eBusiness Weekly
Tapiwanashe Mangwiro
CBZ Bank, the country’s largest bank by customer size and capitalization, has confirmed its appetite for growth through mergers and acquisitions.
This comes amid hints of a potential merger of CBZ and another commercial bank, ZB Holdings Limited after both companies have been issuing a number of cautionary statements.
Chief executive Blessing Mudavanhu, told shareholders at the recent company’s annual general meeting that the Zimbabwean economy is in need of a bigger bank, which has the ability to underwrite more and bigger business.
“This is in line with the appetite we have for mergers and acquisitions and we have realised as a company that unless we create capacity, it will be very difficult, if not impossible, to be able to address the financial needs of the Zimbabwean economy and by housing the largest bank in Zimbabwe, we have that responsibility,” said Mudavanhu.
“For us to deliver on that responsibility, we will have to make sure that we create a sizeable balance sheet that will be able to meet that challenge, and that sizeable balance sheet will come from organic growth and inorganic growth, which is going to be ushered through mergers and acquisitions.”
In 2021, CBZ Holdings realised an inflation adjusted net profit after tax of $7,7 billion.
However, the outcome represented a 5 percent drop from the previous year’s performance of $8,2 billion. The decline was largely attributable to a surge in credit loss provisions, which stood at $7,4 billion, as well as an adjustment for monetary losses of $7,2 billion.
As for the first quarter of 2022, the bank saw its profit after tax rise to $4,7 billion from $2,4 billion in the same period last year.
Group chief financial officer, Tawanda Gumbo, said unfortunately, the significant impact of inflation really started ratcheting itself up from March to June and a significant exchange rate differential started ticking in the June period.
“But I think what our financials demonstrate is that even as at March 2022, the way we structured the business is largely capable of ensuring the following key things for the group: ensuring that we remain adequately capitalised, we remain with appropriate levels of liquidity and that we have the ability, in terms of how we started the business, to actually beat inflation and to ensure that we continue to increase the USD component of the business as we progress,” he said.
Latest data shows price inflation mounting by 256,9 percent in the last 12 months through July 2022.
From a month-on-month perspective, prices mounted by 25,6 percent in July 2022, completing an unsustainable average monthly growth of 14,31 percent in the first half of the year.
“Especially if inflation continues to become a factor in the economy, it is then vital that we continue to create assets that can hedge against inflation.”
The historical cost to income ratio improved from 29.6 percent in the first quarter of 2021 to 26.4 percent in the first quarter of 2022.
“It demonstrates the group’s ability to continue to reduce costs as much as we can using the technological platforms that are becoming available as part of the strategy,” he added.
The group’s June financials will be out after review by the auditors.
