Zimbabwe’s largest financial institution by deposits, CBZ Holdings’ profit for the quarter to September 30, 2020 declined 43.5% to ZWL$2.44bn on declining top-line as the banking group took a hit from the effects of the Covid-19 pandemic.
In the same period last year, net earnings were ZWL$4.32bn.
The virus, CBZ said, created both threats and opportunities to the group’s business model.
“The company’s profit after tax declined to ZWL$2.445bn for the quarter which ended September 30 2020 while total revenue went down to ZWL$10.4bn during the quarter from ZWL$11.5bn in the same period last year.
This can be attributed to Covid-19 effects,” CBZ group legal corporate secretary Rumbidzayi Jakanani said in a statement accompanying the third quarter trade update.
Total assets for the group grew 91.3% to ZWL$90.39bn during the reviewed period from ZWL$47.2bn recorded in the prior comparative period.
Deposits soared to ZWL$64.38bn for the third quarter of 2020 from ZWL$27.83bn recorded in the same period last year.
Jakanani said the trading environment remained generally difficult.
She said the monetary and fiscal authorities pursued a balanced approach to policy conduct, characterised with a combination of contractionary policy measures as part of efforts to deal with inflationary pressures and speculative attacks on the exchange rate, as well as concessionary facilities and fiscal incentives to stimulate economic activity.
Some of the notable policy measures that were introduced included the increase of the central bank rate to 35% from 15%, extension of the medium term bank accommodation facility, standardisation of the exporters’ surrender requirements at 30%, introduction of an 80% retention threshold on domestic sales of goods and services in foreign currency and upward review of PAYE tax thresholds.
Thus, reflecting the contractionary public policies, as well as the belated stability in the exchange rate towards the end of the quarter, the month-on-month rate of inflation fell from an average of 21.5% in Q2 to an average of 15.9% in Q3.
Jakanani said the local currency was depreciating rapidly during the period under review, as part of price discovery, between July and August 2020, before stabilising.
This week the Zimbabwe dollar is trading at ZWL$81.7: US$1.
Jakanani said on the policy front, most advanced and emerging market economies pursued expansionary monetary policies, characterised with ultra-low interest rates and concessionary credit facilities, as part of measures to boost credit expansion and, thus, economic activity.
She said CBZ has put in place various measures to support its clients and counter the effects of Covid-19 which include aggressive use of digital channels, encouraging its customers to make use of the various available digital platforms in an effort to decrease the number of walk-in customers and remote working.
Jakanani said the directors have engaged themselves to continuously assess the ability of the group to continue to operate as a going concern in light of the Covid-19 pandemic.
In the outlook, CBZ expects policy makers to maintain expansionary monetary policies in order to continue supporting their economies.
In Zimbabwe, she said, the direction of most economic fundamentals largely depends on the government’s pace and approach towards reopening of the economy, in particular how the authorities would seek to boost economic activity.