CBZ bad loans climb to $78 mil­lion

Chronicle (Zimbabwe) - - Business - Enacy Ma­pakame Busi­ness Re­porter

CBZ HOLD­INGS sold $40 mil­lion worth of debt to Zim­babwe As­set Man­age­ment Com­pany (Zamco) dur­ing the first six months of 2016, but the group still booked a 3,8 per­cent in­crease in bad loans due to poor per­for­mance in agri­cul­ture.

Non per­form­ing loans (NPLs) climbed to $78,9 mil­lion dur­ing the half-year from $76,1 mil­lion at full-year 2015, ac­cord­ing to the bank­ing group’s lat­est earn­ings re­lease.

CBZ Hold­ings, Zim­babwe’s big­gest lender with over $1 bil­lion in de­posits, blamed the in­crease on be­low par per­for­mance in agri­cul­ture.

The num­ber of cus­tomers in agri­cul­ture that failed to re­pay loans rose sharply, it said, up more than 93 per­cent.

The 2015 /16 agri­cul­ture sea­son was neg­a­tively af­fected by bad weather char­ac­terised by the El Nino in­duced drought.

Re­sul­tantly agri­cul­ture sec­tor per­formed poorly which drove CBZ’s over­all ra­tio of NPLs higher at 7,2 per­cent from 6,9 per­cent, but still re­mained within the bank­ing sec­tor’s bench­mark of 10 per­cent.

And thanks to the Zamco debt sale, the group cut the amount of debt it did not ex­pect to re­cover by 37 per­cent to $9,1 mil­lion, for the half-year in re­view.

For the six months un­der re­view, to­tal de­posits were 5,3 per­cent firmer at $1,77 bil­lion from com­pa­ra­ble pe­riod’s $1,68 bil­lion on strong in­no­va­tion and cus­tomer cen­tric ser­vice de­liv­ery ap­proach.

The ser­vices sec­tor con­trib­uted 30 per­cent of the de­posits while fi­nan­cial or­gan­i­sa­tions and the dis­tri­bu­tions sec­tor con­trib­uted 30 per­cent and 17 per­cent in that or­der.

Eq­ui­ties an­a­lysts fore­cast the group to re­main prof­itable and on course in meet­ing its ob­jec­tives with an up­surge in de­posits on in­tro­duc­tion of new in­no­va­tive prod­ucts and in­crease in agents.

“We an­tic­i­pate de­posits to con­tinue on an up­ward trend as we have fore­cast a 10,1 per­cent growth year on year, slower than the 12,5 per­cent that has been fore­cast by man­age­ment,” said bro­ker­age firm, IH Se­cu­ri­ties.

CBZH’s to­tal in­come for the pe­riod was 12 per­cent weaker at $73,2 mil­lion com­pared to $83,2 mil­lion posted in the same pe­riod last year while profit af­ter tax de­clined 13 per­cent to $11,9 mil­lion.

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