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CBZ struggles to recover loans under lockdown

BY TATIRA ZWINOIRA

CBZ Holdings, one of the largest financial institutions in Zimbabwe, says the prolonged lockdown to slow down the spread of Covid-19 is hurting its business with borrowers struggling to service loans.

Zimbabwe went into lockdown at the end of March after recording cases of the disease caused by the novel coronavirus.

President Emmerson Mnangagwa in May slightly reopened the economy, but last week he warned he would be forced to tighten the restrictions after Covid-19 cases breached the one-thousand mark.

In a trade update, CBZ Holdings corporate secretary Rumbidzai Jakanani said the lockdown had seen the group closing down some of its branches and offering limited services.

“Due to the lockdown that has been necessitated by the need to curtail the spread of the virus, most of the group’s branches and head offices have either been closed or are not operating at full capacity,” Jakanani said.

“Most of the group’s employees are working from home with the exception of staff members that are required to be available physically within the work premises.

“Limited services are being offered to clients, with most of the services being restricted to clients who have been designated as essential services.

“Transactional volumes have declined during the lockdown period as a result of the restriction in movement and the requirement that only essential services be allowed to operate during this period.”

She said borrowers that were hardest hit by the lockdown were in the tourism and hospitality sector.

Jakanani said the group, however, was not likely to be left severely bruised by the struggles in that sector because tourism players did not comprise a big chunk of its debtors.

“Borrowers, especially those that are in the hardest-hit industries such as tourism and hospitality, have had their businesses affected and consequently, their ability to service debts,” she said.

“The group’s level of exposure within the hospitality and tourism sector, which has been hardest hit by the effects of the outbreak, constitutes about 0.68% and, hence, the group is unlikely to suffer significant losses due to non-performance of borrowers in this sector.”

According to CBZ Holdings’ 2019 financial results, the group was owed $3 013 900 920.

Jakanani said the group had put in place other measures to support its clients and counter the pandemic’s effects such as aggressive use of digital channels, remote working, and limited services.

“The group has encouraged its customers to make use of the various digital platforms it has available in an effort to make sure that services are available to customers during the lockdown period,” she said.

“Most of the group employees are available to ensure continuity of the business during lockdown by working remotely.”

Jakanani said the group was also offering money transfer agency services, deposit and withdrawal services to customers that were within the essential services category and those that had access to the teller on premises facility.

“Going into the second quarter of the year, the operating environment is expected to remain fraught with increased uncertainties emanating from the effects of the outbreak and attendant measures to fight the virus,” she said.

Despite the credit risk exposure, CBZ Holdings posted a 279% increase in inflation-adjusted profit after tax to $312,7 million during the first quarter of the year from a comparative of $82,5 million in 2019.

Total revenue rose 140,54% to $1,17 billion during the period under review from a 2019 comparative of $487,9 million.

Total assets rose 33,21% to $26,41 billion for the first quarter from $19,83 billion during the similar period last year.

The group also increased its lending portfolio as total advances rose 29,04% to $5,09 billion during the period under review from a 2019 comparative of $3,95 billion.

The group’s profitability translated to a basic earnings per share of 60,24 cents from a 2019 comparative of 15,94 cents, putting it in a profitable position heading into the second quarter.

Jakanani, however, warned the second quarter would still see economic activity slow down “as priorities remain firmly focused on confronting the unfolding unprecedented health and humanitarian crisis”.

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