An aggressive lending approach helped Stanbic Bank in Zimbabwe nearly double its after tax profit for the first six months of this year, with confidence in the banking sector improving.

Stanbic, a unit of South Africa’s Standard Bank Group, saw its profit hit $6.5 million, spurred by a strong growth in incomes.

This owes much to the banks aggressive lending approach, with the bank increasing loans from $153 million to $199 million at a time when other banks had been cautious. Though operating expenses increased by 21 percent to $21.5 million due to staff costs, total income rose $10 million to $35 million as a result of net interest income, which contributed 44 percent of the bank’s total income. Gross loans and advances to customers increased to $212 million from $161 million at the end of last year.

Despite the ongoing liquidity squeeze, this all came as deposits in the entire banking system rose from $3.1 billion to $4 billion between December and June, with confidence in the banking sector slowly being rebuilt. Yet lending rates have declined, according to Reserve Bank of Zimbabwe figures, to an average of 14.5 percent in May from 19.6 per cent in December.

In spite of his bank’s positive results, Stanbic chairman Sternford Moyo sounded a warning that the Zimbabwean economy still faced significant challenges even as the banking sector showed signs of recovery. He opined that price fluctuations on the commodities market, a top foreign currency earner for Zimbabwe, were likely to reduce earnings from exports.

“Given the over-reliance on the exportation of commodities for growth, the country’s growth trajectory will be negatively affected if commodity prices continue to plummet on the international market,” Moyo said. “It is imperative for stakeholders to appreciate that local liquidity is not adequate to fully fund national requirements and, therefore, redoubled efforts should be channelled towards mobilising external lines of credit and improving the country’s investment climate to unlock positive net investment into key sectors of the economy.”