CBZ  nine months profit CBZ cited potential interest rate hikes abroad and expected below-normal rainfall among the downside risk in the outlook (File Picture)

Tapiwanashe Mangwiro

Financial services group CBZ Holdings reported a profit after tax of $636,6 billion for the 9 months to September 30, 2023, representing a 696 percent inflation-adjusted increase from the 2022 comparative period.

The performance drove significant improvement in the group’s profitability indicators, with return on assets rising to 21 percent from 8 percent, and return on equity rising to 80 percent from 22 percent.

The group’s total revenues climbed 137 percent to $1,5 trillion, although the cost-to-income ratio declined to 27 percent from 32 percent. Total assets increased by 113 percent to $6,7 trillion and total equity increased by 171 percent to $1,4 trillion.

Total loans and advances grew by 57 percent to $1,7 trillion while total deposits increased by 113 percent to $4,8 trillion.

Looking ahead, the group highlighted the downside risks of further interest rate hikes abroad raising external borrowing costs, and the normal to below normal rainfall being forecasted for the upcoming agricultural season.

Analyst Namatai Maeresera said the relatively stable currency environment in the third quarter saw a moderate recovery in the group’s balance sheet, with total assets and deposits closing marginally higher, although still below their values at the end of the first quarter.

“On the sharp growth in the group’s revenues and profits, technical gains arising from the group’s real assets and USD balances are likely major contributing factors. Otherwise, the high interest rate environment and the sharp local currency depreciation experienced earlier in the year are expected to translate to subdued income interest growth, in real terms.

“Similarly, the squeeze on local currency liquidity and increased use of cash are likely to slow down income from fees and transactions. Beyond that, the possibility of a weak agricultural season presents a real threat for the group, given the increasingly significant contribution of the Agro-Yield unit to the group’s income,” he said.

On a positive note, the group’s asset management unit has been appointed the Fund Manager in the upcoming Revitus REIT – an ambitious project that aims to raise funds from investors to reinvigorate a number of CBD properties held under the property portfolio of the National Railways of Zimbabwe. Under a multi-phased development/rehabilitation programme, the REIT is projected to generate more than US$6 million per year in rentals at completion.

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