CBZ Holdings Limited (CBZ) will monitor commodity price volatility and El Niño-induced drought risks to strategise faster, after recording a 330% increase in profit after tax in 2023.
In its financial year ended December 31, 2023, CBZ recorded an increase in profit in Zimbabwe dollar (ZWL$) terms after tax rose to ZWL$693,56 billion, compared to 2022’s prior figure of ZWL$161,28 billion.
The increase was on the back of its non-net interest income soaring to ZWL$1,85 trillion during the period, against the 2022 figure of ZWL$859, 44 billion.
However, given global commodity price volatility and El Niño-induced drought this year, CBZ will be closely monitoring the situation to strategise better to protect its gains from 2023.
“In 2024, the IMF [International Monetary Fund] expects global growth to remain flat at 3,1%, with the risks to the outlook largely balanced. Sub-Saharan Africa is expected to recover to 3,8%,” CBZ’s new chairman Luxon Zembe said, in a statement attached to the group’s annual financial statement for the year ended December 31, 2023.
“In Zimbabwe, however, government expects growth to moderate further to 3,5% as the adverse effects of the El Niño effect become more pronounced, particularly on the agricultural and related sectors. Relatively strong performance is, however, still expected in the mining, accommodation and food services, and wholesale and retail trade sectors.”
He continued: “The downside risks to the growth projections include, among others, prolonged weak commodity prices, especially for base metals and PGMs, potential further disruptions to supply chains and trade flows, and currency weaknesses.”
“The Group will continue to monitor these developments for quicker detection of, and response to, emerging risks and opportunities,” he concluded.
Driving the non-net interest income were unrealised gains on foreign currency exchange, fair value adjustments on investment properties owing to the foreign currency increases, commission and income and net income from forex trading.
However, as the now defunct Zimdollar depreciated by over 700% last year, CBZ’s operating expenditure more than doubled to over ZWL$1 trillion, from a 2022 comparative of ZWL$412,39 billion.
This was driven by increases in staff and administrative costs.
“The board seeks to strike a balance between the need to provide competitive financial returns and the expectations of stakeholders and shareholders regarding governance in the context of growing change and regulatory complexity,” Zembe said.
“The board has done a commendable job of establishing the Group’s strategic direction and making sure the Group successfully manages risk. Our primary emphasis continues to be setting measurable goals to support a positive company culture that is in line with our steadfast dedication to our stakeholders.”
Net interest income was recorded at ZWL$547,76 billion during the period under review, up nearly 55% from the 2022 comparative.
In terms of loans and advances to customers, CBZ recorded a near 145% increase to ZWL$2,07 trillion during the period from a 2022 comparative of ZWL$846,79 billion.
Commercial loans to the private sector, agriculture, mining, manufacturing and distribution drove lending.
“The extension of the multi-currency system to 2030 provided the much-needed policy clarity and consistency for the given period, thereby enabling the Group to effectively underwrite long term products,” Zembe said.
“The Group also continued to leverage on its strong investment in intellectual, manufactured, and financial capital to continuously develop and offer solutions that satisfy the needs of its wide range of clients. These included, among others, enhancement of products and mobilisation of external lines of credit to better meet the loan requirements of industry.”
Deposits rose to ZWL5,57 trillion as at the end of the period under review, from a 2022 comparative of ZWL3,26 trillion.
Increased lending and financial securities helped grow CBZ’s total assets to ZWL8,25 trillion at the end of last year, an increase of nearly 80% from 2022.