BY TATIRA ZWINOIRA
ZIMBABWE’S largest financial institution, CBZ Holdings Limited, took a near 68% knock to its profit after tax to $929,2 million for the first quarter, compared to the 2021 comparative owing to inflation.
During the period under review, the Zimbabwe dollar depreciated by 31,06% to end the quarter at $142,42 against the United States dollar, down from $108,66 at the start of the period.
This saw the annual inflation rate rising by nearly 12 percentage points to close the quarter at 72,7% from 60,74%.
At the end of the 2021 first quarter, CBZ posted a profit after tax of $2,86 billion.
“Rising global geopolitical tensions are expected to continue exerting both upside and downside risks to the economy. In particular, mining and other export-oriented sectors are likely to benefit from firming commodity and food prices on the global markets,” CBZ said in a statement attached to its financial results for the 2022 first quarter.
“However, rising prices for oil, fertilisers, and other critical imported raw materials, will translate into higher domestic production costs, thereby adversely impacting on competitiveness and viability. Measures that limit the adverse impact of the external shocks should, therefore, be prioritised.”
CBZ said it would continue to monitor the macro-economic developments with a view to better manage emerging risks and opportunities.
In 2021 full year, CBZ Holdings experienced a near 5,5% decrease in profit after tax to $7,7 billion from a 2020 comparative of $8,15 billion due to the Zimbabwe dollar depreciating by about 33%.
Resultantly, the group saw its monetary loss widen by nearly 511% to $7,15 billion in the period under review, from a 2020 comparative of $1,17 billion. It also resulted in credit losses widening by about 382% to $7,33 billion last year, from $1,52 billion in the prior year.
Thus, the decline in profit after tax for the period under review, if it continues, could lead to a similar performance by the end of 2022.
The decline in profit after tax, saw CBZ Holdings basic earnings per share down to 712,01 cents from 2 191,82 cents recorded in the 2021 comparative.
“The first quarter saw the relaxation of COVID-19-induced restrictions and inhibitions as countries transitioned to co-existing with the virus. This allowed business to resume, as well as scale up operations,” CBZ said.
“However, the period was also characterised (by) a surge in global inflationary pressures, which somewhat constrained demand and consumption, as central banks tightened monetary policies while economic agents reprioritised expenditures and shifted investment behaviours. In Zimbabwe, inflationary pressures were fuelled by rising global oil prices as well as currency weaknesses.”
The decline in profit after tax in year’s first quarter was recorded despite experiencing a near 54% increase in total revenue to $13,09 billion, from $8,52 billion recorded in the 2021 comparative.
Based on the results, this could be attributed to total advances increasing to $75,59 billion in the quarter under review, from a 2021 comparative of $69,82 billion, as the increase would mean growth in net interest income.
Total assets grew nearly 21% to $241,62 billion in the quarter under review, from a similar figure of $199,98 billion.
Deposits were up 13,31% to $150,92 billion from 2021’s comparative $133,19 billion.
“The group is adequately capitalised, and all its regulated subsidiaries are in full compliance with the gazetted minimum capital requirements. The Group continues to align its investments strategically in order to preserve capital,” CBZ said.
The results could spell trouble for CBZ Holdings as it holds significant government securities at a time Treasury remains broke.
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