TWO months ago, businessdigest broke the story that Beverley Building Society, for a very long time viewed as a sitting duck for a take-over, was being bought by CBZ Holdings. Business reporter, Shakeman Mugari (Mugari) spoke with Beverley’s manag
ing director Mike Moyo (Moyo) to find out more about the institution and progress in the talks between Beverley and CBZ.
Mugari: We understand that the society has been taken over by CBZ Holdings. Can you comment on that?
Moyo: Well that is a shareholder issue and I have no comment to make. However, I can confirm that there has been a lot of interest in the society.
Mugari: But information we have is that the society has already been taken over?
Moyo: I have no information to that effect. However, I am aware that no transaction has yet been finalised.
Mugari: The mortgage lending business is under pressure from inflation and escalating house prices. Would you say Beverley is still taking mortgage lending as its core business?
Moyo: We are still a mortgage lender at heart. However, you should realise that the business has been under pressure from inflation and the escalating prices of houses. Another problem is that we have always relied on land serviced for housing stands by local authorities. However, over the last few years the local authorities have not been servicing much land because of the current economic constraints.
Mugari: That means there has been less activity in the mortgage business. How have you been surviving as a business when there is less activity in your core business?
Moyo: We have been surviving on our treasury operations especially the money market and other forms of lending. We had to have such a strategy after it became apparent that the mortgage lending business was going down.
Mugari: So what percentage of your income is now coming from mortgages?
Moyo: The business mix has changed. I can say we are now getting 80% of our profits from treasury activities and 20% from mortgage lending. Most of our income is coming from treasury activities.
Mugari: So what needs to be done for societies to return to their core business of mortgage lending and to lend more to the people?
Moyo: We need to get more money at cheaper rates so that we can on-lend to the people at cheaper rates.
Mugari: But some people still argue that even if these societies get the cheap money, mortgage lending will still be accessed by top income earners while the poor man remains homeless.
Moyo: We don’t discriminate against anyone. You have to realise that the ability to get the mortgage is always a function of one’s income. We would love to lend to as many people as possible but in this environment, where prices are going up, it is impossible. The cost of building has actually become more than that of buying a finished house.
Mugari: Beverley is 54 years old but according to central bank figures, it is smaller than other
societies established later. In fact it is now the third largest.
Moyo: I can assure you that those figures are not a correct reflection of the true position of the bank. We are the second largest building society after Cabs.
Mugari: Talking about performance, what is the state of the society’s cost to income ratio?
Moyo: It has actually improved. It has declined from the 33% in August to about 26% now.
Mugari: And how about the performance of your IT system which has been giving you problems for the past two years?
Moyo: We have now stabilised. We are still using the old system. The problem is that the system was written in old language which the new guys coming into the IT industry cannot understand. But we brought in experts to deal with that problem.
Mugari: But why not get a new system altogether if it’s causing problems?
Moyo: We have got RBZ permission to replace the system but we are still to be allocated foreign currency to get a new system. Once that has been done we will have the new system.
Mugari: How big is the society now?
Moyo: We had $19, 7 billion in assets as of October 31. This is a growth from the $7,5 billion at the end of June this year.
Mugari: Is that in real terms or inflationary.
Moyo: It’s both. But I would say by calculation we have grown by 8% above inflation in the past four months. That indicates we have achieved real growth.
Mugari: What is the size of the deposit base?
Moyo: We have an estimated 700 000 depositors across all the portfolios. Our savings have increased from $1,6 billion to $3,9 billion since June. Our mortgage advances have increased from $748 million to $1,6 billion during the same period.