systems to ensure the continued support to our esteemed customers with minimal disruption. We credibly delivered on our brand value of accessibility through our branch network and various digital channels. Thus, the Bank’s operations continued smoothly even with the significantly increased working remotely from home by the staff in compliance with the Ministry of Health preventive and safety measures.
We will continue to strongly sustain our business through the continued and effective management of risks whilst ensuring high levels of compliance with regulatory requirements in the new normal.
Executive Management Changes
I am pleased to advise that on 1st October, 2020, Mrs. Mukwandi Chibesakunda was appointed the Chief Executive Officer of Zanaco Plc. She took over from Mr. Henk G. Mulder who retired at the end of December 2020 after a very successful four-year tour of duty. The Board of Directors are proud that they have exhibited commitment to the Gender Policy in the recruitment of the first female chief executive officer in the 50 year history of the Bank. The Board has every confidence that Mukwandi, an award-winning industry giant, with over 15 years transformational leadership experience, will ensure that Zanaco continues to regain its rightful place as the market leader and becoming the Top Transaction Bank and employer of choice, that provides growing value to all its shareholders. The Board wishes Mukwandi every success in taking the Bank to greater heights.
The Board further expresses its gratitude to Mr Henk Mulder whose diligence and commitment saw the transformation of the Bank and resulted in its strong performance whilst ensuring a solid growth trajectory.
The Board further reports that Mr Lishala Situmbeko, Chief Commercial Officer, and Mr Hamish Chipungu, Chief Risk Officer, mutually separated from Zanaco as at 30th November, 2020. Lishala had led the Commercial Division and achieved key transformational milestones that included client segmentation, business development, brand repositioning and organisational re-design. In line with Zanaco’s focus on strong succession planning, Mr Chali Mwefyeni, has been appointed in an acting capacity as Chief Commercial Officer. Chali is a seasoned banker with over 15 years’ experience and has a tenacious drive to enhance organisational performance and transformation.
Under Hamish Chipungu’s leadership, the Bank had passed the first ever external quality assurance review of the internal audit function. In line with the aforementioned Succession Planning, Dillian Hamuwele has been appointed in an acting capacity as the Chief Risk Officer.
Ultimately, the intention is to assess the successful execution of these roles on both qualitative and quantitative key performance indicators of the incumbents for consideration to confirm before advertising the roles internally and externally.
Board of Directors Changes
We are pleased to advise that the Board of Directors has been strengthened with the nomination of Mrs Regina K Mulenga and Mr David Musunga as board members to take up the two vacancies that fall open on March 31, 2021 with the retirement of Director Hastings Mtine and Director Charity C Lumpa. The retiring directors will have completed their six years of duty on March 31, 2021. The appointment of the office bearers of Chairperson and Vice Chairperson shall be conducted through an election process in line with the Articles of Association and Zanaco Plc Board Charter.
Annual Board Evaluation
In accordance with best practice and in compliance with both the Zanaco Board Charter and the Bank of Zambia Corporate Governance Directives, the Board undertook its annual evaluation in the fourth quarter of 2020 to assess its continued performance. The results of the Board evaluation continue to be positive and provided input into the training needs of the Directors for continuous development. The evaluation also revealed the high level of adherence to corporate governance principles by the Zanaco Board of Directors.
Appreciation
The Board of Directors would like to thank the Management and staff for their strong commitment to Zanaco. This is clearly evident through the great results that have been delivered by the Team in what has been an extremely challenging year. I would also like to thank the Board of Directors for their unwavering support, guidance and leadership to the Management as they tirelessly worked to produce the great results we are seeing today. I also wish to appreciate the Board of Directors’ resilience and adaptability to providing leadership in a virtual environment. It has not been an easy time.
I further invite all of us to observe a moment’s silence for all the staff, customers and other stakeholders that Zanaco has lost to the ravaging effects of Covid-19. May their souls rest in eternal peace.
Farewell
This AGM marks the end of my tenure as Board Chairman of Zanaco Plc. In my time I have seen the Bank grow and be transformed inside and out. The Bank has delivered exceptional results over the years where we have seen regain its top two ranking in the market. The Bank especially posted great and historical profit in 2020 which was underpinned by the 15% growth in deposit market share and 27% in lending market share. With revenues growing at 100% and PAT at 434% over the years.
We have stood by our Gender Policy as a Board and now have 60% female representation on the executive management team whilst 38% are female Board Members.
I have closely worked with my colleagues on the Board of Directors over the past six years to ensure we have a sound plan and process in place for not only my successor, but every senior leader at the Bank who plays a critical role in Zanaco’s day-to-day activities. I leave the Board extremely satisfied and happy at the positive transformation achieved and the stellar results therefrom. We have seen top line performance grow incrementally such that Zanaco now holds the top two positions in the market as regards revenue, deposit, lending, PAT and overall improvement in the non-performing ratio from a high of 28% four years ago to 5% at the end of 2019. The NPL ratio stood at 6.3% at the end of 2020 which is still a very remarkable performance! The Bank further saw a 220%+ growth in quality client numbers in the period, making Zanaco have the largest customer base in Zambia.
In my time as Chairman, we have transformed the look and feel of the branches as part of strengthening the brand and the Retail Banking proposition, whilst further refining the customer value propositions. The Bank’s focus on delivering an enhanced customer experience has seen the continued and innovative use of technology in the products and services that are on offer.
Lastly, the Bank transformed into a Group with the formation of two subsidiaries, Digital Shared Services Limited and Zanaco Football Club Limited. These strategic initiatives are to support the successful expansion of revenue generation activities that will pull through to the attendant improvement in shareholder value. This includes the revolutionary introduction of Xpress Agency banking by Zanaco that has seen the Bank’s presence grow exponentially in the market, thus enhancing financial inclusion.
I especially wish to thank the former CEO, Henk Mulder, Mukwandi and the Executive team, for meaningfully overcoming the challenges presented by the Covid-19 preventive measures. The strong focus on delivering the digital strategy, whilst ensuring the welfare of both staff and customers, has been central to the remarkable performance that we are seeing in 2020.
I am confident that the Bank will attain its 2025 strategic ambitions and continue to be a thought leader and key player in the development of our country.
I thank you, the shareholders, for the support and confidence you gave to the Board of Directors over the years and I will forever cherish this important period of my corporate journey.
God Bless us all.
Charity Chanda Lumpa
Chairman
Zanaco 2020 Annual Report.pdf
Zanaco – Full Notice and Agenda of 2021 AGM.pdf
