HARARE — Zimbabwe’s largest banking group CBZ Holdings has announced plans to issue a $200 million bond in April this year — double what it raised in the fixed income market last year — to boost its underwriting capacity, an official said on Wednesday as the group reported an 18,4% dip in after-tax profit.
CBZ Holdings’ after-tax profit was $36,7 million for the full year to December 31 on Wednesday, weighed down by a significant 322% increase in its impairment provision and growth in staff expenses. The group has sought to curb its lending activities, but saw its loan book grow to $1 billion, from $855 million the previous year.
CBZ Holdings chief executive officer John Mangudya said the bank remained committed to funding the productive sectors of Zimbabwe’s struggling economy.
“We have a number of international initiatives. We shall be renewing our bond in April. The first bond is expiring in April this year. We are renewing it at a level of $200 million as well as its tenure. Those funds will be very important to this economy, our customers and for industrial development. We are quite happy about it,” Mangudya told an analyst briefing.
The African Export and Import Bank (Afrexim) had committed to underwrite the bond, which would have a coupon rate of 7%, Mangudya added.
He said funds would be loaned out to productive sectors at an average interest rate of 10% per annum.
Last year the bank raised over $100 million offshore through a successful $86 million bond and a $10 million long-term debenture.
Mangudya said the $86 million bond was largely funded by international banking institutions.
The group has established a global fund based in Malaysia to raise offshore capital. It sought and secured a Mauritius-based strategic partner, Safari Quantum Investments which now controls 10% of its issued share capital. The group’s lines of credit rose from $33,9 million at the start of the multiple currency regime in 2009 to $289,67 million in 2013.
On interest rates and bank charges, Mangudya said the Reserve Bank of Zimbabwe had tightened regulations following the expiry of a year-long cap on fees and rates by the central bank.
“There is now a policy saying if you want to change interest rates and fees, you have to seek advice from the central bank,” he said.
– The Source