CBZ offloads $40m bad debts
CBZ Holdings has in the half year ended June 30, 2016 increased to $40 million bad debts that have been acquired as Non-Performing Loans by the Zimbabwe Asset Management Company (ZAMCO).
In 2015, the financial services group closed the year with $24 million having been written off in bad debts and surrendered to ZAMCO.
In a statement accompanying CBZ financial results for the six months ended June 30, 2016, the financial institution said: “The group writes off a loan or an investment debt security balance, and any related allowances for impairment, when the relevant committees determine that the loan or security is uncollectible.
“This determination is made after considering information such as the occurrence of significant changes in the borrower’s or issuer’s financial position such that the borrower or issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure.” The group’s directors believe that the concentration risk is limited due to the customer base being large and unrelated.
As a result, the group was not exposed to any customer by more than 10 percent of the total advance book. CBZ indicated that impairments and write offs had been minimised by the sale of $40 million to ZAMCO.
ZAMCO is a special purpose vehicle established by the Government in 2014 with a mandate to absorb NPLs in the banking sector with a view to clean the banks’ balance sheets so that the institutions can confidently trade and lend. The asset management, which started operating last year, has so far absorbed $528 million and targets to clear all the $750 million NPLs by end of year.
During the period under review, the group recorded a 13 percent reduction in profit after tax to $11,9 million due to poor performance by its business units. CBZ’s total income amounted $73,2 million during the period compared to $83,2 million in 2015. The group’s banking division posted the largest chunk of profits recording $7,4 million profit after tax from $8,6 million during the same period last year. — @okazunga.
Dr Nigel Chanakira