CBZ reports lower half-year profits

By Happiness Zengeni, HARARE, August 8, 2013 (The Source) – The country’s largest bank by deposits CBZ on Thursday reported a 12.6 percent drop in profit for the half-year to June 30.
CBZ CE John Mangudya told analysts that the performance of the company had been impacted by the Memorandum of Understanding signed between banks and the Reserve Bank of Zimbabwe early this year compelling banks to lower their interest rates and bank charges.
Under the terms of the agreement, banks will also be compelled to pay an interest rate of at least 4 percent on term deposits of more than $1,000 and to design accounts with lower charges for poorer customers.
The bank reported profit of $15.96 million from $18.3 million in the comparable year ago period while earnings were at 5.64c per share. The group declared a dividend of 0.167c at 14 times cover.
Total income grew 8.1 percent to $69.2 million representing 48% of the December year end amount of $144.1 million. Net interest income made up 63% of the total income while non-interest income was at 31%. Underwriting income from the insurance units was up 77.3% to $3.9 million. Total expenditure increased 12.9% to $42.1 million.
In the period, total assets grew 10.4% to $1.35 billion while finance director Never Nyemudzo said the group had maintained a small growth on the loan book at 7.3% to $917.4 billion. Total deposits grew 12% to $1.15 billion. Mangudya said the group had cleaned up the loan book through write-offs where appropriate and had adopted more prudential banking practices.”
Mangudya said the group had improved its liquidity management and had arranged longer term financing facilities to enable “our customers to spread their cash flows.” At present the bank is sitting on above $220 million lines of credit.
The bank had also just completed a $10 million convertible debenture facility to be taken up by a foreign investor. The facility is for three years at a 10% coupon rate. Mangudya said the debenture will be convertible at the average price on the day it will be taken.
 “Increasing our liquidity will ensure a growth in revenue.”
 Mangudya also said the group would be offloading the shares held in treasury from the share buy-back scheme to a like-minded shareholder at market price. He added the group would be buying back more shares in order to consolidate the share register.