CBZ after-tax profit up 7pct, debt write-off surges

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HARARE: Zimbabwe’s largest financial group, CBZ Holdings, on Wednesday reported a 7 percent increase in after-tax profit to $35.2 million in the full year to December 2015, but said it had written off $24 million in bad debts as the country’s deteriorating economy adversely impacts asset quality.
CBZ, which operates the country’s biggest retail bank as well as insurance and asset management subsidiaries, reduced the amount of total loans advanced to $1,021 billion during 2015, down from $1,126 billion previously. In 2014, the bank wrote off $4,45 million.
Zimbabwe’s central bank has created a special purpose vehicle to buy bad loans from the banking sector, thereby reducing the industry’s non-performing loan ratio from about 20 percent in June 2014 to 10.9 percent by December 2015. The central bank’s asset manager has so far purchased nearly $300 million bad loans from banks, improving their asset quality.
CBZ’s non-performing loan ratio did improve marginally to 7.45 percent in 2015, from 7.63 percent in 2014, with interest having been suspended on loans worth $76 million, their financial statements show. The bank’s decision to keep a huge chunk of non-performing loans in-house, as opposed to selling them off to the state asset manager, suggest they are betting on their ability to recover some value.
The group’s total assets grew 18 percent to $1.974 billion, while total income, minus interest expense, was $184 million, a 19 percent improvement on the prior year. CBZ’s insurance business weighed in with net underwriting income of $12.5 million last year, up from $8 million in 2014.
CBZ’s flagship commercial banking unit weighed in with $140 million, or 76 of total income. The banking subsidiary’s after-tax profit for 2015 was $26.1 million, up from $16.3 million in 2014.
The group had closed the year with $42.5 million cash in the bank, down from $73 million in 2014.Advertisement