HARARE – Financial services group CBZ Holdings posted an 1136% growth in profit after tax of $794 billion in the nine months to September as it benefited from high interest rates and growth in deposit.
In its nine month trading update- basic earnings per share measured as a portion of a company’s profit allocated to each outstanding share of common stock- increased to 202 768.3 cents from 16 404.0 cents.
The Reserve Bank of Zimbabwe Central kept interest rates relatively high at 75.0% for the productive sector and 150.0% for the non-productive sector, influenced by the need to balance between stimulating economic growth and maintaining macroeconomic stability.
In the nine months to September, group revenue was 726% higher than previous year same period at $1.4 trillion aided by non-interest income from fees and commissions derived from growth in deposits and exchange rate gains.
Deposits in the nine months to September reached $4.8 trillion from $641 billion previous year. Year to date, deposits grew 607.3%.
Total advances reached $1.7 trillion as compared to $308 billion previous year. Year-to-date growth in advances stood at 866% against 451% previously. The growth in advances is largely attributed to its exposure to the agriculture sector where it participates in command agriculture and other government sponsored agricultural funding programmes.
“The Group performed well during the period under review, with all its regulated subsidiaries being adequately capitalized. The Group’s business underwriting strength aligns with the thrust to grow market shares within all the sub-sectors it operates in,” said Group Chief Governance Officer, Rumbidzayi Jakanani.
Total assets were up 660% to $ 6.5 trillion from $ 858.9 billion. Return on assets ratio improved to 35.3% from 20.6%. The group return on equity – a metric which measures how much profit a company is generating for each dollar of shareholder investment – climbed to 133.3% from 98.9% a year ago.
In the outlook, geopolitical tensions in Eastern Europe, the Middle East and some parts of Africa will continue to pose significant downside risks to the global and continental macroeconomic outlook, especially in the areas of supply chains and crude oil markets. With this background, the likelihood of further interest rate hikes also remains relatively high, thereby perpetuating high interest rate risks on externally mobilised debt.
“In Zimbabwe, the major downside risk remains the projected normal to below normal rainfall forecasts, which may adversely affect output in the agricultural sector, particularly for farmers that depend on rainwater as well as activity in the sectors that depend on the agricultural sector for raw materials.”
Nevertheless, the group will bank on its stable financial position, a significant market share, and a strong digital footprint to sustain its underwriting strength and growth in deposits.