CBZ splurges US$1bn
CBZ Bank, the country’s biggest commercial bank by balance sheet, extended close to US$1 billion worth of credit to the private sector last year, despite challenges in the operating environment, the Financial Gazette has learnt.
This comes at a time when companies are struggling to get affordable working capital and long-term funding to re-tool in a liquidity strained market, a situation which has adversely affected output within the private sector.
Morris Mpofu, the Reserve Bank of Zimbabwe (RBZ) director of exchange control, told a Zimbabwe National Chamber of Commerce annual congress held in the resort town of Victoria Falls two weeks ago that CBZ had pumped a huge chunk of money into business.
Without revealing figures, Mpofu said BancABC, a pan African financial services provider, and Central African Building Society (CABS), a subsidiary of the Old Mutual Group, also extended substantial amounts to the private sector but their combined contributions were not closer to the amount extended by CBZ Bank alone.
BancABC’s contribution was second to CBZ’s, followed by CABS, he said.
“The RBZ is the regulatory authority of the financial sector and also administers and facilitate business transactions. For the first time, we are supporting ZNCC by giving prizes to various sectors,” said Mpofu, who spoke at the presidential dinner and awards ceremony sponsored by Old Mutual.
“In 2014, CBZ Bank extended to business credit closer to US$1 billion. This amounts to 94 percent of its earnings, which means only six percent went to individuals.
CBZ’s profit for the year to December 2014 went down by 7,3 percent from prior year. This was attributable to an increase in funding cost due to tight liquidity conditions in the market.
The bank’s income increased by 0,33 percent, driven by increases in non interest income. The non-interest income contribution increased from the previous year contribution of 32 percent to 40 percent.
This was in line with the bank’s strategy to reduce concentration risk by creating new income streams to increase non-funded income.
Total bank assets increased by 6,3 percent largely driven by increase in money market assets.
Gross advances increased by 9,7 percent, while its deposit base increased by 5,7 percent as the bank continued to grow its deposit market share through various products, some of which were created to make inroads into the unbanked segments of the population.
The bank’s capital adequacy ratio as at 31 December 2014 was 14 percent, surpassing the RBZ’s prescribed minimum requirement of 12 percent.
Its core capital was US$111 million, which was above the regulated minimum capital of US$25 million.
This made CBZ the only bank in the country to surpass the central bank’s target for commercial banking institutions to have capitalisation of US$100 million by 2020.
A huge core capital base indicates long-term stability for the financial institution which is in a sector that has been characterised by bank closures, particularly of indigenous banks.
Four other banks with capital levels above US$50 million are: CABS, which has a core capital of US$92,82 million, Stanbic (US$79,73 million), BancABC (US$63,33 million) and Standard Chartered (US$61,90 million). — Staff Reporter