- Monetary loss experienced a significant increase reaching a staggering 340 billion
- Deposits surpassed 5 trillion
- Profits After Tax (PAT) skyrocketed, surpassed half a trillion
- Posted a strong loan book crossing 2 trillion
Harare- CBZ Holdings, a blue-chip company listed on the Zimbabwe Stock Exchange and known for its flagship asset, CBZ Bank, has experienced a substantial increase in monetary losses for the fiscal year ended 31 December 2023.
According to the full-year financial results, the losses have nearly doubled after shooting by 92% to ZWL340 billion from ZWL177.4 billion in 2022. In the half-year to June 2023, the monetary loss surpassed 100% after spiking by 116%.
“The economy experienced intermittent currency weaknesses and price instabilities during the period under review as the local currency depreciated from ZWL$671.45:1USD in January 2023 to end the year at year at ZWL$6106:1USD on the official foreign exchange market,” Zembe, the Group’s chairperson said in a statement accompanying the full year financials.
This reveals the expansion of the monetary losses were primarily attributed to the rapid depreciation of the local currency, which depreciated by 89% against the US dollar on the formal market while PMR shoot to 13000 per dollar.
The government's heavy influence on monetary markets, particularly its control over the exchange rate has contributed to a premium of over 60% throughout the year.
This trend is expected to persist as the government continues to exert its control, even with the introduction of the new currency, ZiG. The government's intervention is driven by the lack of sufficient backing in gold and US dollars, necessitating legislative measures to regulate the exchange rate.
However, attempting to legislate the economy is not a viable solution. As long as the government maintains its power over monetary markets, particularly through fixed exchange rates, formal companies like CBZ will continue to face significant monetary losses. Presently, the ZiG is experiencing a 35% decline against the US dollar in the black market, with a 20% premium.
CBZ Holdings boasts the largest bank in the country in terms of assets and deposits. It also holds a leading position in lending, followed by Cabs, Stanbic, and FBC Holdings, which account for 10% of all loans, according to the latest statistics.
During the period under review, the bank solidified its position in lending and deposits, with the loan base surpassing ZWL2 trillion to reach ZWL2.1 trillion, up from ZWL846.7 billion in the previous year. The group is expecting to further solidify its asset base with an acquisition of stake in FML and ZB Financial Holding.
Deposits also made history by reaching ZWL5.5 trillion, up from ZWL3.2 trillion in the prior year, thereby maintaining CBZ's status as the largest bank. However, it is important to note that these impressive figures do not truly reflect the company's growth but are inflated due to inflationary pressures as they are adjusted for inflation.
Tax contributions to the national fiscus increased to ZWL187 billion, representing a slight improvement compared to the previous period's ZWL104 billion.
Non-interest income continued to dominate, reaching ZWL1.8 trillion, while net interest income stood at ZWL547.7 billion.
The public's confidence in the banking sector and monetary policies implemented by the authorities has diminished due to policy inconsistencies, resulting in a decline in bankers' income and an increased reliance on non-interest income for banks.
The past experiences of currency revaluations in Zimbabwe since 2006 to early 2009 serve as a painful reminder of the losses suffered by economic agents. The introduction of new currencies has led to significant losses for depositors and savers, eroding public confidence in the banking sector and the government's monetary policies.
Despite these challenges, CBZ Holdings achieved a remarkable milestone with total income reaching a historic ZWL2.3 trillion, up from ZWL1.2 trillion. This resulted in an after-tax profit of ZWL693.5 billion, a significant leap from ZWL161.2 billion in the previous year.
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