CBZ Holdings downplays RBZ decision to slash inter...

CBZ Holdings downplays RBZ decision to slash interest rates

By Nyashadzashe Ndoro

CBZ Holdings, Zimbabwe's largest banking group, downplayed the Central Bank's recent policy decision to slash interest rates, reporting a strong financial performance for the quarter ended March 31, 2024.

However, the bank acknowledges the challenging global and regional economic environment, including high international borrowing costs and a potentially volatile foreign exchange market.

In a statement released to stakeholders, CBZ Holdings Group Chief Governance Officer, Rumbidzayi Angeline Jakanani highlighted the group's concerns over the global and regional economic climate.

"The Global and regional markets during the period under review were dominated by interest rate decisions, emerging markets debt distress and restructurings, elections, the El Nino effect and geopolitical tensions," Jakanani said.

The bank noted that most central banks maintained high interest rates due to inflationary pressures, with the US dollar benefiting from this trend. Regionally, the El Nino weather phenomenon resulted in a poor agricultural season, further straining economies in Southern Africa.

Despite these headwinds, CBZ Holdings reported "commendable financial performance" with consolidated inflation-adjusted operating revenue of ZWL1.42 trillion, driven by customer growth, deposits, and product uptake. The Group boasted a strong financial position with customer loans and advances reaching ZWL7.12 trillion, supported by a ZWL16.99 trillion customer deposit base.

Looking ahead, CBZ Holdings acknowledged the potential for continued high international borrowing costs and a potentially volatile foreign exchange market due to the recent monetary policy pronouncements by the Reserve Bank of Zimbabwe (RBZ). The RBZ's recent policy measures included a reduction in the bank policy rate from 130% to 20%.

However, CBZ Holdings expressed cautious optimism.

"The monetary policy measures that were recently introduced by the Reserve Bank of Zimbabwe are expected to foster stability on the foreign exchange markets, whilst perpetuating tight liquidity conditions on the money marketThe Bank also downplayed the impact of the interest rate cut, stating they had already adjusted lending rates downwards "in order to pass the benefit of lower bank rates to its customers."

The Group also projected continued growth based on its "strong market presence, innovation drive, and a customer-centric strategy.”