FINANCIAL services giant, CBZ Holdings Limited, has called on the government’s support to mitigate climate shocks as it reported a huge loan exposure of ZWL$7,12 trillion in the first quarter of 2024.
Zimbabwe is experiencing an El Nino-induced drought of average to below normal rainfall with harvests projected to drop by about half. President Emmerson Mnangagwa has declared the drought a State of disaster.
For financiers lending in the agriculture space, the El Nino-induced drought has left them exposed to negative returns stemming from lower agricultural sector.
In its full year performance ended December 31, 2023, CBZ gave out 22% of its ZWL$2,07 trillion loans and advances to customers in the agriculture sector.
“The group financial position remains strong, as loans and advances to customers closed the period at ZWL$7,12 trillion, anchored on a ZWL$16,99 trillion customer deposit base. Insurance operations closed with a ZWL$108,64 billion insurance liabilities book, supported by ZWL$50,09 billion in insurance and reinsurance assets,” CBZ said, in its trading update for the quarter ended March 31, 2024.
“The group closed the period with a strong capital and asset base, coupled with a robust presence in digital channels anchoring the group’s transactional volumes and values. The group continues to capitalise on its strong market presence, innovation drive, and a customer-centric strategy to sustain its competitive edge.”
CBZ added: “Climate change will continue to adversely impact the country’s agricultural and related sectors, hence the need for both the private sector and the government to step up efforts towards climate change mitigation, adaptation and relief programmes.”
CBZ said it would continue to reconfigure and position its business model towards unlocking long term value for its stakeholders.
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“The group posted commendable financial performance during the period, reporting a consolidated inflation adjusted operating revenue of ZWL$1,42 trillion from a total revenue of ZWL$2,38 trillion,” CBZ said.
“This strong performance was bolstered by a sustained growth in customer numbers, deposits, transactional activity and uptake of the group’s comprehensive product range.”
CBZ said all subsidiaries were adequately capitalised in the reviewed period.
CBZ’s board revealed that it is confident in the group’s ability to remain a going concern owing to its strong financial performance, financial position and a resilient business strategy.
“The board has maintained a commitment to evaluate and monitor the group’s ability to remain a going concern,” CBZ said.
In its financial statement for the full year ended December 31, 2023, CBZ reported that while climate change would negatively affect the agriculture sector and related industries, it was expecting a strong performance from mining.
Apart from mining, the group is also looking into the accommodation and food services sector and wholesale and retail trade sectors.
However, the downside risks to the growth projections include, among others, prolonged weak commodity prices, especially for base metals and the platinum group of metals.
The group vowed to continue monitoring these developments for quicker detection and response to emerging risks and opportunities.
