Mbca Bank Annual Report For The Year Ended 31 December 2015

MBCA
BANK
ITS ALL
ABOUT
YOU
MBCA BANK LIMITED

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2015
ANNUAL REPORT
2015
MBCA BANK LIMITED

FINANCIAL STATEMENTS
31 December 2015
CONTENTS
PAGE
Directorate, Registered Office and Business Address
5 Year Financial Review and Statistical Summary
Bank Profile
Chairmans Statement
Managing Directors Report
10
Chief Finance Officers Report
14
Corporate Social Investment Report
16
Corporate Governance Report
18
Report of the Directors
24
Report of the Independent Auditors
27
Statement of Financial Position
28
Statement of Profit or Loss and Other Comprehensive Income
29
Statement of Changes in Equity
30
Statement of Cash Flows
31
Notes to the Financial Statements
32
Notice to the Shareholders
107
MBCA BANK LIMITED

31 December 2015
Directorate, Registered Office and Business Address
Directors
Zireva V W (Chairman)
Jinya C C Dr * (Managing Director)
Brits J H (Retired 31 December 2015)
Buchholz R W R
Chinamo A R
du Plessis J A
Gwanzura S
Makonese A *
Murehwa J P
Naik S Dr
Hillie M G **
*Executive
** Alternate Non - Executive Director to J A du Plessis
Company Secretary
Sithole F
Auditors
KPMG Chartered Accountants (Zimbabwe)
Lawyers
Atherstone and Cook Legal Practitioners

Scanlen and Holderness Legal Practitioners
Registered Office and Business Address

MBCA Bank Head Office
14th Floor
Old Mutual Centre
Third Street/Jason Moyo Avenue
Harare, Zimbabwe
Telephone: +263 4 701636/52
Facsimile: +263 4 708005/739084/739088
E-mail: mbcabank@mbca.co.zw
Website: www.mbca.co.zw
Jason Moyo Branch
99 Jason Moyo Avenue

Harare, Zimbabwe
Telephone: +263 4 724365/67
Facsimile: +263 4 724382
Email: retail-jasonmoyo@mbca.co.zw

Bulawayo Regional Office
Merchant Bank Chambers

74 Joshua Mqabuko Nkomo Street
Bulawayo, Zimbabwe
Telephone: +263 9 76278/86/95
Facsimile: +263 9 76274
Email: mainstreetbyo@mbca.co.zw
Mutare Branch
Windsor Msasa House

75 Herbert Chitepo
Mutare, Zimbabwe
Telephone: +263 20 61649 /61459
Facsimile: +263 20 67341
Email: retailmutare@mbca.co.zw
MBCA BANK LIMITED

31 December 2015
Directorate, Registered Office and Business Address (continued)

Southerton Branch
Leopold Takawira Branch
Belmont Branch
Zvishavane Branch
Avondale Branch
Msasa Branch
Shamrock House
30 King George Road
Avondale
Telephone: +263 4 332 540
70 Colonnade, Mutare Road

Beverly West, Msasa
Harare, Zimbabwe
Shop 3, 11 Highfield Junction House

Harare, Zimbabwe
Telephone: +263 4 774951/2/4/5
Facsimile: +263 4 780090
Email: retail-southerton@mbca.co.zw

61 Plumtree Road, Belmont

Bulawayo, Zimbabwe
Telephone: +263 9 470297/470188
Facsimile: +263 9 460189
Email: retail-belmont@mbca.co.zw
Facsimile: +263 4 332 544

Email: retail-avondale@mbca.co.zw
Kwekwe Branch
Number 28 B, Nelson Mandela Ave
Kwekwe, Zimbabwe
Telephone: +263 55 25677-80
Email: retail-kwekwe@mbca.co.zw
Ground Floor, CABS Building

Cnr Jason Moyo/Leopold Takawira,
Bulawayo, Zimbabwe
Telephone: +263 9 64141/2/7/9
Facsimile: +263 9 64318
Email: retail-l_takawira@mbca.co.zw
100 Ireland Road

Zvishavane, Zimbabwe
Telephone: +263 51 2342/3371-3
Facsimile: +263 51 2342
Email: retail-zvishavane@mbca.co.zw
Telephone: +263 4 446 124/138/228

Email: retail-msasa@mbca.co.zw
Gweru branch
55A Main Street
Gweru, Zimbabwe
Telephone: +263 54 227 603/4/5/6
Email: retail-gweru@mbca.co.zw
MBCA BANK LIMITED

31 December 2015
5 Year Financial Review and Statistical Summary

Statement of Profit or Loss and

Other Comprehensive Income
Profit before tax

Profit after tax
Total comprehensive income for the year
2015 2014 2013 2012 2011

US$ m
US$ m
US$ m
US$ m
US$ m
7.85
5.84
5.80
7.17
5.38
5.32
5.55
4.04
4.03
42.83
37.02
243.88 188.94
113.07 71.08
103.19 92.78
193.22 138.93
31.71
179.69
74.98
77.58
131.30
Statement of Financial Position
Total shareholders equity

Total assets
Cash and cash equivalents
Net loans and advances to customers
Deposits from customers
Selected performance ratios
Total equity/total assets

Capital adequacy ratio
Return on equity
Operating cost/income ratio
Non-interest income/total income
Non-interest income/total expenses
Credit loss ratio
Loans and advances/deposits from customers
Leverage ratio (equity/loans and advances)
Liquidity ratio
Number of employees
18%
25%
15%
72%
46%
65%
3.57%
53%
42%
69%
257
20%
23%
16%
72%
45%
65%
3.60%
67%
40%
62%
244
18%
23%
13%
75%
54%
72%
2.38%
59%
41%
69%
228
6.68
4.97
4.96
3.92
3.36
3.43
27.68 19.71
179.27 180.65
66.56 76.37
88.19 81.15
140.32 149.88
15%
20%
18%
69%
51%
75%
1.70%
63%
31%
53%
212
11%
15%
17%
79%
57%
72%
1.50%
54%
24%
76%
212
MBCA BANK LIMITED

31 December 2015
Bank Profile
MBCA Bank Limited (MBCA or the Bank) offers a full range of Commercial Banking products and
services, comprising Retail Banking, Wholesale Banking, Treasury Services, Business Development
and Institutional Banking. These services are offered under dedicated functional areas.
Major Shareholders
MBCA is a wholly owned subsidiary of MBCA Holdings Limited, whose shareholders directly and
indirectly, include the MBCA Employee Share Trust and the following financial services groups:
- Nedbank Group Limited
- Old Mutual Zimbabwe Limited
- NM Rothschild and Sons Limited
South Africa
Zimbabwe
United Kingdom
The Bank is ultimately a subsidiary of the Nedbank Group Limited (the Group or the Nedbank
Group).
Footprint
The Bank has ten branches; four in Harare, two in Bulawayo, one each in Mutare, Kwekwe, Gweru,
and Zvishavane. In addition, the Bank has twelve Automated Teller Machines (ATMs). These
branches and electronic delivery channels in strategic locations countrywide allow the Bank to
provide innovative financial products throughout the country.
Vision
Building Zimbabwes most admired Bank by our staff, clients, shareholders, regulators and
communities.
Our Mission
To be the leading Bank in Zimbabwe by providing focused and customised products and services
tailored to meet our clients diverse needs.
Wholesale Banking
The Wholesale Banking Division has longstanding expertise in financing Zimbabwes imports
and exports, as well as working capital requirements for the productive sectors. A variety of new
products have been developed over the years in line with the requirements of a dynamic economic
environment. The division provides the following range of products:

Inventory, debtor and order financing through acceptance credit and other short-term facilities;
Structured trade finance;
Short and medium term loan facilities, including bridging finance;
Asset based finance; and
Documentary letters of credit, documentary collections, open account payments, and provision
of guarantees.
The Wholesale Banking Division also manages the Banks principal credit risk exposures.
MBCA BANK LIMITED

31 December 2015
Bank Profile (continued)

Treasury Services
A fully-fledged Treasury Services division provides solutions to meet the short to medium term
financing, investing and hedging needs of corporates, institutional investors and individuals. The
divisions product offering includes:

Money market investments in fixed deposits;

Spot cross currency quotes;
Global markets trend advice; and
Forward exchange contracts.
Treasury also manages the Banks cash flow, monetary assets and liabilities in the context of liquidity
risk, interest rate risk, foreign currency risk and other market related risks. This is done in line with
best practices as guided by the Assets and Liabilities Committee (ALCO) framework.
Retail Banking
The divisions products and services include:

Current and savings accounts for individuals, Small to Medium Enterprises (SMEs) and
Corporates;
MBCAnet - internet banking for individuals and corporate bodies;
Paynet - electronic processing of salaries;
Domestic and foreign funds transfers;
Stop orders/debit orders;
United States of America dollars (USD) denominated local debit card;
ATM facilities and access to ZIMSWITCH point of sale terminals;
MBCAinsure - short term insurance product (underwritten by Old Mutual Insurance Limited) to
cover home, household contents, equipment and vehicle insurance;
Vehicle and Asset Financing;
Personal and SMEs loans and overdraft facilities; and
Mobile Banking.
The division is committed to continued innovation around existing products and the progressive
expansion of its product range to meet the ever changing and increasing client requirements.
Business Development and Institutional Banking
The divisions main mandate is to pursue opportunities for further growth in the Banks chosen market
segments with specific focus on new big ticket corporate client acquisitions, development of new
markets, structured trade finance, loan syndications and customised products to meet specific client
requirements. The department is also responsible for strengthening and developing the Banks
relationship with local and foreign financial institutions to arrange financial support that may be
required by the Bank for the benefit of its clients.
MBCA BANK LIMITED

31 December 2015
Chairmans Statement
The Banks capital as at 31 December 2015 was

US$42.8 million and is on target to meet the regulatory
capital level of US$100 million by 31 December 2020
subject to an improvement in the environment.
V W Zireva
Chairman
Selected
Selected Performance
Indicators
Return on equity
Liquidity ratio
Shareholders equity
Capital adequacy ratio
Operating cost/Income ratio
Regulatory
2015
2014
limit Movement
15%
69%
US$42.8m
25%
72%
16%
62%
US$37.0m
23%
72%
n/a
30%
US$25m
12%
n/a
Economic overview
Zimbabwes economy grew by 1.5% in 2015 below the original forecast of 2.7%. The growth prospects
for the economy were adversely affected by low commodity prices and the decline in industrial
capacity utilization from 36.5% recorded in 2014 to 34.3%. This was mainly due to low domestic
demand, antiquated machinery, power cuts and competition from imports. Zimbabwes inflation
remained negative throughout the year, with year on year inflation at -2.5% as at 31 December 2015
down from -0.8% in the prior year.
Developments in the banking sector
In spite of the economic challenges that affected the different sectors of the economy, the year under
review witnessed stability in Zimbabwes banking sector with an 11.2% growth in deposits being
recorded. According to the Monetary Policy Statement issued by the Reserve Bank of Zimbabwe in
February 2016, total banking sector deposits closed the year at US$5.6 billion from US$4.4 billion
in 2014 whilst loans and advances amounted to US$3.9 billion, resulting in a loan to deposit ratio of
68.8%. Successful implementation of financial inclusion measures should see a growing number of
the unbanked population coming onto mainstream banking.
MBCA BANK LIMITED

31 December 2015
Chairmans Statement (continued)

Developments in the banking sector (continued)
The ratio of Non-Performing Loans (NPLs) in the banking sector declined from 16.0% as at
31 December 2014 to 10.9% as at 31 December 2015. This improvement was mainly due to an
increase in the take up of NPLs from banks by Zimbabwe Asset Management Company (ZAMCO) from
US$65 million in 2014 to US$95 million as at 31 December 2015 and the tightening in the governance
around credit policies. The introduction of the Credit Reference Bureau and amendments to the Banking
Act will further mitigate against future occurrences of indiscipline by both borrowers and banks.
Capitalisation
The Banks capital as at 31 December 2015 was US$42.8 million and is on target to meet the regulatory
capital level of US$100 million by 31 December 2020 subject to an improvement in the environment.
In addition to the lending on the MBCA balance sheet, the Bank continues to benefit from the major
shareholders technical support as well as a US$75 million line of credit to provide commodity finance
to Zimbabwe companies.
Indigenisation
The Bank is in the process of implementing the approved Indigenisation Plan.
Outlook
Zimbabwes re-engagement with the international financial institutions and successful

implementation of structural reforms will unlock opportunities for the country and enable medium
to long term growth. Economic growth of 2.7% is forecast for 2016. The outlook, however, is clouded
by increased power shortages, reduced agriculture earnings due to erratic weather conditions, limited
irrigation facilities and low mining earnings due to weak commodity prices. This is exacerbated
by increased competition from imports given local infrastructure constraints and unfavourable
exchange rate dynamics.
Appreciation
Mr. JH Brits retired from the Board as non executive director with effect from 31 December 2015. The
Board appreciates the valuable contribution received from Mr. Brits during his tenure and wishes him
well in his future plans.
I take this opportunity to express my appreciation to the Board for their untiring commitment during
the year under review. The Board continues to be grateful for the wise guidance of the Regulators and
support from management and staff in meeting the expectations of our customers. I also take this
opportunity to thank our customers without whom the Banks results would not have been achieved.
The Bank looks forward to their continued support in the years ahead.
V W Zireva
Chairman
23 February 2016
MBCA BANK LIMITED

31 December 2015
Managing Directors Report

The growth in cash and cash
equivalents was to ensure that the
bank was adequately resourced to
meet the growing requirements for
cash by our customers at year end.
Total deposits grew significantly by
39% to US$193.223 million from
US$138.930 million in line with the
asset growth of the Bank.
Dr Charity C Jinya
Managing Director
Performance overview
Profit after tax grew by 8% from US$5.380 million in 2014 to US$5.835 million in 2015, largely
emanating from net interest income which increased by 10% to US$14.753 million. This was as
a result of the growth in the loan book which increased by 11%. Non-interest revenue decreased
by 7% to US$12.792 million primarily due to reduced transactional business from companies and
individuals who were adversely impacted by low economic activity. The Bank introduced the Entry
Level Banking (ELB) product as part of its financial inclusion strategy. The product is expected to
contribute to the growth of non-interest revenue in future as the economy improves.
In 2015, the Balance Sheet grew significantly to US$243.884 million from US$188.936 million
primarily due to growth in the loan book and Treasury Bills (TBs) which grew by 11% and 32%
respectively. The bulk of the TBs were AfreximBank Trade Debt Backed securities. Loans and advances
to customers constituted 42% of the total balance sheet, compared to 49% in 2014 while cash and
cash equivalents increased to 46% from 38% in 2014. The growth in cash and cash equivalents was
to ensure that the bank was adequately resourced to meet the growing requirements for cash by
our customers at year end. Total deposits grew significantly by 39% to US$193.223 million from
US$138.930 million in line with the asset growth of the Bank.
Client focus
The Bank continued to pursue its strategic focus of being a banker to all while ensuring that it
meets the specific needs of customers in their targeted market segments. In order to be accessible
to the wider market, the Bank opened new branches in Msasa and Gweru in November 2015. More
distribution channels will be opened in 2016 and beyond paying due regard to the benefits of
automation to improve market reach and in line with market developments. New products were
rolled out during the year namely: home loans to individuals and ELB; the product targeted for the
banking needs of individuals in the market who earn US$300 per month and below.
10
MBCA BANK LIMITED

31 December 2015
Managing Directors Report (continued)

Client focus (continued)
A customer satisfaction survey was carried out in December 2015. The customer satisfaction ratio
improved by 9 percentage points to 88% from the 2014 position. The survey also provided us with key
insights on areas that require improvement in 2016 and beyond.
Human resources
The Bank continues to focus on investing in leadership and management development programmes in
order to create a sustainable leadership pipeline. Front facing staff undertook technical and customer
orientated development programmes to enhance service delivery to all our clients. A cordial industrial
relations climate was maintained through continuous engagement with staff at all levels of the Bank.
Colleagues were kept updated on pertinent developments in the Bank through road shows, news
bulletins, workshops and small group meetings
Divisional performance
Wholesale banking
The division contributed 44% of total operating income for the Bank during the year ended 31
December 2015 up from 42% reported in the prior year. Some of the Banks customers continued
to enjoy the Groups support in terms of the US$75 million off balance sheet direct line of credit to
customers and Afreximbanks US$35 million lines of credit for commodities. These facilities, together
with own resources, enabled the Bank to provide much needed working capital support to clients. The
improved performance of the division during the year was also due to the full operationalisation of
the Client Service Teams (CSTs) introduced in 2014.
Retail banking
The division contributed 37% towards total operating income of the Bank for the year, down from
38% contributed in the prior year. The launch of the home loans and ELB had a positive impact on the
assets and liabilities of the division.
Treasury
The volume of the Banks tradable assets increased during the year and the division contributed 19%
of the Banks total operating income down from 20% contributed in the prior year. This was mainly due
to a decrease in dealing profits on the back of major trading currencies weakening against the United
States dollar throughout the year.
Liquidity and Capitalisation
The liquidity position of the Bank is sound with a liquidity ratio of 69% as at 31 December 2015,
well above the minimum regulatory ratio of 30%. The capital adequacy ratio stood at 25%, which is
significantly above the minimum regulatory ratio of 12%. The Bank is also adequately capitalised at
US$42.827 million as at 31 December 2015.
11
MBCA BANK LIMITED

31 December 2015
Compliance and Governance
The Bank continues to embrace compliance in all its transactions and relationships particularly
around Know Your Client (KYC) principles and Anti-Money Laundering (AML) and Combating of the
Financing of Terrorist (CFT) activities. In this regard we have put in place structures and resources
that ensure that the Bank is able to monitor and implement appropriate compliance measures.
The Bank has complied with all the taxation regulations and subscribes to the principle of accurate
and full disclosure of all taxation matters. It has also complied with all other relevant regulations.
Outlook
The Bank will continue to build a sustainable base of operations as it prepares for the improvement
of the economy, which will be supported by the implementation of Governments ZimAsset
initiatives. The Bank is also working on measures to improve on cost effective funding for medium
term facilities as well as new products and services relevant to our market and clients. Focus will
also be directed at investing in the Banks IT platform to improve operational efficiencies as well as
planned branch network expansion.
Appreciation
I take this opportunity to thank our valued customers and shareholders for their continued support
throughout 2015 and the foreseeable future. I also extend my appreciation to the Chairman and the
Board for their guidance. I remain grateful for the support of the MBCA team, regulatory authorities
and other stakeholders.
Dr Charity C Jinya
Managing Director
23 February 2016
12
MBCA BANK LIMITED

31 December 2015
Chief Finance Officer's Report

The Banks loan book has performed fairly
well given the deterioration in the risk profile
of the market and credit risk management
tools being employed as evidenced by the
non-performing loan ratio of 6.5% which
was below the reported industry average of
10.87% at 31 December 2015.
Antony Makonese
Chief Finance Officer
FINANCIAL OVERVIEW
Profitability
Total revenue for the Bank increased by 1.3% from US$27.200 million in prior year to US$27.544 millon.
This increase was on the back of net interest income that increased by 10% while non interest income
declined by 6.9%. Net interest income recorded a growth due to the increase in average loan book
throughout the year. This was despite the reduction in interest rates for loans and advances that was
implemented from October 2015.
Total operating expenses went down by 1.7% to US$19.696 million from US$20.031 million in 2014.
This was due to the decrease in loan impairment charge from US$1.700 million in prior year to
US$0.721 million.
Operating expenses excluding loan impairment charge however increased by 3.5% from prior years
position. This was attributable to depreciation and amortisation that grew by a significant 32% due
to investments in IT infrastructure and branch expansion. In addition, marketing costs increased by
22%, consistent with the increase in product awareness advertisements. Staff costs grew by 2% due
to additional employees recruited to cater for business growth and compliance related functions in
the Bank.
Loans and advances
Total gross loans and advances and net loans as at 31 December 2015 increased from prior year
by 10% and 11% to US$106.304 million and US$103.192 million respectively. With a 32% growth
in 2015, Business Banking loans continued to record the highest growth on the back of the Banks
strategic portfolio tilt towards this area. Following the Supreme Court Labour ruling in July 2015
(where it was found to be lawful for an employer to terminate an employees contract by giving
14
MBCA BANK LIMITED

31 December 2015
Chief Finance Officer's Report (continued)

Loans and advances (continued)
3 months notice period), the growth of personal unsecured loans slowed down and this led to the
decline in the Retail loan book by 6% despite home loans increasing to US$3.895 million by end of
the year. The loan book continues to comprise largely of overdrafts which constitute 40% of the total
book in 2015 and 37% in 2014. The Banks loan book has performed fairly well given the deterioration
in the risk profile of the market and credit risk management tools being employed as evidenced by
the non-performing loan ratio of 6.5% which was below the reported industry average of 10.87% at
31 December 2015.
The credit loss ratio, at 3.57%, remained at the same level as prior year despite the increase in the
loan book. The Bank wrote off loans amounting to US$1.327 million in the current year compared
to US$0.499 million written off in the prior year. This related mainly to a deterioration of individual
personal loans on the back of job losses and company closures. The tough operating environment
resulted in decline in bad debts recoveries and US$0.266 million was recovered during the year
compared to US$0.361 million recovered in the previous year.
Deposits
While total deposits grew to US$193.223 million from US$138.930 million in prior year, they have
largely remained transitory as indicated by the fact that 53% of the Banks deposits were current
account deposits. The downside of transitory nature of the deposits is that the Bank has to rely
on fixed deposits which are expensive to stabilise the balance sheet and maintain sound liquidity
position that comply with both internal and regulatory minimum liquidity thresholds. The Bank's
loans to deposits ratio stood at 53%, compared to 67% reported as at 31 December 2014. The ratio
came down due to increase in deposits towards year end.
Taxation charge
Growth in profitability resulted in a taxation charge of US$2.013 million (2014: US$1.788 million).
Antony Makonese
Chief Finance Officer
23 February 2016
15
MBCA BANK LIMITED

31 December 2015
Corporate Social Investment Report

EDUCATION
MBCA Bank believes that the youth are fast becoming the most disadvantaged people in our
communities due to the difficult operating environment, hence the Banks continuous involvement
with several institutions which support youth development initiatives such as Junior Achievement
Zimbabwe (JAZ), Zimbabwe Teens, Laying Solid Foundations (LASOF) Leadership Institute and ACES
Soccer Academy.
JAZ
The Bank has partnered with JAZ for four consecutive years. The Bank took on board 2 additional
schools namely Kwekwe High and St Dominics Chishawasha onto the JAZ. In the true spirit of the
Junior Achievement motto, Let their success be your inspiration, MBCA staff mentored students
throughout the year at various platforms namely, JAZ mentorship programme, the Global money
week which saw students visiting the Bank to learn about financial management. JAZ also visited
the Bank for a Job shadow exercise where they were able to experience a real working environment
including CV writing, interview skills and career guidance for students who were entering the job
market. Some MBCA staff were also judges at the end of year competitions.
LASOF Leadership Institute
MBCA Bank partnered with the LASOF Leadership Institute to inspire and motivate underprivileged
students in society to reach their maximum potential. The Bank sponsored 30 orphans from
Matthew Rusike Home. The students were taken through a 2 day programme aimed at building their
confidence and they learnt various life readiness skills which will equip them in their lives and help
them find their individual purpose. From the programme, the youth were empowered, motivated and
confident to face anything they set their minds to.
ZW Teens
For the third consecutive year, MBCA Bank partnered with ZW Teens at their annual Mutare Teen
EXPO. In 2015, the EXPO ran under theme: Reshaping the Future of Finance, Enhancing skills and
Facilitating access to the formal economy. The Bank also mentored students throughout the EXPO
and offered advice on how to manage their finances from a young age as habits that shape their
future.
SPORT
ACES Soccer Academy
MBCA partnered with ACES soccer academy in an effort to educate youth who have potential
to become professional players for Zimbabwe. The Bank continues to support initiatives which
contribute to the development of underprivileged youth in our communities. In this regard, the
Bank contributed towards the education of 16 underprivileged boys who are talented in soccer. The
academy looks after various boys and girls who have excelled in soccer and have been sent abroad
due to their talent.
16
MBCA BANK LIMITED

31 December 2015
Corporate Social Investment Report (continued)

Zimbabwe Open Golf
The Bank was the financial services partner for the Zimbabwe Open Golf tournament for the second
consecutive year. The event attracted several golfing professionals and golfers in the corporate world.
The event was aimed at empowering Zimbabwean golf professionals to compete with international
players and to identify potential professional players in the country.
SOCIAL WELFARE
Mbire District Floods
In January 2015, Zimbabwe experienced floods in Mbire District, Mashonaland Central Province, for
the second year running. The disaster was in the form of flash floods due to incessant rains. The
floods destroyed 327 homesteads and 1635 people were displaced in 10 wards out of the 17 in the
district. More than 3250 hectares of agriculture land belonging to nine wards were severely affected
by siltation and as a result people lost their maize and other crops. In a drive to assist the flood
victims, the Bank donated blankets and text books for the families in the Mbire District.
New Start Childrens Home
New Start Childrens Home caters for abandoned children from our communities. The home cares for
children of all ages and is also involved in educating children from the Waterfalls community. MBCA
Bank identified a need for the regular supply of water to cater for the day to day needs at the home.
The Bank donated a borehole and installed 4 x 5000 litre water tanks which solved the homes water
challenges. In addition MBCA staff also contributed to this cause by donating clothing, food items and
bath soap to the children at the home.
Staff Corporate Social Responsibility Initiatives
As a green and caring Bank, MBCA Bank has an ingrained culture of caring for the communities in
which we live. The Bank staff contributed towards the education and welfare of the less privileged in
society, thus demonstrating the values they live by.
The MBCA Bulawayo team attended a prize giving ceremony at Mvuthu Primary school where they
presented gifts to the less privileged students who had excelled in their studies. The MBCA staff
also presented food items to St Francis Old Peoples Home. Furthermore, staff extended a helping
hand to patients cared for by The Zimbabwe Tariro Organisation which cares for mentally challenged
people through rehabilitation. The organization acts as a halfway home to bridge their re-integration
into society after the patients discharge from mental hospitals. The patients almost missed an
opportunity to attend the 2015 World Mental Health Day commemorations due to lack of funding and
MBCA staff put their resources together towards their trip.
17
MBCA BANK LIMITED

31 December 2015
Corporate Governance Report

Growing and evolving businesses require effective and systematic governance structures
which enable them to optimally and effectively utilise their entire resource bases. Business
governance in a corporate environment is essentially the active interaction between people,
structures, processes and traditions that support the exercise of legitimate authority to ensure
sound leadership, direction, oversight, and control of the institution in order to make certain
that its purpose is achieved, and that there is proper accounting for the conduct of its affairs,
the use of its resources, and the results of its activities.
For business governance to act as an enabler in a business, continuous monitoring of the governance
structure is imperative to ensure optimum process flows and to prevent any possible transgressions
in the institution. Business governance is therefore the system by which companies are directed
and controlled.
The Bank has in place an established business governance structure. Committees are formed
through a formal process in terms of the Schedule of Delegated Authority (SODA) which defines
each committee by charter. Each charter contains the requisite composition of each management
committee and the terms of reference for each management team. These charters are reviewed on
an annual basis and each charter is approved by the Board of Directors.
It is essential to ensure that the fundamental pillars of business governance principles in the Bank
are well established and the level of business governance culture is good and well-ensconced in
management and staff members so that it becomes part of the ethics of the organisation. The
Banks Risk Management division promotes a business governance culture and awareness in a
number of ways to ensure that the principles of business governance remain situated in the minds
of people to make the right ethical choices. This ensures staff adheres to, and executes all internal
controls in compliance with risk management processes and procedures. The Legal and Compliance
department provides Bank-wide training on policies.
Business Unit Compliance Champions are in place and they provide an interface between
Compliance and the other departments. To further strengthen the compliance oversight role,
the Bank ensures that Business Unit Compliance Champions work more closely together and are
conscious of compliance issues by providing continuous training and having regular meetings with
the Banks Compliance Officer. All policies which are rolled out are based on the Nedbank Group
standard and enhanced for in-country legislative purposes, which ensures uniformity of standards
across the Nedbank Group and adds credibility to the organisation. The policies provide a standard
for conduct by staff members.
Training on policies is carried out periodically for each department in the Bank to enhance and
maintain business governance awareness and encourage transparency and accountability. The
Board is generally satisfied that good governance practices are being carried out within the Bank.
The conduct of committees and all practices demonstrates accountability, responsibility, discipline,
fairness, social responsibility, transparency and independence.
18
MBCA BANK LIMITED

31 December 2015
Corporate Governance Report (continued)

Enterprise governance and compliance framework
This framework covers both the corporate and business governance aspects of the entity. It refers to
the good governance that is linked strategically with performance management, thereby enabling the
Bank to focus on the key areas that move the business forward. Enterprise governance and compliance
constitute part of the entire accountability framework of the Bank, and calls for a balance between
accountability, assurance (conformance), value creation and resource utilisation (performance). The
framework ensures that strategic goals are aligned and good management is achieved.
Compliance
The compliance function ensures conformity not only with regulatory laws and standards, but also
with internal policies and procedures.
The Bank continues to conform, in all material respects, with all laws and regulations governing
its operations, including but not limited to, the Companies Act (Chapter 24:03); the Income Tax Act
(Chapter 23:02); the Banking Act (Chapter 24:20) and Banking Regulations, Statutory Instrument
205 of 2000; the Exchange Control Act (Chapter 22:05); the Bank Use Promotion and Suppression of
Money Laundering Act (Chapter 24:24); the National Payment Systems Act (Chapter 24:23) as well as
all Reserve Bank of Zimbabwe (RBZ) directives.
The Bank subscribes to and supports most of the provisions of the Code of Best Practice as
recommended by King II, the Cadbury Committee and all provisions of the RBZ Guideline No. 01-2004/
BSD on sound corporate governance.
The Board
The Board is responsible to the shareholders for setting the direction of the Bank through the
establishment of strategies, objectives, key policies and management structures. It monitors the
implementation of these strategies and policies through a structured approach to reporting and
accountability and recognises that it is responsible for developing relationships with its various
stakeholders and it actively manages those relationships.
The Board meets at least quarterly to evaluate performance, assess risks and hold additional meetings
to shape the strategic direction of the Bank and review thereof. Appointments to the Board are based
on a required mix of skills and experience to ensure the on-going success of the Bank.
For the year under review, the Board comprised two executive directors, two non-executive directors
and six independent non-executive directors. Independent non-executive directors provide objectivity
and independence to the Board. The Chairman of the Board is an independent non-executive director.
Directors are responsible for ensuring the maintenance of adequate accounting records and the
preparation and the integrity of the financial statements. This responsibility is supported by
internal controls and risk management processes implemented and independently monitored for
effectiveness.
19
MBCA BANK LIMITED

31 December 2015

The Board (continued)
Certain responsibilities and functions of the Board are delegated to various committees whose
members are skilled and competent. However, the Board retains full accountability for decisions
made. All committees have written terms of reference that are reviewed annually by the Board. All
Committees are chaired by independent non-executive directors.
Board attendance
In 2015, the Board met five times in line with Banks policy. The record of attendance by directors
is shown below:
MBCA Bank Limited Board of Directors
Meetings Held
Name
V W Zireva (Chairman)
Dr C C Jinya
A du Plessis
LOA
R W R Buchhloz
J H Brits
LOA
S Gwanzura
A Makonese
A R Chinamo
LOA
J P Murehwa
10
Dr S Naik
LOA
11
M Hillie (Alternate)
KEY: LOA- Leave of Absence Granted | a - Present
Audit Committee
The Audit Committee consists of three independent non-executive directors of the Bank. The
Committees primary functions are to assist the Board in its evaluation and review of the adequacy
and efficiency of the internal control systems, accounting practices, information systems and audit
processes applied within the Bank in the day-to-day management of the business, and to introduce
measures to enhance the credibility and objectivity of financial statements and reports prepared
with reference to the affairs of the Bank.
20
MBCA BANK LIMITED

31 December 2015

Audit Committee (continued)
The Audit Committee met six times in 2015 and the record of attendance by its members is shown
as follows:
Meetings Held
Name
S Gwanzura
(Chairperson)
A R Chinamo
LOA
J H Brits
Risk and Compliance Committee
The Risk and Compliance Committee, which comprises non-executive directors, sets policy guidelines
for monitoring risks that are inherent within the Bank and reviews all risk reports generated by the
Risk Division. The Committee also sets policy guidelines for ensuring and monitoring compliance with
all regulatory laws and directives and internal policies and procedures.
The record of attendance by members of the Risk and Compliance Committee is shown as follows:
Meetings Held
Name
Dr S Naik
(Chairperson)
RWR Buchhloz
JH Brits
21
MBCA BANK LIMITED

31 December 2015

Board Lending Committee
This Committee comprises non-executive directors and is mainly responsible for considering and
approving credit facilities as mandated by the Board.
The record of attendance by members of the Board Lending Committee is shown below:
Meetings Held
Name
J H Brits
(Chairperson)
R W R Buchholz
S Gwanzura
Loans Review Committee
This Committee, comprising independent non-executive directors, reviews the quality of the Banks
loan portfolio and sets and reviews policies for lending and adequacy of loan loss provisions.
The record of attendance by members of the Loans Review Committee is shown below:
Meetings Held
Name
A R Chinamo (Chairperson)
LOA
J P Murehwa
V W Zireva
Dr S Naik
22
MBCA BANK LIMITED

31 December 2015

Remuneration Committee
This Committee, which comprises non-executive directors and the Nedbank Rest of Africa Managing
Executive, meets quarterly and reviews guidelines for the salaries and benefits of the Banks staff.
The Committee also recommends the remuneration of the executive and non-executive directors.
The Committee met four times in 2015. The record of attendance by members of the Remuneration
Committee is shown in the following table:
Meetings Held
Name
J P Murehwa (Chairperson)
V W Zireva
A du Plessis
LOA
M Hillie (Alternate)
23
MBCA BANK LIMITED

31 December 2015
Report of the Directors

Responsibility
The directors are responsible for the preparation and fair presentation of the annual financial
statements of MBCA Bank Limited (the Bank), comprising the statement of financial position as at
31 December 2015, and the statements of profit or loss and other comprehensive income, changes
in equity and cash flows for the year then ended, and the notes to the financial statements which
include a summary of significant accounting policies and other explanatory notes, in accordance
with International Financial Reporting Standards and in a manner required by the Companies Act
(Chapter 24:03), the Banking Act (Chapter 24:20), and the Directors Report.
The directors are also responsible for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error, and for maintaining adequate accounting records and an effective system
of risk management as well as the preparation of the supplementary schedules included in these
financial statements.
The directors have made an assessment of the ability of the company to continue as a going concern
and have no reason to believe that the business will not be a going concern in the year ahead.
The auditor is responsible for reporting on whether the financial statements are fairly presented in
accordance with the applicable financial reporting framework.
Financial results
Profit after tax for the year amounted to US$5.835 million compared to US$5.380 million in 2014.
Shareholder funds at the end of the year amounted to US$42.827 million compared to US$37.024
million at the end of the previous year.
Going concern
The directors have a reasonable expectation that the Bank has adequate resources to continue in
operational existence for the foreseeable future. The Bank therefore continues to adopt the going
concern basis in preparing its financial statements.
Dividend
In view of the need to build capital towards the 2020 target, the Board considers it prudent not to
declare a dividend.
Share capital
The authorised share capital of the Bank remained at 9 200 000 000 ordinary shares with a nominal
value of US$0.00001. The total number of issued shares remained at 8 949 936 276.
Capital adequacy
The capital adequacy ratio as at 31 December 2015 is 25%, well above the regulatory minimum
ratio of 12%. The Banks policy is to maintain a strong capital base that will not limit new business
development and the capital position is constantly reviewed to ensure sustained compliance with
regulated minimum capital requirements and capital adequacy ratios.
24
MBCA BANK LIMITED

31 December 2015
Report of the Directors (continued)

Directors approval
This annual report was approved by the Board of directors and is subject to approval by the
shareholders at the forthcoming Annual General Meeting.
Directors and Secretary
A complete list of directors and the company secretary at the date of this report appear on page 2.
Directors remuneration
Details of directors remuneration are set out in note 11 to the financial statements.
Auditors
KPMG Chartered Accountants (Zimbabwe) were appointed the independent auditors for the financial
year ended 31 December 2015 after the expiry of the maximum 5 year allowed period for Deloitte
and Touche as per the RBZ regulation. KPMG have expressed their willingness to continue in office for
the forthcoming financial year. The audit report of the independent auditor is presented on page 27.
Approval of Annual Financial Statements
The annual financial statements of the Bank, as identified in the first paragraph, were approved by the
Board of directors on 23 February 2016 and signed on its behalf by:
By order of the Board
V W Zireva
Chairman
F Sithole
Company Secretary
Harare
23 February 2016
25
MBCA BANK LIMITED

31 December 2015
Independent Auditors Report

To the members of MBCA Bank Limited
Report on the Financial Statements

We have audited the financial statements of MBCA Bank Limited (the Bank), which comprise of the
statement of financial position at 31 December 2015, and the statements of profit or loss and other
comprehensive income, changes in equity and cash flows for the year then ended, and the notes
to the financial statements which include a summary of significant accounting policies and other
explanatory notes, as set out on pages 28 to 106.
Directors Responsibility for the Financial Statements

The Banks directors are responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards and in a manner required
by the Companies Act (Chapter 24:03), the Banking Act (Chapter 24:20), and for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, these financial statements present fairly, in all material respects, the financial position
of MBCA Bank Limited at 31 December 2015, and its financial performance and cash flows for the
year then ended in accordance with International Financial Reporting Standards and in a manner
required by the Companies Act (Chapter 24:03) and the Banking Act (Chapter 24:20).
KPMG Chartered Accountants (Zimbabwe)

Harare
23 February 2016
27
MBCA BANK LIMITED

STATEMENT OF FINANCIAL POSITION
As at 31 December 2015

Note
2015 2014

US$ US$
ASSETS
17
113 072 019
71 084 293
Loans and advances to customers
18
103 192 446
92 784 823
Available for sale investment securities
19
747 275
948 080
Held to maturity investment securities
20
19 057 891
14 442 057
Other assets
21
1 843 285
4 574 956
Current tax asset

25 619
Intangible assets
22
207 866
273 295
Deferred tax asset
23
1 217 290
1 385 915
Property and equipment
24
4 520 738
3 442 865
Total assets
243 884 429
188 936 284

LIABILITIES AND EQUITY
Liabilities
25
193 222 571
138 930 297
Current taxation liability
-
55 999
Other liabilities
26
7 835 248
12 926 394

Total liabilities
201 057 819
151 912 690

Equity
Share capital
27.2
89 499
89 499
Share premium
27.2
17 784 930
17 784 930
Revaluation reserve
27.3
210 141
156 536
Fair value reserve
27.4
(159 632)
(73 791)
Regulatory reserve
27.8
1 102 104
Retained earnings
23 799 568
19 066 420

Total equity
42 826 610
37 023 594

TOTAL LIABILITIES AND EQUITY
243 884 429
188 936 284

Dr Charity C Jinya
Managing Director
23 February 2016
Harare
28
V W Zireva
Chairman
MBCA BANK LIMITED

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Note

2015 2014
US$ US$
Interest income
7
19 869 652
18 234 654
Interest expense
7
(5 116 975)
(4 776 212)

Net interest income
14 752 677
13 458 442
Fee and commission income
Trading and dealing income
Trading and dealing expenses
8
9
9
10 457 224
2 368 248
(33 668)
10 795 178
2 993 080
(46 534)
Revenue
27 544 481
27 200166

Net impairment loss on financial assets
10
(720 834)
(1 699 923)
Employee and directors costs
11
(10 593 835)
(10 338 187)
Administrative expenses
12
(6 767 410)
(6 679 976)
Depreciation and amortisation expenses
13
(935 025)
(704 801)
Other operating expenses
14
(678 880)
(608 423)

Total operating expenses
(19 695 984)
(20 031310)

Profit before tax
7 848 497
7 168 856

Taxation
15
(2 013 245)
(1 788 398)

Profit for the year
5 835 252
5 380 458

OTHER COMPREHENSIVE INCOME
Items that will never be re-classified
to profit or loss
Gains on revaluation of land and
buildings (net of tax)
16
53 605
3 469
16
(85 841)
(68 282)
16
(32 236)
(64 813)
TOTAL COMPREHENSIVE INCOME

5 803 016
5 315 645
Items that are or may be re-classified

to profit or loss
Fair value loss on available for sale
financial assets (net of tax)

Other comprehensive loss for
the year, net of tax

29
30
210 141
89 499 17 784 930
53 605
Fair value loss on available for

sale financial assets (net of tax)
-
Gains on revaluation of lands

and buildings net of tax
Transfer to regulatory reserve

Balance as at 31 December 2015
Profit for the year
156 536
89 499 17 784 930
3 469
Gains on revaluation of
land and building (net of tax)
Fair value loss on available for sale

financial assets (net of tax)

Profit for the year
(159632)
(85 841)
(68 282)
3 469
5 380 458
(1 102104)
5 835 252
(85 841)
53 605
5 835 252
19 066 420 37 023 594
5 380 458
13 685 962 31 707 949
1 102 104 23 799 568 42 826 610
1 102 104
(73 791)
(68 282)
(5 509)
89 499 17 784 930
Balance as at 1 January 2014
153 067
Share
Share Revaluation
Fair value Regulatory
Retained
capital
premium
reserve
reserve
reserve
earnings
Total
US$ US$ US$ US$ US$ US$ US$
MBCA BANK LIMITED
STATEMENT OF CHANGES OF EQUITY

MBCA BANK LIMITED

STATEMENT OF CASH FLOWS

Note

2015 2014
US$
US$
CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax
7 848 497
Adjustments for non-cash items:

Net impairment loss on financial assets
10
720 834
Depreciation and amortisation expense
13
935 025
Operating cash flow before changes in
operating assets and liabilities
9 504 356
7 168 856
1 699 923
704 801
9 573 580
Changes in operating assets and liabilities

Increase in deposits and other liabilities
49 201 128
3 875 616
Increase in gross advances and other assets
(12 894 879)
(13 964 445)

Operating cash inflow/(outflow) after changes in
operating assets and liabilities
45 810 605
(515 249)
Income taxes paid
(1 938 075)

Cash generated from/(utilised in) operating activities
43 872 530

CASH FLOW FROM INVESTING ACTIVITIES
(2 650 192)
(3 165 441)
Purchase of property and equipment

24
(1 865 829)
(929 865)
Purchase of intangible assets
22
(18 975)
(21 505)
Proceeds from sale of motor vehicle
-
20 741

Cash utilised in investing activities
(1 884 804)
(930 629)

Net increase/(decrease) in cash and cash equivalents
41 987 726
(4 096 070)
Cash and cash equivalents at beginning of the year
71 084 293
75 180 363

Cash and cash equivalents at end of the year
17
113 072 019
71 084 293
Comprising:
Balances with the Reserve Bank of Zimbabwe
63 594 809
Balances with banks and cash
49 477 210

113 072 019

31 542 725
39 541 568
71 084 293
31
MBCA BANK LIMITED

REPORTING ENTITY
MBCA Bank Limited (The Bank) is a company incorporated in Zimbabwe and is a registered
commercial Bank primarily involved in corporate banking, retail banking and treasury
services.
MBCA Holdings Limited is the parent company and the ultimate controlling party is Nedbank
Group Limited of South Africa.
The address of its registered office and principal place of business is 14th floor, Old Mutual
Centre, Corner Jason Moyo Avenue and Third Street, Harare, Zimbabwe.
BASIS OF PREPARATION
2.1
Basis of accounting
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter
24:03) and the Banking Act (Chapter 24:20).
2.2
Basis of measurement
These financial statements have been prepared on the historical cost basis except for the
following:

Available for sale financial assets measured at fair value; and

Land and buildings measured at fair value.
2.3
Functional and presentation currency

These financial statements are presented in United States of America Dollars (US$) which
is the Banks functional currency. Except as otherwise indicated, financial information is
presented in US$ and shown as absolute figures.
32
MBCA BANK LIMITED

SIGNIFICANT ACCOUNTING POLICIES
3.1
Standards issued not yet adopted

A number of new standards and amendments to standards are effective for annual periods
beginning after 1 January 2015; however, the Bank has not applied the following new or
amended standards in preparing these financial statements.
New or amended Effective

standards
date
Summary of Requirements
Possible
impact
financial statements
IFRS 9 Financial
Instruments
IFRS 9, published in July 2014, replaces

the existing guidance in IAS 39 (Financial
Instruments: Recognition and Measurement).
IFRS 9 includes revised guidance on the
classification and measurement of financial
instruments, including a new expected credit
loss model for calculating impairment of
financial assets, and the new general hedge
accounting requirements. It also carries
forward the guidance on recognition and
derecognition of financial instruments from
IAS 39.
The Bank is assessing

the potential impact on
its financial statements
resulting
from
the
application of IFRS 9.
1 January
2018
on
IFRS 9 is effective for annual reporting periods

beginning on or after 1 January 2018, with
early adoption permitted.
IFRS 15 Revenue 1 January
from Contracts
2018
with Custom
IFRS 15 establishes a comprehensive

framework for determining whether, how
much and when revenue is recognised.
It replaces existing revenue recognition
guidance, including IAS 18 Revenue, IAS 11
Construction Contracts and IFRIC 13 Customer
Loyalty Programmes.

resulting
from
the
IRFS 16
Leases
IFRS 16 was published in January 2016. It

sets out the principles for the recogintion,
measurement presentation and disclosure of
leases for both parties to a contract, i.e the
customer ('lessee') and the supplier ('lessor').
IFRS 16 replaces the previous leases Standard,
IAS 17 Leases and related Intepretations. IFRS
16 has one model for lessees which will result
in almost all leases being included on the
Statement of Financial position. No significant
changes have been included for lessors.

resulting
from
the
1 January
2019
The standard is effective for annual periods

begginning on or after 1 January 2019, with
early adoption permitted only if the entity also
adopts IFRS 15. The transtional requirements
are different for lessees and lessors .
33
MBCA BANK LIMITED

SIGNIFICANT ACCOUNTING POLICIES (continued)
3.1
Standards issued not yet adopted (continued)

The following new or amended standards are not expected to have a significant impact on
the Banks financial statements:
IFRS 14 Regulatory Deferral Accounts.

Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11).
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS
16 and IAS 38).
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41).
Equity Method in Separate Financial Statements (Amendments to IAS 27).
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28).
Annual Improvements to IFRSs 20122014 Cycle various standards.
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS
12 and IAS 28).
3.2 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially
all the risks and rewards of ownership to the lessee. All other leases are classified as
operating leases. The Bank does not have any finance leases.
3.2.1
The Bank as a lessor

Rental income from operating leases is recognised in the profit and loss on a straight-line
basis over the term of the relevant lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
3.2.2
The Bank as a lessee

Operating lease payments are recognised in the profit and loss as an expense on a
straight-line basis over the lease term, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are
consumed. Contingent rentals arising under operating leases are recognised as an expense
in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such
incentives are recognised as a liability. The aggregate benefit of incentives is recognised
as a reduction of rental expense on a straight-line basis, except where another systematic
basis is more representative of the time pattern in which economic benefits from the leased
asset are consumed.
34
MBCA BANK LIMITED

3.3
Foreign currencies
3.3.1
Transactions and balances

Foreign currency transactions that are denominated, or that require settlement, in a foreign
currency, are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions.
Monetary items denominated in foreign currency are translated at the closing rate as at the
reporting date. Non-monetary items measured at historical cost denominated in a foreign
currency are translated at the exchange rate as at the date of initial recognition; nonmonetary items in a foreign currency that are measured at fair value are translated using the
exchange rates at the date when the fair value was determined.
Foreign currency differences arising on translation are generally recognised in profit or loss.
However, foreign currency differences arising from available for sale equity instruments are
recognised in other comprehensive income.
3.4 Taxation
Income tax expense comprises current and deferred tax. It is recognised in profit or losses
except to the extent that it relates to items recognised directly in equity or in other
comprehensive income.
3.4.1
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss
for the year and any adjustment to the tax payable or receivable in respect of previous years.
It is measured using tax rates enacted or substantively enacted at the reporting date.
3.4.2
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amount
of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is recognised for:

Temporary difference on the initial recognition of assets or liabilities in a transaction

that is not a business combination and that affects neither accounting nor taxable
profit or loss;
Temporary difference related to investments in subsidiaries to the extent that it is
probable that they will not reverse in the foreseeable future; and
Taxable temporary difference arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible
temporary difference to the extent that it is probable that future taxable profits will be
available against which they can be used. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefits
will be realised.
35
MBCA BANK LIMITED

3.4
Taxation (continued)
3.4.2
Deferred Tax (continued)

Unrecognised deferred tax assets are reassessed at each reporting date and recognised
to the extent that it has become probable that future taxable profits will be available
against which they can be used. Deferred tax is measured at the tax rates that are expected
to be applied to temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date. The measurement of deferred tax reflects
the tax consequences that would follow the manner in which the Bank expects, at the
reporting date, to recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is presumed to
be recovered through sale, and the Bank has not rebutted this presumption.
Deferred tax assets and liabilities are offset if there is a legal enforceable right to offset
current tax liabilities and assets, and they relate to taxes levied by the same tax authority
on the same taxable entity, or on different tax entities, but they intend to settle current
tax liabilities and assets on a net basis or their assets and liabilities will be realised
simultaneously.
3.5
Employee benefits
Employee benefits are all forms of consideration given by the Bank in exchange for services
rendered by employees.
3.5.1
Short-term benefits
Short-term benefits are employee benefits (other than termination benefits), that are to
be settled wholly before twelve months after the year end of the period in which the
employees render related services.
When an employee has rendered services during an accounting period, the Bank recognises
the undiscounted amount of the short-term employee benefits expected to be paid in
exchange for that service.
3.5.2
36
Post employment benefits

Post employment benefits are employee benefits (other than termination benefits) which
are payable after the completion of employment. Employee benefits are provided for
employees through the National Social Security Authority (NSSA) and the Bank operates
a pension scheme on a defined contribution basis providing benefits based on contributions
made plus profits that are declared by the schemes trustees from time to time. The assets
of the scheme are held separately from those of the Bank. The scheme is financed by Bank
and employee contributions. The Banks contributions to the scheme are charged to the
statement of profit or loss.
MBCA BANK LIMITED

3.5
Employee benefits (continued)
3.5.3
Termination benefits
Termination benefits are employee benefits payable as a result of the Banks decision to
terminate employment before normal retirement date (or contractual date) or an employees
decision to accept voluntary redundancy in exchange for those benefits. The Bank
recognises termination benefits at the earlier of when it can no longer withdraw the offer
of those benefits and when it recognises costs for restricting that is within the scope of IAS
37: Provisions, Contingent Liabilities and Contingent Assets and involves the payment of
termination benefits.
Termination benefits that are not expected to be settled wholly before twelve months
after the end of the annual reporting period in which the employees renders services are
discounted using market rates of interest. In case of an offer made to encourage voluntary
redundancy, the measurement of termination benefits shall be based on the number of
employees expected to accept the offer.
3.6

Land and buildings comprise two buildings held for administrative purposes. All motor
vehicles, furniture, fittings and equipment used by the Bank are stated at historical cost less
accumulated depreciation and any impairment losses. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Refer to 3.6.1 for measurement
of land buildings.
Subsequent expenditures are included in the assets carrying amount or are recognised as
a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Bank and the cost of the item can be measured
reliably. All repair and maintenance costs are charged to other operating expenses during
the financial period in which they are incurred and recognised in profit or loss.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line
method to allocate their cost to their residual values over their estimated useful lives, as
follows:
- Buildings
- Leasehold improvements
- Furniture and fittings
- Motor vehicles
- Computer equipment
up to 40 years;
up to 5 years;
up to 10 years;
up to 5 years; and
up to 5 years.
37
MBCA BANK LIMITED

3.6
Property and equipment (continued)

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at
each reporting date. Assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An assets
carrying amount is written down immediately to its recoverable amount if the assets
carrying amount is greater than its estimated recoverable amount. The recoverable amount
is the higher of the assets fair value less costs to sell and value in use. No property or
equipment was impaired as at 31 December 2015. Gains and losses on disposal are
determined by comparing proceeds with the carrying amount and are included in other
operating expenses in the statement of profit or loss.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset.
3.6.1
Revaluation
Land and buildings are shown at fair value, based on annual valuations by external
independent valuers, less subsequent depreciation and impairment for buildings. Any
accumulated depreciation at the date of revaluation is eliminated against the gross carrying
amount of the asset, and the net amount is restated to the revalued amount of the asset.
Note 24 explains that the open market method of valuation was used for land and buildings.
The effects of revaluation of land and buildings are credited to the revaluation reserve
account through other comprehensive income and shown separately in the statement of
changes in equity after adjustment for the related deferred tax. Subsequent depreciation is
based on the revalued amount.
3.7
Intangible assets
Intangible assets comprise separately identifiable expenditure arising from computer
software acquisitions. Software acquisitions are recognised and capitalised on the basis
of the costs incurred to acquire and bring to use the specific software, and subsequently
amortised using the straight line method over their estimated useful economic life,
generally not exceeding 3 years.
3.8 Provisions
A provision is recognised if, as a result of a past event, the Bank has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the
liability.
38
MBCA BANK LIMITED

3.8.1
Financial guarantee and loan commitments

Financial guarantees are contracts that require the Bank to make specified payments to
reimburse the holder of a loss that it incurs because a specified debtor fails to make payment
when it is due in accordance with the terms of the debt instrument. Loan commitments are
firm commitments to provide credit under pre-specified terms and conditions.
3.9
Financial Instruments
3.9.1
Classification
Financial instruments include financial assets and financial liabilities. All financial assets are
classified into either available-for-sale, held to maturity or loans and receivables. Held
to maturity financial instruments are those with fixed or determinable payments and fixed
maturity that the Bank has the intent and ability to hold to maturity. Loans and receivables
are created or bought by the Bank providing money to a debtor other than those created with
the intention of short-term profit taking. Available-for-sale financial instruments are those
assets that are designated as available for sale or that are not at fair value through profit or
loss, loans and receivables or held to maturity by the Bank. Financial liabilities are either
classified as at fair value through profit or loss or other.
3.9.2
Recognition
Financial instruments that are at fair value through profit or loss and available for sale are
recognised on the date the Bank commits to purchase the instrument.
From this date any gains and losses arising from changes in fair value of the trading
instruments are recognised and charged to the statement of profit or loss and gains and
losses on available-for-sale instruments are recognised in other comprehensive income.
When the financial instruments that are available-for-sale are sold, collected or otherwise
disposed of, the cumulative gain or loss recognised in other comprehensive income is
transferred to profit or loss. Held to maturity assets and loans and receivables are recognised
on the day they are transferred to the Bank.
3.9.3
Measurement
All financial instruments are measured initially at fair value, including transaction costs with
the exception of financial instruments at fair value through profit or loss, which requires
expensing of transaction costs. Subsequent to initial recognition all financial instruments
designated as either at fair value through profit or loss or available for sale are measured
at fair value. Any instrument that does not have a quoted market price in an active market
and whose fair value cannot be reliably measured is stated at cost, including transaction
costs, less impairment.
Loans and receivables and held-to-maturity assets are measured at amortised cost less
impairment. Amortised cost is calculated using the effective interest rate method. Premiums
and discounts, including initial transaction costs are included in the carrying amount of the
related instrument and amortised based on the effective interest rate of the instrument.
Financial liabilities are measured at amortised cost.
39
MBCA BANK LIMITED

3.9
Financial Instruments (continued)
3.9.4
Classes of financial instruments

The Bank classifies the financial instruments into classes that reflect the characteristics of
those financial instruments. The classification made can be seen in the table below:
Category (as defined by IAS 39)
Class (as determined by the Bank)
Financial
assets
Loans and
receivables
Loans and advances to

customers
Overdrafts
Term loans
Held to maturity
investment
securities
Held to maturity
investment securities
Government stock
Treasury bills
Available-for-sale
financial assets
Investment securitiesequity securities
Unlisted investments
Financial
liabilities at
amortised cost
Demand deposits
Term deposits
Financial
liabilities
Off-balance sheet financial

instruments
Loan commitments
Guarantees and other financial facilities
3.9.5
Fair value measurement

All financial instruments designated as as available for sale are reported at fair values that
are estimated using valuation techniques. The fair values of quoted financial instruments
are based on their quoted market price at the reporting date without any deduction for
transaction costs.
3.9.6
Gains and losses on subsequent measurement

Gains and losses arising from a change in the fair value of available-for-sale assets are
recognised directly in equity through other comprehensive income. When the financial
assets are sold, collected or otherwise disposed of, the cumulative gain or loss recognised
in equity is transferred to profit and loss. Gains and losses arising from a change in the fair
value of at available for sale instruments are recognised in other comprehensive income.
3.9.7
De-recognition
A financial asset is de-recognised when the Bank loses control over the contractual
rights that comprise that asset. This occurs when the rights are realised, expired or are
surrendered. A financial liability is de-recognised when it is extinguished.
40
MBCA BANK LIMITED

3.9
3.9.7
De-recognition (continued)
Available-for-sale assets and assets at fair value through profit or loss that are sold are derecognised and corresponding receivables from the buyer for the payment are recognised
as of the date the Bank commits to sell the assets. The Bank uses the specific identification
method to determine the gain or loss on de-recognition. Held-to-maturity instruments and
originated loans and receivables are de-recognised on the day they are transferred by the
Bank. The Bank de-recognises a financial liability when its contractual obligations are
discharged, cancelled, or expire.
3.9.8
Repurchase agreements
Repurchase agreements are when the Bank enters into purchases or sales of investments
under agreements to resell or repurchase substantially identical investments at a certain
date in the future at a fixed price. Investments purchased subject to commitments to
resell them at future dates are recognised. Investments sold under repurchase agreements
continue to be recognised in the statement of financial position and are measured in
accordance with the accounting policy for either assets at fair value through profit or loss or
available-for-sale, whichever is appropriate. The proceeds from the sale of the investments
are reported as liabilities to either Banks or customers. The difference between the sale
and repurchase consideration is recognised on an accrual basis over the period of the
transaction and is included in interest.
3.9.9 Impairment
At each reporting date, the Bank assesses whether there is objective evidence that financial
assets not carried at fair value through profit and loss are impaired. A financial asset or a
group of financial asset is impaired when objective evidence demonstrates that a loss
event has occurred after the initial recognition of the asset(s) and that the loss event has an
impact on the future cash flow of the asset(s) that can be estimated reliably.
Objective evidence that financial assets are impaired includes:

Significant financial difficulty of the borrower or the issuer;

Default or delinquency of a borrower;
The restructuring of a loan or advance by the Bank on terms that the Bank would not
consider otherwise; and
Indications that a borrower or issuer will enter bankruptcy.
The Bank considers evidence for impairment of financial assets at both specific asset and
a collective level. All individually significant financial assets are assessed for specific
impairment. Those found not to be specifically impaired are collectively assessed for any
impairment that has been incurred but not yet identified. Financial assets not individually
significant are collectively assessed for impairment by grouping together financial assets
with similar characteristics.
41
MBCA BANK LIMITED

3.9
3.9.9
Impairment (continued)
Impairment losses on financial assets measured at amortised costs are calculated as
the difference between the carrying amount and the present value of estimated future
cash flow discounted at the assets original effective interest rate. Impairment losses
are recognised in the statement of profit or loss and reflected in an allowance account
against the financial assets. Interest on the impaired assets continues to be recognised
through the unwinding of the discount. If an event occurring after the impairment was
recognised that causes the amount of impairment loss to decrease, then the decrease in
impairment loss is reversed through the statement of profit or loss.
3.9.9.1
Impairment allowance
Allowance for impairment on financial assets is made as considered necessary having
regard to both specific and general factors.
3.9.9.2 Specific allowance

Specific allowance is made where the repayment of identified financial assets is in doubt
and reflects estimates of the loss.
3.9.9.3
Portfolio allowance
The portfolio allowance relates to the collective evaluation of impairment of financial
assets to customers. These are also referred to as collective allowance in this annual
report.
3.9.9.4 Regulatory allowance

The Reserve Bank of Zimbabwe requires the Bank to provide regulatory allowance for
impairments on financial assets. Where the regulatory provision is higher than the IAS 39,
Financial Instruments: Recognition and Measurement impairment, the excess is recognised
as a regulatory reserve on the Statement of Changes in Equity.
3.9.9.5
Past due but not individually impaired loans

Loans and advances where contractual interest or principal payments are past due but
the Bank believes that impairment is not appropriate on the basis of the level of security/
collateral available and/or the stage of collection of amounts owed to the Bank form part
of this category.
3.10
Non-performing loans
Interest on loans and advances is accrued to income until reasonable doubt exists about
its collectability. Thereafter, interest is recognised using the original effective interest
rate to discount the future cash flows for the purpose of measuring the impairment. A
loan is considered non-performing where interest has been suspended and where the
customer has failed to repay interest and/or capital at agreed intervals.
42
MBCA BANK LIMITED

3.11
Interest income and expense

Interest income and expense for all interest-bearing financial instruments are recognised
within interest income and interest expense in the statement of profit or loss using the
original effective interest rate method. The effective interest rate method is a method of
calculating the amortised cost of a financial asset or a financial liability and of allocating the
interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments
or receipts through the expected life of the financial instrument or, when appropriate,
a shorter period to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Bank estimates cash flows considering all
contractual terms of the financial instrument (for example, prepayment options) but does
not consider future credit losses. The calculation includes all fees paid or received between
parties to the contract that are an integral part of the effective interest rate, transaction costs
and all other premiums or discounts. Once a financial asset or a group of similar financial
assets has been written down as a result of impairment, interest income is recognised using
the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment.
3.12
Fee and commission income

Fee and commission income is generally recognised on an accrual basis when the service
has been provided. Services giving rise to this income provided by the Bank include cash
management and sale services. The recognition of revenue for financial service fees depends
on the purposes for which the fees are assessed and the basis of accounting for any associated
financial instruments.
3.12.1 Other fees and commission

These are recognised as the related services are performed. Loan commitment fees are
recognised on a straight line basis over the loan period.
3.13
Net trading and dealing income

Net trading and dealing income includes gains and losses arising from disposals and changes
in the fair value of foreign currency dealing.
3.14

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with
Central Bank and highly liquid financial assets with original maturities of three months or
less from the date of acquisition that are subject to an insignificant risk of change in their fair
value, and are used by the Bank in the management of its short-term commitments.
Cash and cash equivalents are carried at amortised cost in the statement of financial position.
43
MBCA BANK LIMITED

3.15
Related parties
Parties are considered to be related if one party has the ability to control the other party
or exercise significant influence over the other party in making financial and operating
decisions. The Bank has related party relationships with its parent company, subsidiaries,
fellow subsidiaries and key management employees. Transactions and balances with
related parties are shown in Note 28.
ASSUMPTIONS AND ESTIMATION UNCERTAINTIES
4.1
4.1.1
In preparing these financial statements, management made, estimates and assumptions

that affect the application of the Banks accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
estimates are recognised prospectively.

Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of
resulting in a material adjustment in the year ended 31 December 2015 is set out below in
relation to the following notes in relation to other areas.
Impairment of financial instruments
Assets accounted for at amortised cost are evaluated for impairment on the basis described
below.
The individual component of the total allowance for impairment applies to financial
assets evaluated individually for impairment and is based on management best estimate
of the present value of the cash flows that are expected to be received. In estimating
the cash flows, management makes judgments about a debtors financial situation and the
net realisable value of any underlying collateral. Each impaired asset is assessed on its
merit, and the workout strategy and estimate of cash flows considered are recoverable are
independently approved by the Credit Committee. The allowance for impairment balance
has been disclosed in Note 5.2.1.4.
A collective component of the total allowance is estimated for:

Group of homogeneous loans that are not considered individually significant; and
Groups of assets that are individually significant but that were not found to be
individually impaired.
In assessing the need for collective loss allowance, management considers factors such
as credit quality, portfolio size, concentrations and economic factors. To estimate the
required allowance assumptions are made to define how inherent losses are modelled and
44
MBCA BANK LIMITED

ASSUMPTIONS AND ESTIMATION UNCERTAINTIES (continued)
4.1
Assumptions and estimation uncertainties (continued)
4.1.1
Impairment of financial instruments (continued)

to determine the input parameters based on historical experience and current economic
conditions. The accuracy of the allowance depends on the model assumptions and parameters
used in determining the collective impairment. The methodology and assumptions used for
estimating both the amount and timing of future cash flows are reviewed regularly to reduce
any differences between loss estimates and actual losses.
For an investment in an equity security a significant or prolonged decline in its fair value
below its costs is objective evidence of impairment. In this respect, the Bank regards a
decline in fair value in excess of 60% to be significant looking at the type of investment held.
4.1.2
Fair values of available for sale investments

The Bank has equity investments in unlisted entities disclosed in Note 19. These are
measured at fair value. Fair value is estimated as the Banks share of net assets of the unlisted
investments.
4.1.3
Fair valuation of property

Land and Buildings are measured at fair value. The assumptions used in fair valuing these
are detailed in Note 24.
FINANCIAL RISK MANAGEMENT

The Bank has exposure to the following key risks:
Credit risk

Credit quality analysis

Collateral held and other credit enhancement

Offsetting financial assets and financial liabilities

Concentration of credit risk

Impaired loans and advances
Liquidity risk

Exposure to liquidity risk

Maturity analysis of financial assets and financial liabilities

Liquidity reserves

Financial asset available to support future funding

Financial assets pledged as collateral
Market risk

Exposure to market risk -trading and non-trading portfolio

Exposure to currency risks
Operational risk

Strategic risk

Reputation risk
Capital Management

Regulatory capital

Capital allocation
45
MBCA BANK LIMITED

FINANCIAL RISK MANAGEMENT (continued)

This note presents financial information on the Banks exposure to each of the above risks,
the Banks objectives, policies and processes for measuring and managing risk and the
management of capital.
5.1
Risk management framework

The Board of directors oversees the Banks risk management framework and is ultimately
responsible for setting risk tolerance limits and ensuring the existence of a robust risk
governance framework incorporating:

First Line of Defence - an accountable and responsible management together with

the Board;
Second Line of Defence - an effective independent risk oversight function led by the
Chief Risk Officer as well as an Enterprise Governance and Compliance function; and
Third Line of Defence - independent assurance provided by Internal Audit and External
Audit. The Bank has a strong risk management culture that is embedded in the
Nedbank Groups strategic framework. The Banks Enterprise-wide Risk Management
Framework (ERMF) contains the risk universe, which lists 17 risk categories with
their respective risk management policies. Enterprise Risk Management (ERM) is a
structured and integrated approach to risk management, aligning strategy, processes,
people, technology and knowledge with the purpose of evaluating and managing the
opportunities, threats and uncertainties that the Bank faces as it strives to create
shareholder value. It involves integrating risk and capital management effectively
through the Banks risk universe, business units and operating divisions.
The Banks risk exposure remained within acceptable levels in all risk categories. The Bank
continues to strengthen its risk management systems in order to remain abreast of the
challenges that are presented by changes in the economic and regulatory environment.
5.2
Credit risk
The risk arising from the probability of borrowers and/or counterparties failing to meet
their repayment commitments (including accumulated interest) and in particular risks
arising from impaired or problem assets and the banks related impairments, provisions or
reserves. It also includes risk arising from exposure to related persons. Credit risk has the
following sub risks:

46
Collateral risk;
Concentration risk;
Counterparty risk;
Country risk;
Issuer risk;
Industry risk;
Settlement risk;
Transfer (sovereign) risk;
Underwriting (lending) risk; and
Securitisation risk or re-securitisation structures.
MBCA BANK LIMITED

5.2
Credit risk (continued)

Credit risk is managed through a comprehensive system of credit analysis, credit approval,
credit monitoring and review, and credit loss control. The Banks Credit policy, which is
subject to annual review, regulates the granting of all credit facilities and aspects of credit
risk management. Decisions are made through formal meetings of the Board Lendings
Committee and the Management Credit Committees.
All facilities are risk rated whether they are on-balance sheet, off-balance sheet, personal or
corporate. The Bank maintains impairment allowance to cushion the financial asset against
objective evidence of impairment as a result of one or more loss event if that loss event
has an impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated. Financial assets are measured at amortised cost. The
ratio of non-performing loans increased from 3.19% recorded in December 2014 to 6.5%
mainly due to increases in defaults in the personal unsecured loans. Country risk and credit
counterparty risk are still perceived high making it difficult for the banking sector to secure
credit on favourable terms.
47
48
4783 079
Net carrying amount
Held to maturity investments

securities
92 794 823
747 275
747 275
747 275
948 080
948 080
948 080
19 057 891
19 057 891
19 057 891
Cash and cash

equivalents
14 442 057 113 072 019
14 442 057 113 072 019
14 442 057 113 072 019
The bank does not have financial assets that have been classified or designated at fair value through profit or loss.
103 192446
Neither past due

nor impaired
Total carrying amount
97947 215
Net carrying amount
Available for sale assets
(2 426 294)
(1 328 131)
90 657 957
93 084 251
1721 000
99275 346
462 152
Collectively Impaired
Gross carrying amount
Allowance for impairment
-portfolio
Net carrying amount
1 721 000
462 152
415 866
(1014 735)
(1783 262)
96235 852
1 430 601
106 303 839
6566 341
Past due but not

individually impaired
losses-specific
Available for sale

investments
71 084 293
71 084 293
71 084 293
2015 2014 2015 2014 2015 2014 2015 2014

US$ US$ US$ US$ US$ US$
US$
US$
Individually impaired
losses-specific

Assets at amortised cost
Loans and Advances to

Customers
Credit quality analysis
5.2
5.2.1
MBCA BANK LIMITED

MBCA BANK LIMITED

5.2
5.2.1
Credit quality analysis (continued)
5.2.1.1
Individually impaired
The Bank regards a loan and advance or a debt security as impaired in the following
circumstance:

There is objective evidence that a loss event has occurred since initial recognition
and the loss event has an impact on future estimated cash flows from the asset; and
A personal loan is overdue for 90 days or more.
A loan that has been renegotiated due to deterioration in the borrowers condition is usually
considered to be impaired unless there is evidence that the risk of not receiving contractual
cash flows has reduced significantly and there are no other indicators of impairment. Loans
that are subject to a collective impairment allowance are not considered impaired. Impaired
loans and advances are graded (Non Performing) NP1 to NP3 in the Banks internal credit
risk grading system.
The table below analyses the aging of individually impaired loans and advances to
customers and the net position after deducting impairment allowance.

20152015
Past due 91 days -180 days
Past due 365 days +

2014
Past due 365 days +

Gross Net
US$ US$
6065 259
336 287
164 795
4444 549
220 838
117 692
6566 341
4783 079
612 642
550 880
267 079
239 047
150 800
26 019
1 430 601
415 866
5.2.1.2 Past due but not individually impaired loans and advances
Past due but not individually impaired loans and advances are those for which contractual
interest or principal payments are past due, but the Bank believes that specific impairment
is not appropriate on the basis of the level of security /collateral available and / or stage
of collection of amounts owed to the Bank. A collective impairment provision has been
recognised on these loans. Loans and advances less than 90 days past due are not usually
considered impaired, unless other information is available to indicate the contrary. The
gross amount of loans and advances by class to customers that were past due but not
impaired were as follows:
49
MBCA BANK LIMITED

5.2
5.2.1
5.2.1.2
Past due but not individually impaired loans and advances (continued)

2015
Past due 365 days +

2014
Past due 365 days +

5.2.1.3
Gross Net
Overdrafts
Total
US$ US$
173 126
97 632
191 394
173 126
97 632
191 394
462 152
462 152
81 436
192 398
1 447 166
81 436
192 398
1 447 166
1 721 000
1 721 000
Collectively impaired loans and advances to customers

Collectively impaired loans and advances are loans for which the Bank determines
that there is no objective impairment on them individually, but there is possibility for
impairment when grouped into assets of the same characteristics and behavioural trends.
The table below analyses the aging of impaired loans and advances to customers and the
net after the collective provisioning recognised on them.

Gross Net
US$
US$
2015
Not past due
98681 998 97377 461
Past due up to 90 days
593 348
569 754

99275 346 97947 215

2014
Not past due
86 264 393 84 109 001
Past due up to 90 days
6 819 858
6 548 956

93 084 251 90 657 957
50
MBCA BANK LIMITED

5.2
5.2.1
5.2.1.4

The Bank establishes an allowance for impairment on assets carried at amortised cost that
represents its estimate of incurred losses in its loan portfolio. The main components of this
allowance are a specific loss component that relates to individually significant exposures,
and a collective loan loss allowance established for groups of homogeneous assets as
well as for individually significant exposures that were subject to individual assessment for
impairment but not found to be individually impaired.
The table below sets out a reconciliation of allowance balances as at the respective year
end.

Balance as at 1 January 2014
Gross impairment charge
Amounts written off

Amounts written off

Balance at 31 December 2015
5.2.1.5
Specific
Portfolio
allowance allowance
Total
US$ US$ US$
807 317
716 735
(499 317)
1 081 884
1 344 410
-
1 889 201
2 061 145
(499 317)
1 024 735 2 426 294

3 451 029
2 085 063 (1 098 163)
986 900
(1 326 536)
- (1 326 536)
1 783 262
1 328 131
3 111 393
Loans and advances write-offs

The Bank writes off loans and advances, when the Credit Committee determines that the
loan or security is uncollectible. The determination is made after considering information
such as the occurrence of significant changes in the borrowers or issuers financial
position such that the borrower/issuer can no longer pay the obligation, or that the
proceeds from collateral will not be sufficient to pay back the entire exposure. Amounts
written off during the year were:

Amounts written off through profit and loss
2015 2014
US$ US$
1 326 536
499 317
51
MBCA BANK LIMITED

5.2
5.2.1
5.2.1.6
Collateral against loans and advances

The Bank holds collateral against loans and advances to customers in the form of
mortgage interest over property, other registered securities over assets, and guarantees.
Estimates of fair value are based on the value of collateral assessed at the time of
borrowings, and generally are not updated except when a loan is individually assessed
as impaired. Collateral is not held against investment securities.
An estimate of the fair value of collateral and other security enhancement held against
loans and advances to customers is shown below:

2015 2014
US$ US$
Against individually impaired loans and advances

Property
5720 344 1 756 668

Gross loans and advances
7028 493 3151601
Percentage of exposure that is covered by collateral
Against collectively impaired loans and advances
Property, NGCBs* and Cash Cover

Gross loans and advances
Percentage of exposure that is covered by collateral
81%
56%
110312 178 64526 480

99275 349 92678 522
111%
70%
The Bank did not take any possession of collateral held as security against loans and
advances. The Banks policy is to pursue timely realisation of the collateral in an orderly
manner. The Bank does not use the non-cash collateral for its own operations.
*NGCB is Notarial General Covering Bond.
5.2.1.6.1
52
Collateral against Home loans

The Bank holds on average 65% Loan to Value (LTV) ratio on home loans. LTV is
calculated as the ratio of the gross amount of the loan to the value of the collateral.
The valuation excludes any adjustments of obtaining and selling the collateral. The
value of the collateral for residential property is at origination. No updates have been
done on changes in house price indices.
MBCA BANK LIMITED

5.2
5.2.1
5.2.1.7
Concentration of credit risk

The Bank monitors concentration of credit risk by sector. All loans and advances to
customers are for customers operating within Zimbabwe. An analysis of the concentration
of credit risk from gross loans and advances at the reporting date is shown below:

Agriculture and horticulture
Consumer loans
Manufacturing
Retail and wholesale
Food and beverages
Mining
Services
Transport
Tourism
Construction
Other
Conglomerates

2015 2014
US$ %
US$ %
23 255 275
23356 467
11591 737
8978 791
8 257 966
3 966 035
14 812 090
4810 553
2 501 483
1 276 209
2639 685
857 548
22
22
11
8
8
4
14
5
2
1
2
1
22 732 537
24 991 963
11608 166
12 621 354
7 744 075
4 373 793
4 158 337
3 543 752
2 183 104
1492 083
754 214
32 474
24
26
12
13
8
5
4
4
2
2
-
106 303 839
100
96 235 852
100
Concentration risk in the Banks loan book has been reducing on the back of deliberate
efforts to diversify exposures across performing industry sectors. Of note is the continued
support to direct agriculture, whilst we maintain our position in commodity finance to
tobacco.
5.2.1.8
Held to maturity
The Bank held to maturity assets as at 31 December 2015 as disclosed on Note 20. No
impairment has be recognised in respect of this class.
5.2.1.9

The Bank held cash and cash equivalents of US$113 072 019 as at 31 December 2015
(2014: US $71 084 293), which represents its maximum credit exposure on these assets
as disclosed in Note 17.
53
MBCA BANK LIMITED

5.2
5.2.1
5.2.1.10
Settlement risk
The Bank activity may give rise to risk at the time of settlement of transactions and
trades. Settlement risk is the risk of loss due to the failure of an entity to honour
its obligations to deliver cash, securities or other assets as contractually agreed.
Settlement limit form part of the credit approval/limit monitoring process described
earlier. Acceptance of settlement risk on free settlement trades requires transaction
specific or counterparty specific approval from the Risk Department.
5.2.1.11
Offsetting financial assets and financial liabilities

The Bank does not have financial assets and financial liabilities that are subject to
offsetting in the statement of financial position.
5.3
Liquidity risk
There are two types of liquidity risk, namely funding liquidity risk and market liquidity
risk. Funding liquidity risk is the risk that the bank is unable to meet its payment
obligations as they fall due. These payment obligations could emanate from depositor
withdrawals, the inability to roll over maturing debt or meet contractual commitments
to lend. Market liquidity risk is the risk that the bank will be unable to sell assets,
without incurring an unacceptable loss, in order to generate cash required to meet
payment obligations under a stress liquidity event.
The primary role of the Bank in terms of financial intermediation is the transformation
of short-term deposits into longer-term loans. By fulfilling this role, Banks are inherently
susceptible to liquidity mismatches and consequently funding and market liquidity
risks. Concentration risk is a sub-risk of liquidity risk.
Liquidity risk management strategy is determined by the Asset and Liabilities
Committee (ALCO) which reviews liquidity on a monthly basis in addition to assessing
daily funding requirements through the Treasury Department, with the Market Risk
function providing ongoing independent oversight.
The Bank remained in a sound liquidity position and was able to comfortably meet
funding commitments as they fell due. The Bank was compliant with all liquidity risk
limits with a prudential liquidity ratio of 69% as at 31 December 2015 and above the
prudential minimum of 30% and above market average of 45.4%. Whilst market deposits
remained generally short term and transitory in nature, management continued to be
conservative in deploying these into assets with sufficient buffers to support lending.
The Bank continues to put in place strategies to manage concentration risk in its deposit
base with occasional breaches in internal limits. Stress testing results revealed that the
bank has sufficient sources of funding to meet liquidity requirements under various
short term stress scenarios. The stress test results also provide a tool for testing the
adequacy of the Banks contingent liquidity management plan in the event of adverse
shocks.
54
MBCA BANK LIMITED

5.3
Liquidity risk (continued)
5.3.1
Exposure to liquidity risk

The key measure used by the Bank for managing liquidity risk is the liquidity ratio of net
liquid assets to deposits from customers. For this purpose the liquidity ratio looks at the
relationships between all liquid assets versus demand deposits from customers and other
Banks. The table below shows the maximum, minimum and average for the year:
5.3.2
2015 2014
At 31 December
Average
Minimum for the year
Maximum for the year
69%
62%
63% 61%
54%
58%
69%
71%
Liquidity gap analysis

Below is a table with an analysis of the liquidity gap between financial assets and financial
liabilities. All other non financial assets and liabilities shown on the statement of financial
position are expected to be recovered or settled more than 12 months after the reporting
date.
55
56
5.3.2
(20930 235)
(4035 090)
298 087
-
-
40 880
157005 100
102 285 677
27397 734
10 330 979
95 565
140109 955
16895 145
16895 145
747 275
19 057 891
25 619
1 843 285
237 938 535
102 285 677

80 605 915
10 330 979
7 835 248
201 057 819
Liquidity gap
36 880 716

Cumulative gap
46006 006
-
45561 217
-
444 789
25075 771
2 054 386
25 619
37 999
65 508
16875 703
49610 670
103 192 446
6 016 556
107 055 463
113 072 019
Financial assets
Cash and cash
equivalents
Loans and advances
to customers
Available for sale
Held to maturity
investments securities
Current tax assets
Other assets

Financial liabilities
Demand deposits
Term deposits
Savings deposits
Other liabilities
(6788 363)
(2753273)
7249 526
-
5169 997
-
2 079 529
4496 253
5 569
-
573 541
3917 143
38 127 771
44916 134
4 870 732
-
2476 967
-
2 393 765
49786 866
16 997 936
-
-
32788 930
36 880 716
(1 247 055)
2 821 600
2 821 600
1 574 545
1 190 865
383 680
Carrying
Less than
3 months
1 year to Indeterminable
Amount
1 month
1-3 months
to 1 year
5 years
Liquidity gap analysis (continued)
5.3

2015
MBCA BANK LIMITED

Liquidity gap analysis (continued)
5.3.2
(13 771 714)

(13 771 714)
31 921 519
Cumulative gap
Liquidity gap
123 879 764
110 108 050
183 834 209
151 912 690
2 000 000
1 059 330
14 442 057
4 574 956
719 669
948 080
64 751 449
44 353 774
7 479 164
55 999
7 239 378
35 244 758
92784823
64 751 449
66 699 684
7 479 164
55 999
12 926 394
71 084 293
71084 293
Demand deposits
Term deposits
Savings deposits
Current tax liability
Other liabilities
Financial Assets
Cash and cash
equivalents
Loans and advances
to customers
Available for sale
Held to maturity
Other assets
(18 639 230)
(4 867 516)
23 551 230
-
22 345 910
-
-
1 205 320
18 683 714
6 000 000
672 362
33 054
11 978 298
8 349 802
26 989 032
821 173
-
-
-
-
821 173
27 810 205
-
168 091
27 642 114
32 010 006
23 660 204
1 255 971
-
-
-
-
1 255 971
24 916 175
6 442 057
359 108
195 357
17 919 653
31 921 519
(88 487)
2 404 552
2 404 552
2 316 065
2 316 065
Carrying
Less than 1
1-3
3 months
1 year to
Indeterminable
Amount
month
months
to 1 year
5 years
5.3

2014
MBCA BANK LIMITED

57
MBCA BANK LIMITED

5.3
5.3.3
Maturity analysis for financial liabilities and financial assets

The non-derivate financial liabilities and assets amount have been shown using the
undiscounted cash flows and the related accrued interest.
The Banks expected cash flows on some financial assets and financial liability vary
significantly from the contractual cash flows. The principal differences are:

Demand deposits from customers are expected to remain stable or gradually run out
in line with customer spending behavior; and
Retail mortgage have original contractual maturity of between 10 and 20 years but
may have an average duration of 7 years should customers exercise their rights
given the embedded option in the product.
Unrecognised loan commitments have not been included in the liquidity analysis because
these are revocable. The Bank reserves the right to allow a drawdown depending on
certain contractual condition been satisfied. However the Bank maintains a sufficiently
healthy liquidity buffer to accommodate such drawdowns requirements. Issued financial
guarantees have also not been included in this liquidity analysis because all are cash
covered and have already been included in term deposits.
5.3.4
Liquidity reserves
As part of the management of liquidity risk arising from financial liabilities, the Bank holds
liquid assets comprising cash and cash equivalents, debt securities issued by Government
and equity investments which can be readily sold to meet liquidity requirements.
The table below sets out the components of the Banks liquidity reserves:

Balances with Central Bank
Unencumbered
Government Stock*
Investments security

2015
2015
2014
2014
Carrying
Fair
Carrying
Fair
amount
value
amount
value
US$ US$
US$ US$
63 594 809
49 477 210
63 594 809 31 542 725

49 477 210 39 541 568
31 542 725
39 541 568
19 057 891
278 681
19 057 891 14 442 057

278 681
278 681
14 442 057
278 681
132 408 591 132 408 591 85 805 031
85 805 031
* This is classified as held to maturity investments on the statement of financial position.
58
MBCA BANK LIMITED

5.3
5.3.5
Financial assets pledged as collateral

Assets are pledged as collateral for the Banks major activities, such as cash withdrawals,
clearing, and real time gross settlement. The Bank pledges collateral for its participation
on the Zimswitch platform and have pledged treasury bills of US$3 606 878 to a local
financial institution in return for a deposit US$7 328 290.
5.4
2015 2014
US$ US$
Cash collateral to Zimswitch

428 600
338 797
Treasury bills
3 606 878

4 035 478
338 797

Market risk
Market risk in the banking book is the risk of loss in the banking book as a result of adverse
changes in foreign exchange rates and interest rates. The sub-risks of market risk in the
banking book are:

Interest rate risk in the banking book;

Foreign exchange translation risk; and
Foreign exchange transaction risk in the banking book.
he bank is continually improving the technologies that supports the market risk
T
management process and is now working on modeling the behavioural aspects of the
balance sheet portfolio.
5.4.1
Exposure to interest rate risk

Interest rate risk in the banking book is the risk that the Banks earnings or economic value
will decline as a result of changes in interest rates. The sources of interest rate risk in the
Banking book are:

Repricing risk (mismatch risk): timing differences in the maturity/ repricing of Bank
assets, liabilities, and off balance sheet positions; and
Basis risk: imperfect correlation in the adjustment of the rates earned and paid on
different instruments with otherwise similar repricing characteristics.
To maximise profitability, the Bank manages the mismatch of its assets and liabilities in
line with interest rate forecasts established by ALCO. The management of this exposure
is monitored through a gap and sensitivity analysis for which specific limits are set in line
with the Banks interest rate risk appetite.
59
60
Cumulative gap
Interest rate repricing gap

Demand deposits
Term deposits
Savings deposits
Other liabilities

-
43 478 702
-
-
-
-
-
237 938 535 117 894 436
-
36 439 851
10 330 979
-
46 770 830
19 057 891
25 619
1 843 285
102 285 677

80 605 915
10 330 979
7 835 248
201 057 819
71 123 606
71 123 606
13 584 814
298 087
747 275
36 880 716
2 054 386
-
-
97 429 239
103 192 446
41 229 718
(29 893 888)
43 478 702
65 508
5 448 364
20 167 110
113 072 019

6 016 556
40 862 768
(366 950)
687 362
-
687 362
-
-
320 412
5 569
-
-
314 843
110 120 925
102 285 677

7 835 248
89 140 937
25 619
1 843 285
383 680
86 888 353
57 860 704
36 880 716
16 997 936 (20 979 988)
-
-
-
-
16 997 936
16 997 936
-
-
Carrying
Less than
3 months Non-Interest
amount
1 month
1-3 months
to 1 year
1-5 years
bearing
Market risk (continued)

Exposure to interest rate risk - non trading portfolios (continued)
Financial assets
Cash and cash
equivalents
Loans and advances
to customers
Available for sale
Held to maturity
Current tax assets
Other assets

2015
5.4
5.4.1
MBCA BANK LIMITED

35 244 758
-
2 000 000
-
92784 823
948 080
14 442 057
4 574 956
6 000 000
-
11 978 298
-
-
27 642 114
6 442 057
-
17 919 653
4 574 956
948 080
52 546 865

183834 209 55 782 186
17 978 298
27 642 114
24 361 710
58 069 901

Demand deposits
64 751 449
-
-
-
-
64 751 449
Term deposits
66 699 684
41 917 698
22 345 910
-
2 436 076
Savings deposits
7 479 164
7 479 164
-
-
-
Current Income tax liability
55 999
-
-
-
-
55 999
Other liabilities
12 926 394
-
-
-
-
12 926 394

151 912 690 49 396 862
22 345 910
-
2 436 076
77 733 842

Interest rate repricing gap
31 921 519
6 385 324 (4 367 612)
27 642 114
21 925 634 (19 663 941)

Cumulative gap
6 385 324
2 017 712
29 659 826
51 585 460
31 921 519
18 537 428
71084 293
Carrying
Less than
3 months Non-Interest
amount
1 month
1-3months
to 1 year
1-5 years
bearing

Exposure to interest rate risk - non trading portfolios (continued)
Financial Assets
Loans and advances
to customers
Available for sale
Held to maturity
Other assets

2014
5.4
5.4.1
MBCA BANK LIMITED

61
MBCA BANK LIMITED

5.4
5.4.2
Interest rate sensitivity analysis

The Bank uses sensitivity analysis to assess the vulnerability of the institution to adverse
movements in interest rates. The Bank is now making interest rate risk stress testing
an integral part of the overall risk governance framework. Stress testing results impact
decision making at the appropriate management levels.
Stress tests conducted for interest rate risk under various scenarios revealed that:

A 100 basis points (bp) instantaneous parallel decline in interest rates results in a
potential loss of US$528 000 compared to US$407 000 in 2014 which is within the
Banks risk appetite thresholds.
There is a potential increase in re-pricing gaps between assets and liabilities given
the short nature of liabilities and the tendency to go long on fixed rate assets.
The absence of a clear market yield curve to provide price discovery mechanism
remains a threat to the Banks interest margins.
Limited availability of investment options in the market constrains the banks agility
to unwind risky positions in order to restructure its asset and liability profile in need.
5.4.3
Foreign exchange risk
5.4.3.1
Foreign exchange transaction risk

This is the risk that known or ascertainable currency cashflow commitments and
receivables are uncovered, and as a result have an adverse impact on the financial results
and/or financial position of the Bank due to movements in exchange rates.
It is a sub-risk of market risk in the banking book. Foreign exchange transaction risk in the
banking book includes:

Known or ascertainable currency cash flow commitments and receivables; and

foreign funding mismatch.
The Risk and Compliance Committee (board sub-committee) has established acceptable
foreign funding mismatch positions for the Bank.
5.4.3.2
Foreign currency transaction risk

Foreign currency translation risk is the risk to earnings or capital arising from converting
the Banks offshore banking book assets or liabilities, or commitments or earnings from
foreign currency to local or functional currency.
Since the adoption of the United States of American dollar as the functional currency,
material currency exposures are predominantly in the South African Rand. Exposures are
managed through notional currency position limits and compliance with Reserve Bank
of Zimbabwe guidelines, which are closely monitored by market risk and ALCO. Currency
translation risk is receiving greater attention in order to mitigate the impact of revaluation
losses.
62
MBCA BANK LIMITED

5.4
5.4.3
Foreign exchange risk (continued)
5.4.3.3
Exposure to foreign exchange risk

The next table summarises the Banks non trading assets exposure to foreign currency
exchange rate risk at 31 December 2015. The figures quoted below are the US$ equivalent
for the respective foreign currency positions at the prevailing exchange rate per Note 36.
63
64
Exposure to foreign exchange risk (continued)
5.4.3.3
1 006 236
-
-
44 534
1 050 770
Liabilities (US$ equivalent)

Demand deposit
Term deposits
Savings deposits
Other liabilities
Total financial liabilities
786 800
1 837 570
Total financial assets
Net financial position
1 834 413
3 157
-
-
-
-
-
Assets (US$ equivalent)

Other assets
Current tax assets
Deferred tax
130 701
216 302
211 255
-
-
5 047
347 002
347 002
-
-
-
-
-
-
EUR
5.4.3
ZAR
5.4
2015
24 882
89 367
59 381
-
-
29 986
114 249
114 229
20
-
-
-
-
-
GBP
37 054 156
199 621 317
100 941 767

80 605 915
10 330 979
7 742 656
236 675 473
110 594 863

103 189 250
747 275
19 057 891
1 843 285
25 619
1 217 290
USD
101 469
80 063
67 038
-
-
13 025
181 532
181 513
19
-
-
-
-
-
Other
38 098 007
201 057 819
102 285 677

80 605 915
10 330 979
7 835 248
239 155 826
113 072 020

103 192 446
747 275
19 057 891
1 843 285
25 619
1 217 290
Total
MBCA BANK LIMITED

5.4.3.3
4 590 499
-
-
-
274 989
4 865 488
1 939 300
-
-
-
56 754
1 996 054
2 869 434
Assets (US$ equivalent)

Other assets
Total financial assets
Liabilities (US$ equivalent)

Demand deposits
Term deposits
Savings deposits
Current income tax liability
Other liabilities
Total financial liabilities
Net financial position
399 337
749 092
164 642
-
-
-
584 450
1 148 429
408 920
-
-
-
739 509
EUR
5.4.3
ZAR
5.4
2014
30 886
112 432
65 620
-
-
-
46 812
143 318
97 601
-
-
-
45 717
GBP
28 368 494
148 901 101
62 451 230
66 699 684
7 479 164
55 999
12 215 024
177 269 595
65 602 118
92 784 823
948 080
14 442 057
3 492 517
USD
253 368
154 011
130 657
-
-
-
23 354
407 379
385 155
-
-
-
22 224
Other
31 921 519
151 912 690
64 751 449
66 699 684
7 479 164
55 999
12 926 394
183 834 209
71 084 293
92 784 823
948 080
14 442 057
4 574 956
Total
MBCA BANK LIMITED

65
MBCA BANK LIMITED

5.4
5.4.3
5.4.3.3 Exposure to foreign exchange risk (continued)

Sensitivity analysis to exchange rate movements- Rand
The table below shows the impact of a 40% point movement in exchange rate on the rand
balances as at 31 December 2015 and the figures are the US$ equivalent for the respective
foreign currency positions at the prevailing exchange rate per Note 36.
2015

Currency

ZAR
Assets
Cash and
cash
equivalents
1 837 570
Liabilities Net balance Effect of 40%

Deposits
2015
increase in
from
Asset/
exchange
customers (Liability)
rate
(1 050 860)
786 710
(224 774)
Effect of 40%
decrease in
exchange
rate
524 473
A 40% increase in exchange rate will decrease the profit before tax by US$224 774 through
increase in unrealised exchange losses, while a 40 percentage point decrease will increase
the profit before tax by the US$524 473 as a result of the increase in unrealised exchange
gains.
Sensitivity analysis to exchange rate movements- EUR, GBP and Other
2015

Currency

Assets
Cash and
cash
equivalents

Deposits
2015
increase in
from
Asset/
exchange
customers (Liability)
rate
Effect of 10%
decrease in
exchange
rate
EUR
GBP
Other
347 002
114 229
181 513
(216 303)
(89 367)
(80 063)
130 700
24 862
101 450
(11 882)
(2 260)
(9 223)
14 522
2 762
11 272
Total
642 744
(385 733)
257 012
(23 365)
28 556
A 10% increase in exchange rate will decrease the profit before for the year by US$23 365 as
a result of increase unrealised exchange losses, while a 10 percentage point decrease will
increase the profit before tax for the year by US$28 556 as a result of increase unrealised
exchange gains.
66
MBCA BANK LIMITED

5.4
5.4.3
5.4.3.3

Sensitivity analysis to exchange rate movements
The table below shows the impact of a 30% movement in exchange rate on the foreign
currency balances as at 31 December 2014 and the figures are the US$ equivalent for the
respective foreign currency positions at the prevailing exchange rates per Note 36.
2014

Currency

Assets
Cash and
cash
equivalents

Deposits
2014
increase in
from
Asset/
exchange
customers
(Liability)
rate
Effect of 30%
decrease in
exchange
rate
ZAR
EUR
GBP
Other
4 865 488
1 148 429
143 318
407 379
(1 996 054)
(749 092)
(112 432)
(154 011)
2 869 434
399337
30 886
253 368
3730 264
519 138
40 152
329 378
2 008 604
279 535
21 620
177 358
Total
6 564 614
(3 011 589)
3 553 025
4618 932
2 487 117
A 30% increase in exchange rate will increase the profit before tax for the year by
US$1 065 907 through increase in unrealised exchange gains, while a decrease will
decrease the profit before tax by the same amount as a result of the decrease in unrealised
exchange gains.
67
MBCA BANK LIMITED

5.5
Operational risk
This is the risk of loss resulting from inadequate or failed internal processes, people or
systems or from external events. This includes legal risk but, excludes strategic risk and
reputational risk. The event types of operational risk are:

business disruption and system failures;

clients, products and business practices;
damage to physical assets;
employment practices and workplace safety;
execution, delivery and process management;
external fraud;
internal fraud
legal risk (legal risk is a sub category of the sub risk clients, products and business
practice); and
model risk (for economic capital purposes, model risk is a sub category of subrisk
clients, products and business practices).
The Bank Operational Risk Framework includes strategies articulated in concise

operational risk policies, an operational risk governance structure, operational risk
monitoring, loss recording, reporting and escalation processes and risk reporting
structure. Operational risk loss tolerance thresholds are set on an annual basis based on
historic loss experience and managements view about the future operating environment,
given controls in place. Operational risk management is embedded in the day to day
activities of business units and operational departments and supported by independent
risk monitoring and audit and assurance functions.
The Banks Executive Committee, Enterprise Risk Committee (ERCO) and the various
operational committees meet on a regular basis to review and ensure line functions are
effectively managing this risk.
The Joint Operations Forum monitors and plans all issues pertaining to information
technology risk (both operational and strategic) and manages the Banks business
continuity capability.
Risk and Control Self Assessments (RCSA) are now well embedded across business
units. RCSA is a process for identifying and assessing, monitoring and managing key risks
within a business unit and evaluating the effectiveness of the controls that are in place
to manage these risks. The Bank is satisfied with the quality of operational loss recording
and control in line with Basel II requirements.
The bank met its operational net loss thresholds for the year.
68
MBCA BANK LIMITED

5.6
Compliance risk
This is the risk of legal or regulatory sanctions, material financial loss, or loss of reputation
the Bank may suffer as a result of its failure to comply with laws, regulations, rules, related
self-regulatory organisation standards, and codes of conduct applicable to its banking and
other activities. It may also expose the Bank to loss of authorisation to operate and an
inability to enforce contracts.
An independent Enterprise Governance and Compliance function is in place. Whilst
individual business and operating functions are responsible and accountable for compliance
management in their environments, the unit monitors and guides the Bank on compliance
matters ensuring the Bank achieves full compliance in line with the Boards attitude of zero
tolerance to legal or compliance breaches.
5.7
Strategic risk
The risk of an adverse impact on capital and earnings due to business policy decisions
(made or not made), changes in the economic environment, deficient or insufficient
implementation of decisions, or a failure to adapt to changes in the environment. Strategic
risk is either the failure to do the right thing, doing the right thing poorly, or doing the
wrong thing. Strategic risk includes:

The risk associated with the deployment of large chunks of capital into strategic
investments that subsequently fail to meet stakeholders expectations;
The risk that the strategic processes to perform the environmental scan, align various
strategies, formulate a vision, strategies, goals and objectives and allocate resources
for achieving, implementing, monitoring and measuring the strategic objectives are
not properly in place or are defective; and
failure to adequately review and understand the environment in which the bank
operates leading to underperformance of its strategic and business objectives.
The Board is ultimately responsible for the development, approval and application of the
Banks strategic risk principles. The Board approves the Banks strategy, whilst management
is responsible for implementation and ensuring that regular reviews are done in line with
changes in operating conditions. There are various ongoing strategy review initiatives at
country and Group level, with the Banks Managing Director providing leadership.
5.8
Reputational risk
The risk of impairment of the Banks image in the community or the long-term trust
placed in the Bank by its shareholders as a result of a variety of factors, such as the Banks
performance, strategy execution, brand positioning and competitiveness, ability to create
shareholder value, or an activity, action or stance taken by the Bank. This may result in loss
of business and/or legal action.
69
MBCA BANK LIMITED

5.9
Basel II Implementation
Significant progress was made in 2015 in closing the Basel II gaps management had
identified. The Bank produced its first Internal Capital Adequacy Assessment Process
(ICAAP), completed implementing its credit model validation framework and is now
finalizing calibration of its credit model. Key risk models for stress testing are in place
with the focus now on effective implementation. MBCA will continue to position itself to
pass the implementation test for best practice in risk management by anticipating future
enhancements to the countrys Basel II framework.
5.10
Capital management
5.10.1
Regulatory capital
The Banks objectives when managing capital, which is a broader concept than equity on
the face of the statement of financial position are:

To comply with the capital requirements set by the Reserve Bank of Zimbabwe (RBZ);
To safeguard the Banks ability to continue as a going concern so that it can continue
to provide returns for shareholders and benefits for other stakeholders;
To maintain a strong capital base to support the development of its business; and
To implement an effective Internal Capital Adequacy Assessment Process that
regularly aligns available financial resources to actual regulatory and economic
capital, in order to meet the Banks current and future capital requirements given its
total risk exposure and risk under writing behavior going forward.
Capital adequacy and the use of regulatory capital are monitored monthly by the
Banks management, employing techniques based on guidelines developed by the Basel
Committee, as implemented by RBZ for supervisory purposes. The required information is
filed with the RBZ on a quarterly basis.
The Bank maintains a ratio of total regulatory capital to its risk-weighted assets of not
less than 12%, in line with guidelines provided by the RBZ as disclosed in this note. The
weighting seeks to reflect the varying levels of risk attached to assets and off-balance
sheet exposures. The Bank has sufficient economic capital to support the risks the Bank
is carrying.
The regulatory capital requirements are strictly observed when managing economic capital.
The Banks regulatory capital is managed by the Finance Department and comprises three
tiers:

70
Tier 1 capital: ordinary share capital, share premium and retained earnings after
deductions for loans to insiders and other regulatory adjustments relating to
allocation of capital for market and operational risk;
Tier 2 capital: asset revaluation reserves and collective impairment allowances; and
Tier 3 capital: amounts of tier 1 capital allocated to market and operational risks.
MBCA BANK LIMITED

5.10.1
Regulatory capital (continued)

The Banks policy is to maintain a strong capital base that will not limit new business
development.
The next table summarises the composition of regulatory capital and the ratios of the
Bank for the year ended 31 December 2015. Over the past two years, the Bank complied
with all the externally imposed capital requirements to which it is subject.

2015
71
MBCA BANK LIMITED

5.10
Capital Management (continued)
5.10.1
Regulatory capital (continued)

Teir 1 Capital
Share capital
Share premium
Retained earnings
Profit for the year
Regulatory reserve
Revaluation and fair value reserves
Less: Insider loans
Less: Revaluation and fair value reserves
Less: Regulatory reserve
Less: Tier 1 capital allocated to market risk
Less: Tier 1 capital allocated to operational risk

Total qualifying Tier 1 capital

Tier 2 capital
Regulatory reserve
Revaluation and fair value reserves
Portfolio provision for impairment


Tier 3 capital
Allocation of capital to market risk
Allocation of capital to operational risk


Total regulatory capital
2015
US$
2014
US$
89 499
17 784 930
17 964 316
5 835 252
1 102 104
50 509
(743 207)
(50 509)
(1 102 104)
(8 305)
(4 259 472)
89 499
17 784 930
13 685 962
5 380 458
82 745
(703 707)
(82 745)
(38 681)
(3 814 817)
36 663 013
32 383 644
1 102 104
50 509
1 476 529
82 745
1 385 575
2 629 142
1 468 320
8 305
4 259 472
38 681
3 814 817
4 267 777
3 853 498
43 559 932
37 705 462
172 816 492
160 546 761
Total regulatory capital ratio
25%
23%
Tier 1 capital ratio
21%
20%
Minimum RBZ total regulatory ratio
12%
12%

Total risk-weighted assets
72
MBCA BANK LIMITED

5.10
Capital Management (continued)
5.10.2
External ratings
The Bank is assessed by Global Credit Rating Company Limited (GCR), a credit rating
agency accredited by the Reserve Bank of Zimbabwe. The following are the ratings by
GCR of the Bank for the past three years.
Security Class
Rating Scale
Rating
Expiry Date
Long Term
National
April 2016
Long Term
National
April 2015
Long Term
National
May 2014
Long term debt rating scale

A - High credit quality. Protection factors are good

5.10.3
Reserve Bank of Zimbabwe ratings
The Reserve Bank of Zimbabwe conducted a risk-based on-site examination in May
2014. The results per the CAMELS rating scale with comparison against previous on-site
examination are summarised below:
5.10.3.1 CAMELS Ratings
CAMELS component
May 2014
September 2008
Capital adequacy
1-Strong
3-Fair
Asset quality
2-Satisfactory
2-Satisfactory
Management
3-Fair
3-Fair
Earnings
3-Fair
3-Fair
Liquidity
1-Strong
2-Satisfactory
Sensitivity to market risk
2-Satisfactory
2-Satisfactory
Composite Rating
2-Satisfactory
2-Satisfactory
5.10.3.2 Risk Assessment System (RAS) Ratings

RAS component
May 2014
Overall Inherent Risk
Moderate
Overall Risk Management System
Acceptable
Overall Composite Risk
Moderate
Direction of Overall Composite Risk
Stable
73
MBCA BANK LIMITED

5.10
Capital management (continued)
5.10.3
Reseve Bank of Zimbabwe ratings (continued)
5.10.3.3 Summary risk matrix

Type of risk
Level of
inherent risk
Adequacy
of risk
management
Overall
composite risk
Direction
of overall
composite risk
Credit
Moderate
Acceptable
Moderate
Stable
Liquidity
Low
Acceptable
Low
Stable
Interest Rate
Moderate
Acceptable
Moderate
Stable
Foreign exchange
Low
Acceptable
Low
Stable
Strategic
Moderate
Acceptable
Moderate
Stable
Operational
High
Acceptable
High
Increasing
Legal and compliance
Moderate
Acceptable
Moderate
Stable
Reputation
Low
Strong
Low
Stable
Overall
Moderate
Acceptable
Moderate
Stable
Key
Level of inherent risk
Overall Composite Risk
Low -
reflects a lower than average probability of an adverse
impact on a Banking institutions capital earnings. Losses
in a functional area with low inherent risk would have
little negative impact on the Banking institutions overall
financial condition.
Moderate -
could reasonably be expected to result in a loss which could
be absorbed by a Banking institution in the normal course of
business.
High -
reflects a higher than average probability of potential loss.
High inherent risk could reasonably be expected to result in
a significant and harmful loss to the Banking institution.
Low would be assigned to low inherent risk areas. Moderate risk

areas may be assigned a low composite risk where internal
controls and risk management systems are strong and
effectively mitigate much of the risk.
Adequacy of Risk Management Systems

Acceptable -
management of risk is largely effective but lacking in some
modest degree. While the institution might be having
some minor risk management weaknesses, these have
been recognised and are being addressed. Management
information systems are generally adequate.
Strong -
management effectively identifies and controls all types of
risk posed by the relevant functional areas or per inherent risk.
The board and senior management are active participants in
managing risk and ensure appropriate policies and limits are
put in place. The policies comprehensively define the Banks
risk tolerance, responsibilities and accountabilities and how
they are effectively communicated.
74
Moderate -
risk management systems appropriately mitigate inherent
risk. For a given low risk area, significant weaknesses in
the risk management systems may result in a moderate
composite risk assessment. On the other hand, a strong
risk management system may reduce the risk so that any
potential financial loss from the activity would have only a
moderate negative impact on the financial condition of the
organisation.
High -
risk management systems do not significantly mitigate the
high inherent risk.
Direction of Overall Composite Risk
Stable based on the current information, risk is expected to be
stable in the next twelve months.
Increasingbased on the current information, risk is expected to
increase in the next twelve months.
MBCA BANK LIMITED

5.10
Capital management (continued)
5.10.3
Reseve Bank of Zimbabwe ratings (continued)
5.10.3.4
Overall rating
The composite CAMELS rating assigned to the Bank is 2 i.e. satisfactory. Institutions in
this group are fundamentally sound. For an institution to receive this rating, generally, no
component rating should be more severe than 3. Only moderate weaknesses are present
and are well within the Board of Directors and managements capabilities and willingness
to correct. These institutions are stable and are capable of withstanding business
fluctuations. These institutions are in substantial compliance with laws and regulations.
Overall risk management practices are satisfactory relative to the institutions size,
complexity and risk profile. There are no material supervisory concerns and, as a result,
the supervisory response is informal and limited.
FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of financial assets and financial liabilities that are traded in active market
are based on quoted market prices or dealer price quotation. For all other financial
instruments, the Bank determines fair values using other valuation techniques. For
financial instruments that trade infrequently and have little price transparency, fair
value is less objective and requires varying degrees of judgment depending on liquidity,
concentration, uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument.
6.1
Valuation models
The Bank measures fair values using the following fair value hierarchy, which reflects the
significance of inputs used in making the measurements. The fair values of financial assets
and financial liabilities that are traded in active market are based on quoted market prices
or dealer price quotation. For all other financial instruments, the Bank determines fair
values using other valuation techniques. For financial instruments that trade infrequently
and have little price transparency, fair value is less objective and requires varying degrees
of judgment depending on liquidity, concentration, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument.
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. This
level includes listed equity securities and debt instruments on exchanges (for
example, the Zimbabwe Stock Exchange).
Level 2 - Valuation techniques based on observable inputs, either directly (i.e. prices) or
indirectly (i.e. derived from quoted prices). This category includes instruments valued
using: quoted market prices for similar instruments, quoted prices for identical or
similar instruments in markets that are considered less than active or other valuation
techniques where all significant inputs are directly or indirectly observable from
market data.
Level 3 - Valuation techniques using unobservable inputs. This category includes all
instruments where the valuation technique inputs are not based on observable data
and the unobservable inputs have a significant effect on the instruments valuation.
This category includes instruments that are valued based on quoted prices for similar
instruments where significant unobservable adjustments or assumptions are required
to reflect the differences between instruments.
75
MBCA BANK LIMITED

FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
6.1
Valuation models (continued)

The table below analyses financial instruments measured at fair value at the end of
the reporting period, by the level in the fair value hierarchy into which the fair value
measurement is categorised.

Note
Level 1
Level 2
Level 3
Total

US$ US$ US$ US$
2015
Available for sale financial assets:
- Investment securities (equity)
19
-
- 104 998
- Unlisted shares
19
-
-
278 681

-
- 383 679

2014
Available for sale financial assets:
- Investment securities (equity)
19
- 195 357
-
- Unlisted shares
19
278 681
-

- 474 038
-

Measurement of fair value
104 998
278 681
383 679
195 357
278 681
474038
Fair value hierarchy

Level 3
The fair value of available for sale financial assets of US$383 679 has been categorised
under level 3 in the fair value hierarchy based on the inputs to the valuation technique
used.
76
MBCA BANK LIMITED

6.1
Valuation models (continued)

The following is reconciliation from the opening balances to the closing balances for the
level 3 fair values.
US$

Balance at 1 January 2015
Transfers from level 2
Fair value loss recognised in other comprehensive income

474 038
(90 359)
383 679
Valuation technique and significant unobservable inputs

The financial assets have been measured using the net assets value method whose
significant unobservable inputs include the value of the companys assets and liabilities.
6.2
Financial instruments not measured at fair value

The following table sets out the fair value of financial instruments not measured at fair
value and analyses them by the level in the fair value hierarchy into which each fair value
measurement is categorised.

2015
Assets
Other assets

Total assets

Liabilities
Other liabilities

Total liabilities

Net asset position
Level 1
Level 2 Level 3
Total
Fair value
US$ US$
US$ US$ US$
- 113 072 019

- 103192446
- 19057 891
-
1843285
- 113 072019
- 103192446
- 19057 891
-
1843 285
113 072019
103192 446
19057891
1843285
- 237165641
- 237165641
237165641
- 193 222 571

-
7835 248
- 193 222571
- 7835 248
193 222 571

7835248
- 201057819
- 201057819
201057819
36107822
36107822
36107 822
77
MBCA BANK LIMITED

6.2
Financial instruments not measured at fair value (continued)

2014
Level 1
Level 2 Level 3
US$
US$ US$
Total
Fair value
US$
US$
Assets
- 71 084 293
- 71 084293
71 084293
- 92784823
- 92784823
92784 823
- 14 442 057
- 14 442057
14 442057
Other assets
- 4574956
- 4574956
4574956

Total assets
- 182886129
- 182886129 182886129

Liabilities
Other liabilities

Total liabilities

Net asset position
- 138 930297
- 12926394
- 138 930297
- 12926394
138 930297
12926 394
- 151856691
- 151856691
151856 691
- 31029438
- 31029438
31029438
6.2.1

Cash and cash equivalents consists of notes and coins on hand, unrestricted balances in
local and foreign banks, liquid financial assets with original maturities of 3 months or
less. These balances are subject to insignificant risk of change in their fair value. It is the
directors assessment that the carrying amount of these balances approximates their fair
value at any given time.
6.2.2.

These financial assets are net of impairment provisions. The estimated fair value of loans
and advances is estimated to approximate the carrying amount due to non-availability of
benchmark interest rates to discount the expected future cash flows thereof.
The directors believe that current interest rates are market related and would re-issue the
loans at the same interest rate if needed. In addition, 68% of the portfolio balance has a
contractual maturity term within 1 year, which means discounting the future cash flows
for the significant portion of the balance would approximate the carrying amount. It is
from this assessment that directors believe that the carrying amount of these balances
reasonably approximate fair value as discounting the future cash flow using the current
interest rates would not result in significant differences from the carrying amount.
78
MBCA BANK LIMITED

6.2
Financial instruments not measured at fair value (continued)
6.2.3

These financial assets consist of treasury bills issued by the Reserve Bank of Zimbabwe
(RBZ) in lieu of foreign currency balances previously held by the RBZ, open market treasury
bills bought to support the Government of Zimbabwe and Afreximbank Trade Debt Backed
Securities. There is currently no observable active market for these instruments; or a
reliable proxy to discount the expected future cash flows. Directors believe that the carrying
amount approximates fair value on these instruments. In performing this assessment,
directors have determined that interest rates are consistent with the latest transactions
that the Bank entered into and the average tenor of the portfolio was short-term in nature.
6.2.4

The estimated fair value of deposits with no stated maturity, which includes non-interest
bearing deposits, is the amount repayable on demand. The estimated fair value of fixed
interest-bearing deposits approximates the carrying amount as interest rates quoted are
market related. It is the view of directors that the carrying amounts of these assets and
liabilities reasonably approximate fair values.
6.2.5
Other assets and other liabilities

Other assets have maturity profiles within 1 year which means that the effect of discounting
the future cash flows of the balance approximate the carrying amount.
A significant portion of the contractual maturity profile of other liabilities is within 1 year
implying that the effect of discounting is immaterial.
It is the view of the directors that the carrying amounts of other assets and other liabilities
reasonably approximate fair values.
79
80
Financial assets
Loans and advances to
customers
Held to maturity
Available for sale
Other assets
Total

Demand deposits
Term deposits
Savings deposits
Other liabilities
Total
-
-
-
747 275
-
747 275
-
-
-
-
-
113 072 019

-
-
-
-
113 072 019
-
-
-
-
-
-
-
-
-
-
-
1843285
1843 285
- 102 285 677

- 80 605 915
- 10 330 979
-
7835248
- 201057 819
-
-
-
-
19 057 891 103 192 446
19 057 891
- 103 192 446
19 057 891
102 285 677 102 285 677

80 605 915 80 605 915
10 330 979 10 330979
7835248
7835 248
201057 819 201057 819
747 275
747275
1843285
1843 285
237912 916 237912 916
19 057 891
103 192 446 103 192 446
113 072 019 113 072 019

Other
Total
Cash and cash Designated
Held to
Loans and
amortised
carrying
equivalents at fair value
maturity receivables
cost
amount
Fair value
Accounting classifications and fair values
6.3

2015
MBCA BANK LIMITED

6.3
Total
carrying
Other
amortised
-
-
-
-
-
Total
-
-
14 442 057
-
-
92 784 823
-
-
-
-
-
-
-
-
948080
4574 956
948 080
4574956
4574 956 183834 209
- 151856 691 151856 691
151856 691
64 751 449
66 699 684
7 479 164
12926 394
183834 209
14 442 057
- 14 442 057
-
4574956
92 784 823
71 084 293
- 92 784 823
- 71 084 293
- 64 751 449 64 751 449

- 66 699 684 66 699 684
-
7 479 164 7 479 164
- 12926 394 12926 394
948 080 14 442 057 92 784 823
948 080
-
-
-
71 084 293
71 084 293
cash equivalents at fair value

maturity receivables
cost
amount
Fair value
Demand deposits
Term deposits
Savings deposits
Other liabilities
Total
Available for sale
Other assets
Loans and advances

to customers
Held to maturity

2014

Cash and Designated
Held to Loans and
Accounting classifications and fair values (continued)
MBCA BANK LIMITED

81
MBCA BANK LIMITED

NET INTEREST INCOME

2015 2014
US$ US$
Interest income from:

Loans and advances to large corporates
Loans and advances to individuals
7 319 109
6 138 842
7 046 660
6 120 727
Loans and advances to business banking clients

Held to maturity investment securities
Placement with local banks
3 688 490
1 018 624
876 364
2 638 412
616 969
1 517 099
Home loans
Staff loans
302 789
298 650
224 499
Loans and advances to Small to Medium Enterprises


Interest expense on:
Deposit from large corporates
Deposits from banks
Deposits from individuals

148 972
77 812
9 223
61 065
19 869 652
18 234 654
(3 648 831) (3 004 987)

(1 318 147) (1 637 048)
(149 997)
(134 177)
(5 116 975)
(4 776 212)
14 752 677
13 458 442
FEES AND COMMISSION INCOME

Cash withdrawal fees

Account maintenance fees
Other income
International banking fees
Agency commission
RTGS processing fees

All income was recognised from the provision of services.
82
3 384 899
1 782 864
1 719 014
1 439 308
1 106 000
1 025 139
3 489 943
1 358 598
2 220 007
1 589 437
1 124 917
1 012 276
10 457 224
10 795 178
MBCA BANK LIMITED

NET TRADING AND DEALING INCOME

2015 2014
US$ US$
Trading and dealing income

Exchange and dealing income
Other treasury income

Trading and dealing expense
Currency revaluation losses

10
1 723 829
644 419
2 235 723
757 357
2 368 248
2 993 080
(33 668)
(46 534)
2 334 580
2 946 546
NET IMPAIRMENT LOSS ON FINANCIAL ASSETS
US$ US$
Net loan impairment charge
- Specific impairment charge
- Portfolio impairment (write back)/ charge
- Amounts written off during the year

Bad debts recovered

Net loan impairment loss
11
EMPLOYEE AND DIRECTORS COSTS
11.1
Payroll related costs

Long term benefits
Staff bonus
Short term benefits
Other staff costs
Directors fees and emoluments
Education fund
Employee Share Scheme expenses

MBCA Bank Limited Pension Fund
763 833
(1 103 469)
1 326 536
217 418
1 344 410
499 317
986 900
(266 066)
2 061 145
(361 222)
720 834
1 699 923
7 690 750
1 370 518
688 994
456 156
195 940
121426
56 616
13 435
7 376 467
1 296 634
612 969
439 532
308 082
126 503
50 000
128 000
10 593 835 10 338 187
The Bank operates a defined contribution retirement benefit plan for all qualifying
employees. The assets of the plan are held separately from those of the Bank in funds
under the control of trustees. Total contribution for the year included in long term benefit
was US$618 466 (2014: US$588 724).
83
MBCA BANK LIMITED

11
EMPLOYEE AND DIRECTORS COSTS (continued)
11.2
National Social Security Authority

The National Social Security scheme was introduced on 1 October 1994 and with effect
from that date all eligible employees became members of the scheme, to which the Bank
and the employees contribute. The Bank is required to contribute a specified percentage of
payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of
the Bank with respect to the retirement benefit plan is to make the specified contributions.
Total contribution for the year included in long term benefit was US$71 461 (2014: US$ 68
168).
12
ADMINISTRATIVE EXPENSES
2015 2014
US$ US$

Office rentals and rates
Computer expenses
Marketing and public relations
Bank charges
Professional fees
Communication
Deposit Protection Board premiums
Traveling and accommodation
Stationery
Other administration expenses
Repairs and maintenance
Insurance
Motor vehicle expenses

13
2 071 732
970 961
930 197
815 003
384 015
330 171
304 027
284 050
232 600
141 051
121 817
106 050
75 736
2 055 345
981 904
761 482
786 401
452 663
344 779
231 015
259 973
257 120
160 614
135 391
138 710
114 579
6 767 410
6 679 976
DEPRECIATION AND AMORTISATION EXPENSES

Depreciation of property and equipment (Note 24)

Amortisation of software (Note 22)

84
850 621
84 404
665 764
39 037
935 025
704 801
MBCA BANK LIMITED

14
OTHER OPERATING EXPENSES

Service level agreement fees
Audit fees
Other operating expenses

15
2015 2014
US$ US$
458 880
122 646
97 354
481 820
121 325
5 278
678 880
608 423
1 856 457
156 788
2 735 803
(947 405)
2 013 245
1 788 398
INCOME TAX EXPENSE

Current tax for the year

Deferred tax credit /(charge)

Charge to profit or loss
The income tax rate applicable to the Banks 2015 income is 25.75% (2014: 25.75%)
15.1
Reconciliation of income tax expense

2015 2014
US$
US$
Profit before income tax

7 848 497
Tax charge based on profit for the year at 25.75%
2 020 988
Effects of:
-Permanent differences
(7 743)

Actual tax charge
2 013 245

Effective tax rate
25.65%
7 168 856
1 845 980
(57 582)
1 788 398
24.95%
85
86
17
16
2014
4 518
(16 355)
(11837)
(90 359)
69 960
(20399)
(32236)
53 605
(85 841)
(65 816)
6 060
(71 876)
(64 813)
3 469
(68 282)
31 542 725
24 343 060
55 885 785
15 198 508
71 084 293
63 594 809
29 353 621
92 948 430
20 123 589
113 072 019
2015 2014
US$ US$
1 003
(2 591)
3 594
Before
Tax
Net of
Before
Tax
Net
tax
expense
tax
tax
expense
tax
amount
amount
amount
amount
amount
amount
2015
Reclassification
Money at call and short notice includes an amount of US$123589 (2014: US$198508) being accrued interest. In 2014, this amount was included
under Other Assets in Note 21. The amount has been reclassified above to achieve a fair presentation.
Cash and cash equivalents comprises balances with less than three months maturity from the date of acquisition, including cash in hand,
deposits held at call with other Banks and other short term highly liquid investments with original maturities of three months or less.
Current balances with the Reserve Bank of Zimbabwe

Nostro accounts and cash at bank

Money at call and short notice

CASH AND CASH EQUIVALENTS
Fair value loss on available

for sale financial assets
Gains on revaluation of
Land and buildings

Other comprehensive
loss for the year

OTHER COMPREHENSIVE INCOME/(EXPENSES)
MBCA BANK LIMITED

MBCA BANK LIMITED

18
LOANS AND ADVANCES TO CUSTOMERS

2015 2014
US$ US$
43 238 296
36 242 780
35 532 110
33 487 162
16 933 484
22 813 304
6 704 909
3 692 606
3 895 040
-

Overdrafts
Term loans
Personal loans
Instalment credit loans
Home loans
Gross Loans and advances to customers
Less: Loan impairment allowance

Carrying amount
18.1
96 235 852
(3 451 029)
103 192 446
92 784 823
Analysis of gross loans and advances

2015
Retail
SME
BBU
Wholesale
Total
US$ US$ US$ US$ US$
Consumer loans
Home loans
Instalment credit
loans
Overdrafts
Term loans

18.2
106 303 839

(3 111 393)
16 933 484
3 895 040
-
-
-
-
-
-
16 933 484
3 895 040
2 206 259
321 684
-
239 084
697 536
461 058
554 778
23 107 777
7 415 235
3 704 788
19 111 299
27 655 817
6 704 909
43 238 296
35 532 110
23 356 467
1 397 678
31 077 790
50 471 904
106 303 839
Analysis of gross loans and advances

2014
Consumer loans
Overdrafts
Instalment credit loans
Term loans

Retail
SME*
BBU*
Wholesale
Total
US$ US$ US$ US$ US$
22 813 304
1 164 165
1 014 494
-
-
665 157
-
-
-
13 313 181
-
10 381 486
-
21 100 277
2 678 112
23 105 676
22 813 304
36 242 780
3 692 606
33 487 162
24 991 963
665 157
23 694 667
46 884 065
96 235 852
*-SME-Small to Medium Enterprises

*-BBU- Business Banking Units
87
MBCA BANK LIMITED

19

AVAILABLE FOR SALE INVESTMENTS

Unlisted securities available for sale
2015 2014
US$ US$
1 January
Decrease in fair value (Note 16)
195 357
(90 359)
267 233
(71 876)
31 December
104 998
195 357
Unlisted securities available for sale

1 January
Additions
278 681
-
115 481
163 200
31 December
278 681
278 681
Local tradable bills
363 596
474 042
Total available for sale investment securities

747 275
948 080

20
HELD TO MATURITY INVESTMENT SECURITIES
Afreximbank Trade Debt Backed Securities

Open Market 90 days Treasury Bills
RBZ Afreximbank Commission-Treasury Bills
RBZ client linked deposits Treasury Bills
Government bonds from Statutory reserves

15 121483
2 054 385
1 882 023
-
-
8 079159
1 876454
2 468 064
2 018 380
19 057 891
14 442 057
The Government Bonds issued in February 2012 in respect of balances previously held by
the Reserve Bank of Zimbabwe as statutory reserves matured on the 31st of December
2015 and were paid off.
88
MBCA BANK LIMITED

20
HELD TO MATURITY INVESTMENT SECURITIES (continued)

In May 2014, the Government of Zimbabwe, through the RBZ, issued Treasury Bills in
relation to principal amounts of client deposits that were previously transferred to RBZ
per their directive. These Treasury Bills belong to the clients and were issued for 3, 4 and
5 years with an interest rate of 2% payable bi-annually. The Bank is therefore acting as
the intermediary between the RBZ and the individual customers by holding these bills on
behalf of the clients.
Following the passing of the Debt Assumption Bill into law in August 2015, these Treasury
Bills have been derecognised since the Bank does not have any obligation in relation to
these bills.
The Bank continues to participate in the Treasury Bills market, as at year end the Bank
was holding US$2 054 385 (2014: US$8 079 159) worth of Treasury Bills for 90 days with
an interest of 9% per annum.
The Bank also participated in the Afreximbank Trade Debt Backed Securities with an
interest rate of 6.5% per annum for 3 years. The closing balance was US$15121483.
Reclassification
In 2014, accrued interest for these related assets was shown under Other Assets in
Note 21. This amount has been reclassified and reported together with the investment
securities to achieve a fair presentation.
21
OTHER ASSETS

2015 2014

US$
US$
Intercompany debtors
784 087
975081
Prepayments
499 541
840 453
Security deposits-collateral accounts
428 600
338797
Sundry debtors
57 056
23799
Stationery inventory
74 001
80 761
Interest receivable on RBZ linked clients deposits*
- 2 316065

1 843 285 4 574 956

* The interest receivable on the FCA balances has been derecognised following the
passing into law of the Debt Assumption Bill.
89
MBCA BANK LIMITED

22
INTANGIBLE ASSETS
This comprises externally acquired computer software used in the Banks operations and is
amortised over a useful life of 3 years using the straight line method. The residual value at
the reporting date was reviewed and assessed to be nil.
The amortisation expense for the year of US$84 404 (2014: US$39 037) has been included
in Depreciation and amortisation expenses in the statement of profit or loss.
2015 2014
US$ US$
Cost 1 January
Additions
1 442 661
18 975
1 421 156
21 505
Balance as at 31 December

Accumulated amortisation at 1 January
Current year amortisation

Accumulated amortisation

Carrying amount as at 31 December
1 461 636
1 442 661
1 169 366
84 404
1 130 329
39 037
1 253 770
1 169 366
207 866
273 295
23 DEFERRED TAX ASSET

Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and when the deferred
income taxes relate to the same fiscal authority.
Deferred income taxes are calculated on all temporary differences under the liability
method using an effective tax rate of 25.75% (2014: 25.75%)
90
MBCA BANK LIMITED

23
DEFERRED TAX ASSET (continued)

The movement on the deferred tax balance is as follows:

2015 2014
US$ US$
At 1 January
(1 385 915)
(437 507)
Recognised in profit and loss
156 788
(947 405)
Recognised in other comprehensive income
11 837
(1 003)

At 31 December
(1 217 290) (1 385 915)

Temporary differences are attributable to the following items:
Taxable temporary differences

1 273 814
990 554
Prepayment
-
24 860

1 273 814
1 015 414
Deductible temporary differences
Loan impairment allowance
(3 111 393) (3 451 029)
Deferred income
(2 393 765) (2 269 369)
Other
(216 318)
(677 210)

Net temporary differences
(4 447 662) (5 382 194)
Deferred tax

(1 217 290)
(1 385 915)
Recognition of deferred tax assets of US$1 217 290 (2014: US$1 385 915) is based on
managements profit forecasts (which are based on the available evidence, including
historical levels of profitability), which indicates that it is probable that the Bank will
have future taxable profits against which these assets can be used.
91
92
968 000
119 306
242 000
29 960
-
-
-
89 346
1 087 306
242 000
1 025 346
61 960
-
-
234 000
8 000
-
-
340 197
375 644
43 753
(39 000)
370 891
715 841
531 962
-
222 879
(39 000)
1 178 226
1 137 738
277 300
(34 014)
894 452
2 315 964
1 611 543
-
740 260
(35 839)
927 770
359 586
66 964
(39 499)
332 121
1 287 356
860 818
-
471 507
(44 969)
633 100
531 079
246 467
-
284 612
231 445
836 638
186 177
-
650 461
1 164 179 1 068 083
732 996 1 068 083

-
-
431 183
-
-
-
4 520 738
3 359 991
850 621
(112 513)
2 621 883
7 880 729
6 064 748
69 960
1 865 829
(119 808)
Land
Buildings
US$234 000
US$912 600
The Land and Buildings were revalued as at 31 December 2015, and had these not been revalued their carrying amounts would have been as
follows:
Net book amount at

31 December 2015
Current year depreciation

Eliminations for disposals
Accumulated depreciation
at 31 December 2015
at 1 January 2015
Cost/valuation as
at 1 January 2015
Revaluation surplus
Additions
Disposals
Cost/valuation at
31 December 2015

Motor
Computer
Furniture
Leasehold
Globus

Land
Buildings
vehicles
equipment
& fittings
improvements
Servers
Total

US$ US$ US$
US$ US$
US$ US$ US$
24 PROPERTY AND EQUIPMENT
MBCA BANK LIMITED

63 286
26 060
-
89 346
936 000
-
-
-
-
234 000
161 071
370 891
416 227
25 990
(71 326)
717 091
894 452
660 233
234 219
-
528 697
332 121
276 661
55 460
-
448 384
284 612
156 823
127 789
-
417 622 3 442 865
650 461 2 621 883
454 215 2 027 445

196 246
665 764
-
(71 326)
US$160 000
US$989 226
Depreciation expense of US$850 621 (2014: US$665 764) has been included in depreciation and amortisation expense in the statement of profit
or loss and other comprehensive income.
Land
Buildings
The Land and Buildings were revalued as at 31 December 2014, and had these not been revalued their carrying amounts would have been as
follows:
at 1 January 2014
Current year depreciation
Eliminations for disposals
at 31 December 2014

Net book amount at
31 December 2014

Motor
Computer
Furniture
Leasehold
Globus

Land
Buildings
vehicles
equipment
& fittings improvements
Servers
Total

US$

Cost/valuation as at
1 January 2014
160 000
703 286
521 529
1 265 632
769 864
732 496
1 068 083 5 220 890
Revaluation surplus
(4 000)
10 060
-
-
-
-
-
6 060
Additions
78 000
312 000
102 500
345 911
90 954
500
-
929 865
Disposals
-
-
(92 067)
-
-
-
-
(92 067)
Cost/valuation at
31 December 2014
234 000
1 025 346
531 962
1 611 543
860 818
732 996 1 068 083 6 064 748

24 PROPERTY AND EQUIPMENT (continued)
MBCA BANK LIMITED

93
MBCA BANK LIMITED

24
PROPERTY AND EQUIPMENT (continued)
24.1
Land and Buildings carried at revalued amounts

The properties are at Stand 1702, Salisbury Township, Harare and Stand 5332, Bulawayo
Township, 61 Plumtree Road. The properties are owner occupied and their fair values
are shown below:
Property description
Fair Value 2015 (US$)
Fair Value 2014(US$)
Stand 1702, Salisbury Township
840 000
800 000
Stand 5332 Bulawayo Township, 61

Plumtree Road
370 000
370 000
1 210 000
1 170 000
Total
The properties are valued annually on an open market basis by an independent

professional valuer in accordance with the Royal Institute of Chartered Surveyors
Appraisal and Valuation Manual and the Real Estate Institute of Zimbabwe.
94
Capitalisation rates (yields) were

lower (higher).
Therefore, the adjusted rental figures based on

comparables below are outlined in our capitalisation
methodology and are all net rents. The rentals were
then annualised and a capitalisation factor was then
applied to give a market value of the property, also
inferring on comparable premises which are in the
same category as regards the building elements.
The valuer comparable rentals inferred from offices

and industrials within the locality of the property
based on use, location, size and quality of finishes.
Stand 1702 Salisbury Township, Lofts Hall

Ground
Fifth Floor
$5 / sq. m
Staff Quarter
$1.20 / sq. m
Carports
$40 / bay
Yield
10.5%
$5 / sq. m
10%

Offices
Yield
Expected market rental were higher

(lower); and
This method is based on the principle that rents and

capital values are inter-related. Hence given the
income produced by a property, its capital value can
be estimated.
of
Stand 5332 Bulawayo

Bulawayo Township Lands
Township
The estimated fair value would increase

(decrease) if:
In arriving at the Fair Value, the following

rentals were applied on the main space:
key
value
In arriving at the market value of the commercial/

industrial properties, the valuer applied the implicit
investment approach based on the capitalisation of
income.
Inter-relationship
between
unobservable inputs and fair
measurement
Significant unobservable inputs
Valuation technique
Valuation technique and significant unobservable inputs
24.2
PROPERTY AND EQUIPMENT (continued)
24
MBCA BANK LIMITED

95
MBCA BANK LIMITED

25
DEPOSITS FROM CUSTOMERS 2015
25.1
Customer Deposits

2015
2014
Customer deposits
Demand deposits
Term deposits
Savings deposits

25.2
Deposits analysis

2015
Large Corporates
Business Banking clients
SMEs
Individuals
Foreign Banks
Local Banks
Staff

2014
Large Corporates
Business Banking clients
SMEs
Individuals
Foreign Banks
Central Bank
Local Banks
Staff

96
US$ US$
102 285 677
64 751 449
80 605 915
66 699 684
10 330 979
7 479 164
193 222 571
138 930 297
Demand
Term
Savings
Total
US$ US$ US$ US$
47 109 205
11 187 117
12 327 449
9 446 493
540 408
21 466 309
208 696
66 526 604
2 407 010
620 579
2 458 785
2 527 125
6 027 000
38 812
2 402 143
1 199 954
1 800 196
4 772 895
-
-
155 791
116 037 952

14 794 081
14 748 224
16 678 173
3 067 533
27 493 309
403 299
102 285 677
80 605 915
10 330 979
193 222 571
31 939 332
13 031 892
10 988 901
7 724 086
-
-
884 386
182 852
35 644 260
3 076 369
-
3 253 127
2 972 865
2 436 076
19 134 681
182 306
3 737 889
-
-
3 690 700
-
-
-
50 575
71 321 481
16 108 261
10 988 901
14 667 913
2 972 865
2 436 076
20 019 067
415 733
64 751 449
66 699 684
7 479 164 138 930 297
MBCA BANK LIMITED

25
DEPOSITS FROM CUSTOMERS (continued)
25.3
Segmental analysis of deposits

Retail
SME
BBU
Wholesale
Total
2015
US$ US$ US$ US$ US$
Demand deposits
Term deposits
Savings deposits

2014
9 655 189
2 497 597
4 928 686
12 327 449
620 579
1 800 196
11 187 117
2 407 010
1 199 954
17 081 472
14 748 224
14 794 081 146 598 794 193 222 571
Demand deposits
7 906 938
10 988 901
Term deposits
3 435 433
-
Savings deposits
3 741 275
-

15 083 646
10 988 901

25.4
Sectoral analysis of deposits
Finance services, insurance

Manufacturing
Banks
Agriculture, forestry and fishing
Individuals
Wholesale and trade
Retailers
Other
Mining and quarrying
Transport
Building and property development
Government and public sector

69 115 922 102 285 677

75 080 729 80 605 915
2 402 143
10 330 979
13 031 892
3 076 369
-
32 823 718
60 187 882
3 737 889
16 108 261
96 749 489 138 930 297
2015
US$ %
46938 727
32126 373
30560 842
24844 805
17081 472
15 538 909
10785 886
9191 289
3456 003
1 296 513
885 376
516 376
193 222 571
24
17
16
13
9
8
6
5
2
1
-
-
64 751 449
66 699 684
7 479 164
2014
US$ %
20 639 386
16 579 065
25429 008
20 425 109
15083 646
9 553 079
9 429 215
8990 187
8 575 751
1 170 974
274 769
2 780 108
100 138 930 297
15
12
18
15
11
7
7
7
6
1
1
100
97
MBCA BANK LIMITED

26 OTHER LIABILITIES

2015 2014

US$ US$

Interest payable on RBZ client linked deposits*
-
3 556 952
Accrued expenses
2 251 599
2 272 081
Deferred income
2 393 765
2 269 367
Intercompany creditors-Nedbank
1 531 806
1 879 123
Clearing accounts
950 049
1 422425
Intercompany with Embeca Properties
390 000
390000
Staff related provisions
123 895
140363
Sundry liabilities
98 569
111634
Tax related liabilities
95 565
884 449

7 835 248
12 926 394
* - The interest payable on the FCA balances has been de-recognised following the
passing into law of the Debt Assumption Bill.
27 EQUITY
27.1
Authorised share capital

Number of shares
Nominal value per share
Share capital
27.2
2015 2014
9 200 000 000
9 200 000 000
US$0.00001
US$0.00001
US$92 000
US$92 000
Issued share capital and share premium

Number of Shares
Share
Share

capital
premium
US$ US$
Balance at 1 January 2015
New shares issued

98
8 949 936 276

-
8 949 936 276
89 499 17 784 930

-
89 499 17 784 930
MBCA BANK LIMITED

27
Equity (continued)
27.3
Revaluation reserve

2015 2014
US$ US$
Balance at 1 January
156 536 153 067
Revaluation gain on land and buildings
69 960
6 060
Deferred tax liability arising on revaluation
(16 355)
(2 591)

Balance at 31 December
210 141 156 536

27.4
Fair value reserve

2015 2014
US$ US$
Balance at 1 January
(73 791)
(5 509)
Fair value loss
(90 359) (71 876)
Deferred tax asset arising on fair value gain
4 518
3 594

(159 632) (73 791)
27.5
Share premium
Premiums from the issue of shares are reported in the share premium.
27.6
Revaluation reserve
The revaluation reserve includes all amounts arising from an increase in an assets
carrying amount and accumulating under this heading. The amount recognised in the
revaluation reserve, is the amount by which an assets recoverable amount exceeds the
carrying amount due to the revaluation.
27.7
Fair value reserve

Fair value reserve consists of the movement in fair values of assets classified as available
for sale accounted for using the fair value model between two different reporting periods.
Regulatory reserve
The regulatory reserve reflects the difference between the IAS 39 impairment allowance
and the regulatory impairment allowance. This reserve was created in the current year
through a transfer from retained earnings.

2015 2014

US$ US
27.8
1 102 104
99
MBCA BANK LIMITED

28
RELATED-PARTY DISCLOSURES
The Bank is controlled by MBCA Holdings Limited (incorporated in Zimbabwe), which

owns 100% of the ordinary shares. The ultimate controlling parent is Nedbank Limited
(incorporated in South Africa).
Key management personnel comprise the following individuals:
Jinya C C
-Managing Director
Makonese A
-Chief Finance Officer
Mutenda A
-Chief Risk Officer
Nyagomo M
-Chief Operating Officer
Joshi N
-Chief Governance and Compliance Officer
Matsvimbo J
-Head-Business Development and Institutional Banking
Guvaza J A
-Head -Wholesale Banking
Mubvumbi G
-Head- Retail Banking
Mapfirakupa V
-Head- Treasury
Kombe G
-Head-Human Resources
Sithole F
-Company Secretary
Gumpo N
-Head-Internal Audit Assurance
Mutimutema D
-Head- Marketing, Public Relations and Communications
A number of banking transactions are entered into with related parties in the normal
course of business. These include loans, deposits and foreign currency transactions.
The volumes of related-party transactions, outstanding balances at the year-end and
related expense and income for the year are as follows:
28.1
10 0
Loans and advances to key management personnel

2015 2014
US$ US$
Loans outstanding at 1 January

Loans issued during the year
Loan repayments during the year
940 851
922 926
(609 300)
718 556
678 789
(456 494)
Loans outstanding at 31 December
1 254 477
940 851
MBCA BANK LIMITED

28
RELATED PARTY DISCLOSURES (continued)
28.1
Loans and advances to key management personel (continued)

Interest income at market rated rates earned from loans to key management personnel
was US$ 88727 (2014: US$78 890). These loans are repayable monthly as follows:

Up to 20 years for home loans,

5 years for car loans and

3 years for all other personal loans.
28.2
Home loans are secured by the properties that were financed. No specific provision has
been recognised in respect of loans given to related parties (2014: nil). No loans were
issued to non-executive directors during the year.

Balances at the end of the period

Due to the Bank
Owed by the Bank
2015 2014 2015 2014

US US$ US$ US$
Nedbank Group Limited

-
271 374
2 092 714 1 879 123
MBCA Holdings Limited
743 210
703 706
608 165
11 859
Old Mutual Zimbabwe Limited
-
-
27653 903 10 329 586
CABS
20 135 541 15 240 657
21 471 649 2 285 994
Nedbank London
40 880
2 238 114
-
MBCA Bank Limited Pension Fund
-
-
864 494
115 602
MBCA Nominees (Private) Limited
-
-
3 449
658
Embeca Properties (Private) Limited
-
-
405 810
455 119
Melbek Holdings (Private) Limited
423 936
327 143
-

21 343 567 18 780 994 53 100 184 15 077 941

The above deposits and balances are unsecured, carry variable interest rates and have
variable repayments all done at arms length.
101
MBCA BANK LIMITED

28
28.3
Relationships with MBCA Bank Limited:

The related parties disclosed above have the following relationship with MBCA Bank
Limited:
28.4
102
Company
Relationship
Nedbank Group Limited
Ultimate holding company of MBCA Bank

Limited
MBCA Holdings Limited
Holding company of MBCA Bank Limited
Old Mutual Zimbabwe Limited
Minority interest in MBCA Holdings Limited
CABS
A subsidiary of Old Mutual Zimbabwe Limited
MBCA Bank Pension Fund
A Pension Fund for the Banks employees
MBCA Nominees (Private) Limited
A subsidiary of MBCA Bank Limited
Melbek Holdings (Private) Limited
A subsidiary of MBCA Bank Limited
Embeca Properties (Private) Limited
A fellow subsidiary with MBCA Bank Limited

within MBCA Holding Limited group
Nedbank London
A London Branch of Nedbank Group Limited
Other transactions with related parties

2015 2014

US$ US$
Income
Interest income on nostro balances
21 464
27 140
(Nedbank London)
Interest income
807 852
941 441
(CABS)
Account maintenance income
4 982
23 989
(MBCA Pension Fund, Old Mutual Zimbabwe, CABS)

834 298
992 570

Expenses
Interest expenses and nostro bank charges:
1 732 925
195689
(Nedbank South Africa, Nedbank London,
Old Mutual Zimbabwe, CABS, Embeca Properties (Private) Limited
Rentals:
730 844
913 512
(Old Mutual Zimbabwe, Embeca Properties (Private) Limited
Service level agreement fees
494 891
481 820
(Nedbank South Africa)

2 958 660 1 591 021

MBCA BANK LIMITED

28
28.5
Key management compensation

The remuneration of executive directors and other members of key management
personnel during the year were as follows:
2015
2014
US$ US$

Salaries and other short-term employee benefits
Post-employment benefits, including Defined Contribution

1 993 511
119 205
1 408 494
88 136
2112 716
1 496 630
The remuneration of executive directors and key management is determined by the Board
having regard to the performance of individuals and market trends.
29
CONTINGENT LIABILITIES AND COMMITMENTS
29.1

Capital commitments
The Bank has capital commitments amounting to US$0.215 million (2014: US$0.29 million)
for property and equipment that had been approved and ordered as at 31 December 2015.
29.2 Guarantees

2015 2014
US$ US$
Letters of credit
1 089715
803 445
Guarantees to third parties
1 604 000 1 805 825
Individual staff housing through a building society*
- 1 819 004

2 693 715 4 428 274

*The Bank issued guarantees on behalf of managerial and non managerial staff members
who purchased properties through a building society. The Banks guarantee was 25% of
the total amount. This guarantee expired since all the staff home loans were transferred
to MBCA Bank Limited.
103
MBCA BANK LIMITED

29
CONTINGENT LIABILITIES AND COMMITMENTS (continued)
29.3
Operating lease commitments

The future minimum lease payments under non-cancellable leases are as follows:

Less than 1 year
Later than 1 year and no later than 5 years
Later than 5 years

29.4
2015 2014
US$ US$
367 324
1 469 296
1 836 620
316 578
1 266 310
1 582 890
3 673 240
3 165 778
Contingent liabilities
The Bank is party to legal proceedings arising out of its normal business operations. While
the outcome of these matters is inherently uncertain, management believes that, based on
the information available to it, no provisions are required in respect of these matters as at
31 December 2015.
Manzini & 3 Others v MBCA Bank Limited
Three former employees of the Bank retrenched in November 2011 have made an application
to the Labour Office seeking that the Bank revisit the packages awarded them, as the Bank
neglected to add in their computation their allowances for company vehicles. The matter
was heard by an arbitrator in February 2013 who awarded the former employees the order
sought. The Bank has appealed the decision on the basis that the arbitrator no longer has
jurisdiction as the Minister of Labour has already issued the retrenchment package award
and if any party has an issue then they should approach the office of the Minister. Both
parties have submitted their written submissions and the hearing date are awaited. In the
non managerial employees case the Labour Court referred the issue back to the Arbitrator
who ruled in favour of the former employees. The Bank has appealed the decision and we
await a hearing date at the Labour Court.
10 4
MBCA BANK LIMITED

29
CONTINGENT LIABILITIES AND COMMITMENTS (continued)
29.4
Contingent liabilities (continued)

Portland Holdings (Private) Limited Vs MBCA Bank Limited
US$62, 223.94 & ZAR 6,764,987.94
Portland Holdings, a client of the Bank whose funds were transferred to the RBZ in 2007
has instituted legal action against the Bank for the return of their funds transferred
to RBZ. The Bank has instructed Atherstone & Cook to defend the action on the basis
that the customer utilised funds when they were already transferred to the RBZ and are
therefore estopped from claiming that they were not aware of the same.
The Pre-trial Conference in the matter set down for 28 January 2015 was postponed to
a date to be advised. Lawyers for Portland Holdings subsequently withdrew the matter
from the High Court following the promulgation of the Reserve Bank Debt Assumption
Act in August 2015.The matter will be removed from the list of litigation when the official
notice is received from the High Court.
30
AGENCY FACILITIES
Nedbank Limited has put in place a US$75 million facility for on-lending to Banks
customers.
31 SUBSIDIARIES
Details of the Banks subsidiaries at the end of the reporting period are as follows:
Name of subsidiary
Principal activity
Place of
incorporation
Proportion of ownership
and voting held by Bank
2015
2014
Melbek Holdings
(Private) Limited
Property owning
Zimbabwe
100%
100%
MBCA Nominees
(Private) Limited
Nominee
company
Zimbabwe
100%
100%
Consolidated financial statements including the above entities have not been presented
since the Bank need not present consolidated financial statements as it meets all the
criteria for non-consolidation per IFRS 10, Consolidated Financial Statements paragraph
4 (a). The entity is then consolidated at MBCA Holdings Limited.
105
MBCA BANK LIMITED

32
BORROWING POWERS
33
GOING CONCERN
34
SUBSEQUENT EVENTS
35
OFF BALANCE SHEET ITEMS
36
RATES OF EXCHANGE
The directors may exercise all the powers of the Bank to borrow money, to mortgage
property or to change its undertaking. They may issue debentures, debenture stock and
other securities whether outright or as security for any debt, liability or obligation of the
Bank.
The directors have made an assessment of the Banks ability to continue as a going concern
and have no reason to believe the business will not be a going concern in the foreseeable
future. These financial statements have therefore been prepared on a going concern basis.
There have been no significant adjusting events identified after the date of these financial
statements.
The Bank is holding Treasury Bills amounting to US$1.6 million issued by the Government
of Zimbabwe through the RBZ on behalf of Tobacco farmers.
The following United States Dollars cross rates with major transacting currencies for the
Bank were applied:

USD/ EURO
USD /GBP
USD /ZAR
106
2015 2014
0.7208
0.6746
15.5435
0.8226
0.6429
11.5698
MBCA BANK LIMITED

MBCA BANK LIMITED

Notice is hereby given that the sixtieth annual general meeting of members of MBCA Bank Limited,
will take place in the 17th floor boardroom, Old Mutual Centre, 3rd Street, Harare on Tuesday, 10
May 2016 at 11:45 Hours
AGENDA
To elect a Chairman.
To approve the minutes of the previous Annual General Meeting held on 05 May 2015.
To receive and adopt the directors report and statements of accounts as at 31 December
2015.
Election of Directors
In accordance with Article 98 of the Association, Messrs: S. Gwanzura, S Naik and J. P. Murehwa
retire from the Board and, being eligible, offer themselves for re-election.
To note the retirement of Mr J. H. Brits from the Board with effect from 31 December 2015.
To fix remuneration of directors for the past year and propose the ensuing years
remuneration.
To fix the auditors remuneration for the past year.
To appoint auditors for the ensuing year.
To transact such other business as may be transacted at an Annual Generawl Meeting.
By order of the board

SECRETARY
17 Floor, Old Mutual Centre
Cnr. Jason Moyo/3rd Street
Harare
Zimbabwe
11 April 2016
Note: A member of the company entitled to attend and vote, is entitled to appoint a proxy to attend, vote
and speak in his place at the meeting on his behalf, and that proxy need not also be a member of the
company.
107
MBCA BANK LIMITED

NOTES
108
NOTES
MBCA BANK LIMITED

109
www.mbca.co.zw

Mbca Bank Annual Report For The Year Ended 31 December 2015

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Mbca Bank Annual Report For The Year Ended 31 December 2015

Hochgeladen von

Copyright:

Verfügbare Formate

MBCA

MBCA BANK LIMITED

MBCA BANK LIMITED

Directorate, Registered Office and Business Address

5 Year Financial Review and Statistical Summary

Managing Directors Report

Chief Finance Officers Report

Corporate Social Investment Report

Corporate Governance Report

Report of the Directors

Report of the Independent Auditors

Statement of Financial Position

Statement of Profit or Loss and Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Notice to the Shareholders

MBCA BANK LIMITED

Directorate, Registered Office and Business Address

KPMG Chartered Accountants (Zimbabwe)

Atherstone and Cook Legal Practitioners

Registered Office and Business Address

Jason Moyo Branch

99 Jason Moyo Avenue

Bulawayo Regional Office

Merchant Bank Chambers

Windsor Msasa House

MBCA BANK LIMITED

Directorate, Registered Office and Business Address (continued)

Leopold Takawira Branch

70 Colonnade, Mutare Road

Shop 3, 11 Highfield Junction House

61 Plumtree Road, Belmont

Facsimile: +263 4 332 544

Ground Floor, CABS Building

100 Ireland Road

Telephone: +263 4 446 124/138/228

MBCA BANK LIMITED

5 Year Financial Review and Statistical Summary

Statement of Profit or Loss and

Profit before tax

2015 2014 2013 2012 2011

Statement of Financial Position

Total shareholders equity

Selected performance ratios

Total equity/total assets

MBCA BANK LIMITED

MBCA BANK LIMITED

Bank Profile (continued)

Money market investments in fixed deposits;

The divisions products and services include:

Business Development and Institutional Banking

MBCA BANK LIMITED

The Banks capital as at 31 December 2015 was

Developments in the banking sector

MBCA BANK LIMITED

Chairmans Statement (continued)

The Bank is in the process of implementing the approved Indigenisation Plan.

Zimbabwes re-engagement with the international financial institutions and successful

MBCA BANK LIMITED

Managing Directors Report

MBCA BANK LIMITED

Managing Directors Report (continued)