CABS sticks to the script

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CABS, one of Zimbabwe’s largest building societies, saw income from lending activities push its bottom line in the half year to June 2018.
This comes as a majority of the country’s financial services firms are increasingly turning to non-interest income for profit.
Surplus liquidity created by increases in money supply, coupled with low credit absorption by Zimbabwe’s ailing industry, have sent local banks to the stock market, properties and government securities in search of decent investment returns and value preservation.
However, CABS remains one of the few local banks which have stuck to traditional asset distribution, dominated by loans and advances.
“In an environment of increased risks and opportunities, the society maintained its focus on delivering relevant financial services to our customers, on a consistent basis, thereby contributing to the development of the local economy,” Davidzo Chitengu, CABS acting chairperson said in a statement accompanying the building society’s financial statements.
During the six months ended June 2018, the society delivered a surplus of $21 million, up 27 percent from the $17 million in 2017. This was on the back of a solid net interest income of $34 million, which was a 17 percent increase from $29 million in 2017, the society says this came as a result of the growth in loans and advances.
CABS’ loan book grew by 14 percent over the period under review from $668,82 million as at December 2018 to $764,69 million. Its loan to deposit ratio improved marginally from 65,62 percent to 66,17 percent.
Even though the society’s lending is below the benchmark loan to deposit ratio of 70 percent, it is way above the central bank-stated industry average of 45 percent, as at December 2017.
CABS’ private lending appetite has remained despite considerable pressure on account of the attractiveness of government debt over private lending in an environment with depressed interest rates. This has come as Zimbabwe’s persistent budget shortfall has been mostly financed through government borrowing. Over the past two years, banks’ loans to government debt-mix, has increasingly featured treasury bills.
NEDBANK’s financial statements for the six months to June 2018 show that it has on its books, treasury bills and RBZ bonds amounting to $84 million while its loans total $112 million. Barclays’ 2018 half year financial statements show $149 million in treasury bills and only $143 million in loans and advances.
However, CABS’ investment in treasury bills as at June 2018, amounted to $216 million, while its loan book stood at $765 million. The society’s loan book makes up 55 percent of its total assets.
The society says it believes in a positive future for the country and therefore continues to execute a long-term strategy to serve its customers better, including the enhancement of service delivery through its branch network, which it says is the largest in the country.
“The society continues to exert effort to enhance service delivery to its customers and to improve controls and efficiencies. Investments to this effect included on-going branch refurbishments to improve customer experience, investments in digital networks and customer contact points, and on-going staff training programmes,” said Chitengu.
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