CBZ loses $10 million on interest rates cuts

By Chipo Musoko, HARARE, August 8 (The Source) – CBZ Bank has lost over $10 million in non-interest income for the six months ended 30 June 2013 following a directive from the central bank to cut bank charges early this year, the chief executive said on Thursday.
Government directed the Reserve Bank of Zimbabwe to address the issue following an outcry on punitive interest rates and high bank charges leading to the signing of a Memorandum of Understanding (MoU) between banks and the central bank capping the rates.
CBZ Holdings chief executive, John Mangudya told The Source that non-interest income had resulted in a 25 percent loss in revenue.
This had also negatively impacted on the group’s performance which recorded a 12.6 percent decline in profit to $16 million compared to $18 million recorded last year.
“We have been very compliant in reducing the fees….The downside is that your non-interest income also goes down in sympathy,” he said.
“In banking the whole idea is to increase your income mainly from non-interest income but in this case both the ministry of finance and RBZ put brakes on that.”
Despite the loss of income, non-interest income contributed $21 million to the group’s profit up from $20 million during the same period last year.
The group’s total income grew 8.1 percent to $69 million compared to $64 million last year.
Recently Barclays Bank Zimbabwe announced that it would lose around $2 million in income as a result of the cuts while the sector as a whole expects to lose about $40 million.