‘TBs enhance diversity of CBZ balance sheet’


Enacy Mapakame
Zimbabwe’s largest banking group by deposits and assets, CBZ Holdings, says Treasury Bills have now become a significant part of the banking sector and have in particular contributed to the stability of the group’s balance sheet.

This comes as the banking group is targeting total income growth of 11 percent for the full year to December 31, 2017. Responding to questions during presentation of financials for the half year to June 30, 2017, group chief executive Never Nyemudzo said, Treasury Bills enhanced the diversity of the group’s balance sheet.

“We are excited with the returns. While the interest from loans is coming down as we are lending at 6 percent, net of tax treasury bills are yielding beyond 7 percent, so that convergence is bringing a lot of diversity to the sources of income.

“So the ideal is to maintain at that level but we are going to see more dilution on the balance sheet from CBZ Properties and the insurance operations, which are the key portfolios that have potential to grow their assets,” said Mr Nyemudzo. CBZH is targeting to grow its total income to $89,2 million by year end from the $80,4 million achieved in the half year to June 2017.

Total assets and deposits are anticipated to grow by 3,3 percent and 4,5 percent respectively as at December 31, 2017. Currently CBZH is sitting on an asset base of $2,2 billion, which is 14 percent of the gross domestic product while deposits are at $1,8 billion.

The group further forecasts funds under management to grow by 30 percent in the last half of the year from $181,6 million recorded as at half year. Management is banking on cost containment measures as well as initiatives that further spreads its footprint on the  market.

In period to June, cost to income ratio fell to 66 percent from 72,2 percent in the comparable period, prior year on improved process efficiencies and review of supplier contracts.

“Long term cost to income ratio target of 55 percent to 60 percent is within reach given the successes of the ongoing strategy to reduce, reorient and optimize costs,” said Mr Nyemudzo. The group is also targeting to tap into the growing small to medium enterprise while infrastructure development projects are expected to yield positive returns.

Meanwhile, profit after tax for the period marginally increased to $12 million on the back of a 8 percent increase in total income at $80,4 million. All of the group’s business units had a positive contribution to both revenue and profitability with the commercial banking unit — CBZ Bank — accounting for $10 million of the profit after tax.

Net interest income grew 2,8 percent to $39,7 million from $38,6 million. Average non-performing loans ratio stood at 6,2 percent against the Reserve Bank of Zimbabwe (RBZ) threshold of 5 percent.

Management contends they are on course to maintain NPL ratio law on cautious lending and aggressive debt recoveries. Basic earnings per share grew to 4,6 cents from 4,5 cents.

The group declared an interim dividend of $1,76 million. In the first half of the year, the banking group processed transactions worth $14 billion that is 35 percent of national transaction during the period.


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