Business / Companies
CBZ projects total income growth of 10%
27 Feb 2013 at 09:37hrs | Views
CBZH is expecting another good year in F13 with total income growth of 10% and further growth in assets of 19.5% on the back of diversified income and increased credit lines, CEO John Mangudya told an analyst briefing yesterday.
He said the lines of credit will fund SMEs since they are a major contributor to the economy while the quantity as well as the tenor of mortgage finance will also be extended to meet the high demand of customers.
"There is a less concentration on the SMEs… we want to put more resources in this sector which we believe is contributing significantly to this economy and helps create employment," he said.
He however, lamented liquidity constraints and lack of long term funding for industry recapitalisation as the major challenges to sectors like mining which require long term funding.
Mangudya noted that the group recorded a positive performance for the year ended 31 December 2012.
"All the four subsidiary companies of this group are well capitalised," noted Mangudya.
The core capital of the group was at $122.9million against the $27.5million required by regulators of the banks and insurance as at year end. Meanwhile, the total capital for the period under review is at $160.2million.
CBZ Bank recorded $117.9million as core capital surpassing the $25million required by RBZ while CBZ Asset Management had core capital of $1.1million against the $0.5million benchmark set by the central bank.
CBZ Life and CBZ Insurance posted core capital of $2.7million and $1.2million each.
He also told the briefing that the group spent $7million on share buybacks and that shares held under Treasury now constitute that largest shareholding block, followed by Government of Zimbabwe, the Libyan Foreign Bank and NSSA as the top four. He said the intention is to make the share register leaner and the shares held under Treasury will be disposed to a like-minded strategic investor.
He noted that the firm has done a number of product development and expansion during the course of the year which includes the agreement the group made with Econet concerning EcoCash.
The group also launched several insurance products like the Credit Life Policies.
"We are also launching our Education Development Policies…and we are quite happy about that as we have expanded both the business of the group and the products," he said.
Under regulatory amendments, Mangudya highlighted that the group is compliant with the process of implementing the Basel II. He also added that the firm is compliant with the RBZ MOU signed sometime in January this year.
"We have changed our systems to comply with the dictates of the RBZ MOU in regard with the caps that were put on both interest and the bank charges," he added.
On the tax and banking act reforms, CBZ is still going through the documents and "will make the necessary recommendation if necessary".
"We are happy that during the national budget that was presented by the finance minister they announced that commercial banks are also going to enjoy the tax exemption on income from mortgage financing as building societies."
"We are waiting for publication of that instrument so that at least the consumers can continue to enjoy the housing mortgage financing from the banks…We want to expand on that area," said Mangudya.
He noted that the group also focused its attention on offshore financing since one of the major problems in this economy is liquidity crunch and the bank has managed to secure new lines of credit amounting to $280 million.
"There is liquidity gap…The demand is much more than supply and as a result we've got liquidity gap and credit crunch. In order to mitigate that gap we resorted ourselves to secure a number of credit lines offshore," he added.
Mangudya further noted that the firm will also be looking at investments to boost their asset management company.
"The whole idea is to ensure that our customers get a fair share of liquidity for their own businesses and not for ourselves," he said.
CBZH finance director Never Nyemudzo said there was a "48% increase in profit after tax from $30.3million last year to close at $45million at the end of 2012."
He added that there has been a 17% increase in income from $123million to $144million while a 48.8% increase was recorded in underwriting income from $3.2million recorded in the prior year to $4.7million as at 31 December 2012.
The non-interest income which is quite significant to the group's operations contributed 32% compared to net interest income which contributed 68%.
Transaction charges contributed 53% to the non- interest income.
"Going forward this is going to be a game of volume rather than charges increases because we have already entered into an MOU with the RBZ which we intend to be very compliant with," he said.
There was a 15.9% increase in assets to $1 223.1million financed by the 24.4% increase in deposits to break the $1bln mark at $1 032.4million.
"There was a modest 8.1% increase in advances to close at $854.7million as we build the liquidity base within the group.
"Loans and advances in 2011 was 76% but because of the need to build up the liquidity base loans now constitute 70% of total assets," added Nyemudzo..
The bank has security valued at $1.150bln which covers net advances 1.35 times up from 1.1 in F11. NPLS reduced from $48million to $41.9million while coverage ratios improved to 0.62 from 0.45 as a result of increased provisions. Off shore funded advances improved to 20% from 15%.
Funds under management closed at $111.1million from the previous $88.2million posted in the prior year.
Meanwhile, there was a 209.4% increase in assets being insured by the group.
Also on the asset mix, Nyemudzo pointed out that cash and cash equivalent were at 15% whilst property plant and equipment remained unchanged at 6%. Investment properties also remained stable at 2%.
Under the analysis of sectorial contribution to the group's deposits, most of the deposits were from financial organisations at 27% and "this is where all offshore lines of credit are being recorded."
"It increased from 20% last year to 27% and in total that is $280million being $180million on balance sheet and $100million off balance sheet."
The other sectors included services at 19%, communication at 6% and agriculture at 3%. Individuals and manufacturing contributed 12% each while distribution contributed 13%.
He noted that the magnitude of loans that are being funded by offshore money is 20% a significant improvement from the 15% recorded last year.
"So what it means is we will continue to give our customers more time and more space to pay," he said.
Under sectorial analysis of advances, Nyemudzo noted that agriculture made the bulk of the advances at 30% followed by distribution at 24%, manufacturing at 17%, services at 12%, consumer finance at 11%.
"SMEs and microfinance at 5% is going to be a major focus area going forward as these are easy to manage advances as we also want to spread the cake to the economy.
He said the lines of credit will fund SMEs since they are a major contributor to the economy while the quantity as well as the tenor of mortgage finance will also be extended to meet the high demand of customers.
"There is a less concentration on the SMEs… we want to put more resources in this sector which we believe is contributing significantly to this economy and helps create employment," he said.
He however, lamented liquidity constraints and lack of long term funding for industry recapitalisation as the major challenges to sectors like mining which require long term funding.
Mangudya noted that the group recorded a positive performance for the year ended 31 December 2012.
"All the four subsidiary companies of this group are well capitalised," noted Mangudya.
The core capital of the group was at $122.9million against the $27.5million required by regulators of the banks and insurance as at year end. Meanwhile, the total capital for the period under review is at $160.2million.
CBZ Life and CBZ Insurance posted core capital of $2.7million and $1.2million each.
He also told the briefing that the group spent $7million on share buybacks and that shares held under Treasury now constitute that largest shareholding block, followed by Government of Zimbabwe, the Libyan Foreign Bank and NSSA as the top four. He said the intention is to make the share register leaner and the shares held under Treasury will be disposed to a like-minded strategic investor.
He noted that the firm has done a number of product development and expansion during the course of the year which includes the agreement the group made with Econet concerning EcoCash.
The group also launched several insurance products like the Credit Life Policies.
"We are also launching our Education Development Policies…and we are quite happy about that as we have expanded both the business of the group and the products," he said.
Under regulatory amendments, Mangudya highlighted that the group is compliant with the process of implementing the Basel II. He also added that the firm is compliant with the RBZ MOU signed sometime in January this year.
"We have changed our systems to comply with the dictates of the RBZ MOU in regard with the caps that were put on both interest and the bank charges," he added.
On the tax and banking act reforms, CBZ is still going through the documents and "will make the necessary recommendation if necessary".
"We are happy that during the national budget that was presented by the finance minister they announced that commercial banks are also going to enjoy the tax exemption on income from mortgage financing as building societies."
"We are waiting for publication of that instrument so that at least the consumers can continue to enjoy the housing mortgage financing from the banks…We want to expand on that area," said Mangudya.
He noted that the group also focused its attention on offshore financing since one of the major problems in this economy is liquidity crunch and the bank has managed to secure new lines of credit amounting to $280 million.
"There is liquidity gap…The demand is much more than supply and as a result we've got liquidity gap and credit crunch. In order to mitigate that gap we resorted ourselves to secure a number of credit lines offshore," he added.
Mangudya further noted that the firm will also be looking at investments to boost their asset management company.
"The whole idea is to ensure that our customers get a fair share of liquidity for their own businesses and not for ourselves," he said.
CBZH finance director Never Nyemudzo said there was a "48% increase in profit after tax from $30.3million last year to close at $45million at the end of 2012."
He added that there has been a 17% increase in income from $123million to $144million while a 48.8% increase was recorded in underwriting income from $3.2million recorded in the prior year to $4.7million as at 31 December 2012.
The non-interest income which is quite significant to the group's operations contributed 32% compared to net interest income which contributed 68%.
Transaction charges contributed 53% to the non- interest income.
"Going forward this is going to be a game of volume rather than charges increases because we have already entered into an MOU with the RBZ which we intend to be very compliant with," he said.
There was a 15.9% increase in assets to $1 223.1million financed by the 24.4% increase in deposits to break the $1bln mark at $1 032.4million.
"There was a modest 8.1% increase in advances to close at $854.7million as we build the liquidity base within the group.
"Loans and advances in 2011 was 76% but because of the need to build up the liquidity base loans now constitute 70% of total assets," added Nyemudzo..
The bank has security valued at $1.150bln which covers net advances 1.35 times up from 1.1 in F11. NPLS reduced from $48million to $41.9million while coverage ratios improved to 0.62 from 0.45 as a result of increased provisions. Off shore funded advances improved to 20% from 15%.
Funds under management closed at $111.1million from the previous $88.2million posted in the prior year.
Meanwhile, there was a 209.4% increase in assets being insured by the group.
Also on the asset mix, Nyemudzo pointed out that cash and cash equivalent were at 15% whilst property plant and equipment remained unchanged at 6%. Investment properties also remained stable at 2%.
Under the analysis of sectorial contribution to the group's deposits, most of the deposits were from financial organisations at 27% and "this is where all offshore lines of credit are being recorded."
"It increased from 20% last year to 27% and in total that is $280million being $180million on balance sheet and $100million off balance sheet."
The other sectors included services at 19%, communication at 6% and agriculture at 3%. Individuals and manufacturing contributed 12% each while distribution contributed 13%.
He noted that the magnitude of loans that are being funded by offshore money is 20% a significant improvement from the 15% recorded last year.
"So what it means is we will continue to give our customers more time and more space to pay," he said.
Under sectorial analysis of advances, Nyemudzo noted that agriculture made the bulk of the advances at 30% followed by distribution at 24%, manufacturing at 17%, services at 12%, consumer finance at 11%.
"SMEs and microfinance at 5% is going to be a major focus area going forward as these are easy to manage advances as we also want to spread the cake to the economy.
Source - zfn
