THREE of Zimbabwe’s biggest banks this week reported significant post tax profits for the half year ended June 30, 2024, riding out numerous uncertainties from a volatile domestic economy.
The Zimbabwe Stock Exchange listed CBZ Holdings reported a ZWG656,3 million profit after tax during the period, bolstered by strong performance on its digital platforms.
A change in Zimbabwe’s functional currency - which makes it difficult to compare present financial statements with the previous year - along with prolonged power cuts and exchange rate fragilities, were among factors undermining economic growth.
But markets were also held back by a brutal drought, which pushed Zimbabwe’s agro based economy to the edge, with the country appealing for about US$2 billion in aid to feed millions affected by poor rains.
The government downgraded projected growth rates for the agricultural sector from an initial -4,9% to -21,2%.
Disposable incomes also softened, affecting savings. But Zimbabwe’s largest banking group took advantage of its more than one million customers to maintain profitability, according to the financial statements.
“This performance was buttressed by our customer-centric approach to nurturing relationships with our customers, accessible and reliable digital platforms, enhanced disbursements, and a diverse product offering to address the financial needs of our valued customers,” Luxon Zembe chairperson at CBZ, said.
In its financial statements shared with investors this morning, NMB Holdings also said it remained profitable, but hinted about the ramifications of exchange rate volatility.
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The group also achieved a profit after tax, according to chairman Pearson Gowero.
“The group managed to contain costs spending ZWG220 million down 2,1% from ZWG225 million for the comparative period. The group continues to explore strategies to bring the cost of providing service down, primarily through automation and digital solutions,” he said.
“The domestic economy is now projected to grow by 2% in 2024, down from earlier forecasts of 3,5%. The downward revised projections are mainly attributed to the impact of the El Niño-induced drought,” he added.
Notwithstanding the headwinds, Gowero said Zimbabwe’s economy remained resilient to the shocks, driven by growth in accommodation and food services, wholesale and retail, mining and construction.
Growth sentiments were also shared at FBC Holding Limited, which said it achieved a profit before tax of ZWG669,7 million.
FBC said it also registered a 13% boost in its balance sheet for the half year, with total assets swelling ZWG9,99 billion, driven by the acquisition of FBC Crown Bank Limited, formerly Standard Chartered Bank Zimbabwe.
FBCH completed the acquisition of Stanchart Zim on May 18, 2024, further consolidating its market share in the banking sector.
The business has since been integrated into FBC Holdings.
“The focus is now on driving business growth, in line with the group’s market segmentation. We are confident that this acquisition will generate substantial value for our shareholders in the years to come,” FBCH group chairman Herbert Nkala said.
The group’s assets and liabilities were largely denominated in foreign currency, enhancing financial stability and value preservation. Shareholder funds increased by 31% to ZWG2,4 billion.
Total income of ZWG2,1 billion was recorded for the period, with core revenue streams of net interest income and insurance services experiencing growth and increased contribution.
Other income, which comprises net foreign currency trading and dealing income, net gains from financial assets, and fair value gains on investment property, experienced a significant decline compared to the same period last year.
“This was largely due to the local currency’s stability, the ZWG, following its introduction in the second quarter of the year on April 5, 2024,” Nkala said.
“There was general stability in the group hedging asset prices in the second quarter of the year, and this weighed down our total income compared to the same period last year.”
Operating costs for the period under review were ZWG659 million, driven by the mixed macroeconomic conditions during the first half of the year. Inflationary trends were experienced during the first quarter.
The exchange rate as June 30, 2024 was US$1:ZWG13,7.
