Zimbabwe: CBZ Finds New Investors

THE country's biggest banking group by assets and earnings, CBZ Holdings Limited, has identified investors for a 10 percent shareholding meant to raise cash to improve working capital, The Financial Gazette Companies & Markets (C&M) can report.

The stake, consisting of 10 million shares, will raise US$7 million for working capital for the banking unit, CBZ Bank Limited.

Speaking to C&M on the sidelines of an analysts briefing for the company's half year results to June 30, 2013, group chief executive officer, John Mangudya, said the group would soon offload 10 percent of its shareholding to "like-minded investors".

"The processes to dispose 10 percent of our shareholding, which we discussed at our Annual General Meeting, is working well ... soon we would be offloading the shareholding to like-minded group of investors who believe in our model and what we are doing. The shares are housed under treasury and would be sold at market price," Mangudya said.

The 10 million shares were acquired last year under a share buy-back arrangement. The bank's move to buy back shares was initially said to be done to preserve shareholder value.

Mangudya said initially the idea for the share buy-back was to clean up and consolidate the company register but the company then though to rope in a strategic investor who could take up the shares and provide the group with capital.

Mangudya said the top three shareholders in CBZH were government, Libya Arab Foreign Bank and the National Social Security Authority.

"We want to consolidate the company's share register which is currently cluttered. The consolidation is going to be an ongoing process," he said.

Mangudya said the group would continue looking at improved liquidity management during the course of the financial year.

CBZH, which is involved in commercial banking, mortgages, asset management and insurance, said after-tax profit for the six months to June 30 2013 declined by 12,6 percent to US$16 million, down US$18,3 million a year earlier.

Mangudya said all the group's sectors were fully capitalised with the group's core capital at US$140,3 million against the required US$52,23 million.

CBZ Bank core capital was at US$132,2 million and its total capital was US$156,6 million while CBZ Asset Management's was at US$1,9 million.

Total income for the period under review increased by 8,1 percent to US$69,2 million, from US$64 million.

Underwriting income went up 77,3 percent to US$3,9 million from US$2,2 million. Total assets went up 10,4 percent to US$1,4 million against US$1,2 million recorded in the prior period.

"The group is focused on creating more liquidity on the balance sheet, as well as creating those assets that are easy to convert into cash in the event that you need to do so," said Finance director Never Nyemudzo.

The group's coverage ratio increased from 0,62 times to 1,0 times a move seen as an indication that there has been deliberate move by management to increase provisions so that it takes care of the conditions of the operating environment.

The loan to deposit ratio went down to 82,7 percent versus 82,8 percent in December last year while the cost to income ratio slightly went up to 60,8 percent "reflecting the increased cost of doing business."

CBZ's chairman Luxon Zembe said the bank was anxiously waiting for the appointment of a new Cabinet after the elections to get a clearer direction of economic policy.

"The group continued to show impressive results which reflect sound execution of business plans," he said.

Basic earnings per share eased from US5,84c in the first half of 2012 to US5,64c in the half to June 2013.

Zembe said the group's dividend policy and the need to uphold shareholder investment value, a US$1,45 million dividend was declared for the financial period under review.

The flagship, CBZ Bank Limited's after tax profits for the period also slowed down, dipping by 38,4 percent to US$8 million weighed down largely by a sharp increase in interest expenses.

Profits came down significantly despite an increase in interest income from US$63,2 million to US$71,2 million during the interim period.

CBZ Life registered tremendous growth in gross premium written, which vaulted from US$1,7 million to US$3,9 million while net premium also jumped to US$3,8 million from US$1,6 million.

The performance reflected in a US$1,8 million after tax profit in the half to June 2013 against US$382 000 in the same period last year.

Another subsidiary, Datvest's revenue increased marginally to US$4,9 million from US$4,6 million in the comparative period last year, but after tax profit shot to US$385 000 from US$157 000.

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