CBZ regional expansion to ride on existing joint ventures

Financial services conglomerate, CBZ Holdings, says it is taking baby steps to expand into the region, riding on already existing operations within the region.

Group chief executive, Lawrence Nyazema, in an interview, said the group has already completed its restructuring exercise and is now focused on benefiting from the exercise.

“We are done with restructuring and are now focused on transforming the business as we execute our 2024-28 strategy. We are taking baby steps in getting into the region. We have a joint venture for insurance in SA and reinsurance broking in Botswana,” he told Business Weekly.

CBZ has been actively seeking potential acquisitions and alliances in the local and regional markets that align with the group’s growth strategic goals.

In recent years, the group has been on the market for acquisitions and mergers, part of the group’s broader efforts to strengthen its market position and ensure long-term sustainability in a dynamic market.

However, the Competitions and Tariffs Commission (CTC) ruled against its plan to acquire additional shares in First Mutual Holdings (FML) through a mandatory offer.

In its ruling, the CTC resolved that CBZH maintain the 31.22 percent shareholding in FML, which was initially approved by the Commission. CBZ’s plans to merge with ZB Financial Holdings also failed.

According to Nyazema, one of the drawbacks for CBZ Holdings is that since 1980 it has not really established a sustainable business outside the country.

In the first phase of the restructuring process, 13 senior executives were sent on garden leave starting 1 October 2024, with mutual termination of their contracts expected by 31 December 2024.

In the second phase, CBZ initiated a workforce optimisation strategy, resulting in the retrenchment of 347 employees.

The exercise was successfully concluded on 31 January 2025, leaving the group well-placed to harness the benefits and sustain its growth trajectory.

“We integrate our medium- to long-term aspirations with our immediate goals and drive our operating model through our clusters, new markets and partnerships across four strategic operational clusters,” reads part of the group’s financials for the year ended December 31, 2024.

Nyazema, during a presentation of the financials, recently said the group’s subsidiaries’ diversity plays an important role in ensuring that clients are well catered for in their financial service needs.

During the year ended December 31, 2024, the group’s banking unit CBZ Bank raised US$93 million in lines of credit during the year under review, which supported key sectors of the economy.

Nyazema noted that the bank also made significant recoveries on its non-performing book, which resulted in an improved and cleaner balance sheet.

“The bank also increased the dollarisation of the book to 85 percent,” he said. He said the bank was the leading point of sale (POS) market share at 30 per cent USD and Zimbabwe Gold (ZiG) at 25 percent.

During the year under review, the banks’ total deposits had a market share of 21.4 per cent at US$21.4 million, while loans and advances had a market share of 17.3 percent, amounting to US$17.3 million.

During the year under review, Nyazema said the bank witnessed a rise in transactional volumes driven by expanded options and improved infrastructure as well as enhanced account acquisitions.

Redsphere Finance, the group’s subsidiary established in 2019, recovered market share by the fourth quarter of 2024 to be the leading microfinance institution.

Nyazema said recapitalisation efforts to increase the loan book are underway, while new revenue lines like invoice discounting are now commanding a significant contribution to the top line.

During the year under review, Nyazema said Agroyield’s business model was restructured into a diversified agriculture operating company and established new divisions, which are commodities trading, farming operations, mechanisation, logistics and value addition.

“Significant recoveries to the tune of US$11.3 million were made during the year,” he said. He noted that the commodities division, which was operational from the second half, contributed 6 per cent to profitability.

In terms of the group’s insurance cluster, Nyazema said the businesses secured key partnerships and affinities in 2024 and increased dollarisation of the book to 83 per cent.

In the investments cluster, Northgate Ecosystem leads for other subsidiaries and projects, and the group is reorganising CBZ Properties to offer more than property administration for the group.

Nyazema said the group will also focus on alternative investment portfolios and increase mandates for CBZ Capital.

Group Chief Finance Officer Joel Makombe said on the financials that the group reported a profit after tax of US$38.96 million, supported by noninterest income at US$163.22 million and net interest income at US$82.01 million.

He said interest income at US$97.85 million was driven by interest on loans at US$57.67 million and interest from Treasury Bills (TBs), Promissory Notes and Treasury Placements at US$26.84 million, contributing 58.9 per cent and 27.4 per cent, respectively.

Interest expense at US$15.84 million comprised mainly of money market deposits and offshore deposits interest expense, contributing 20.9 per cent and 44.5 per cent, respectively.

Commission and fee income at US$76.01 million contributed 31.2 per cent to nonfunded income due to increased transactional volumes on funds transfers (US$14.45 million), cash withdrawals (US$15.79 million), ATM cash withdrawals (US$18.57 million) and commission income service fees [visa, maintenance, alerts] (US$13.28 million).

Foreign exchange gains contributed 24 per cent of actual performance, spurred by the rapid depreciation of ZWL$ during the first quarter and depreciation of ZiG at the end of the third quarter of 2024.

The group’s operating expenditure closed the year at US$158.44 million. Staff costs at US$110.21 million contributed 69.6 per cent to the group’s expense bill, while restructuring costs of US$30.20 million were included in the staff costs. For the period under review, the group’s total assets at US$1.33 billion were supported by interest-earning assets at US$590.69 million, contributing 44.3 per cent of total assets, while cash balances amounted to US$271.11 million, representing 20.3 per cent of total assets as of 31 December 2024.

Deposits closed the year at US$836.80 million, with demand deposits at US$656.97 million and credit lines at US$118.59 million contributing 79 per cent and 14 per cent to the group’s total deposits, respectively.

Makombe said strengthening the deposit base and enhancing cash flow planning will be key to ensuring sufficient funding capacity to support operations, meet obligations, and seize emerging investment opportunities going forward.

He said the group maintained a strong capital position, closing the year with a total equity of US$306.74 million after distributing US$5 million in dividends.-ebsiesweek;