CBZ mulls investment banking

Business
CBZ Holdings plans to tap into investment banking as the group diversifies its income streams.

CBZ Holdings plans to tap into investment banking as the group diversifies its income streams.

BY NDAMU SANDU

John Mangudya, CBZ group chief executive officer said last week the move was meant to grow its non-interest income.

Non-interest income is derived from transaction charges and fees and commission, among others.

“Going forward, in order to diversify our income base and to enhance our non-interest income, we are focusing on advisory and structured finance,” Mangudya said.

CBZ Bank were the financial advisors in the due diligence of the Chisumbanje ethanol project as well as making recommendations for the conversion of the project into a joint venture from a Built Operate and Transfer model.

Mangudya said there were a number of mandates CBZ Bank was working on this year, providing financial advisory services in gold production, agriculture and services including the privatisation of two loss-making parastatals.

The move to diversify income streams comes at a time banks have lost their cash cow in bank charges and interest rates following a Memorandum of Understanding (MoU) they signed with the central bank last month that puts a cap on charges.

Banks derive their income from two sources — interest on loans (interest income) and from transaction charges, fees and commission (non-interest income).

The MoU recently signed by banks follows concerns by the banking clients and government that bank charges and interest rates were astronomically high and discouraged a savings culture in the economy. In its financial results for the year ended December 31 2012, CBZ recorded a total income of US$156 million with the bulk (68%) coming from net interest income.

Of the non interest income, transaction charges constituted 53% up from 46% realised in 2011.

Commission and fee income recorded a marginal increase to 21% from 19% in 2011.

An investment bank assists individuals, corporations and government in raising capital by underwriting and or acting as the client’s agent in the issuance of securities. In its financial results for the year ended December 31 2012, CBZ group chalked profit after tax of US$45 million up from US$30 million recorded in 2011.

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