The country’s largest banking group by assets and deposits, CBZ Holdings’ profit after tax for the half year to June 30, 2019, surged 300 percent to $$134 million from $34 million in the same period last year despite a challenging economic environment.
The banking group acknowledged the economy was tough, but managed to position itself for earnings growth and anticipates to maintain this trajectory going forward.
“The operating environment deteriorated significantly during the period under review. While this might have brought about some challenges to the financial sector in particular, it also is presenting opportunities for the CBZ business to grow,” said CBZH in a statement accompanying the group financials.
During the period under review, the economy battled severe shortages of electricity and fuel, critical components of the domestic production cycle. As such, industrial activity was significantly curtailed.
Additionally, foreign currency shortages continued to prevail and thus negatively impacting on the importation of critical goods and services yet Zimbabwe is highly dependent on imports and the attendant trade imbalances and shortages culminated in high levels of inflation and declining aggregate demand.
Despite the low market confidence, CBZH experienced earnings growth.
At $586,9 million, total comprehensive income came in 1 611 percent above same period in the prior year. Basic earnings per share jumped 301 percent to 26,5 cents.
Total deposits rose 24 percent to $2,7 billion from $2,2 billion recorded during the same period in 2018, while total advances closed the period at $649 million compared to $767,7 million.
The six months period under review saw net interest income increase 17,5 percent to $47 million. Non-interest income to total income came in at 78,5 percent from 51,2 percent in the comparable prior year period.
In line with the inflationary pressures experienced during the period which resulted in increase in prices of goods and services, operating expenditure rose 76,4 percent to $93,8 million.
According to the group’s financials, administration expenses doubled to $48 million as a result of cost of living adjustments, subsequently accounting for the greater chunk of the total operating expenditure.
While the current economic headwinds are likely to persist in the near future, CBZH management remains upbeat the group will buck the economic trend as it positions itself for growth as well as taking advantage of the policy interventions Government is introducing to improve the business environment.
“. . . We expect the operating environment to remain challenging as the economy continues to undergo change.
“The CBZ group remains financially and technically well prepared and positioned to pursue current and emerging business opportunities, while at the same time managing the attendant business risks and threats,” said the group.
CBZH declared an interim dividend of $5 516 745 or 1,06 cents per share.
During the period under review, CBZH’s share price surged 254 percent on the local bourse ahead of the ZSE All Share Index that gained 40 percent.