Financial services giant CBZ Holdings Limited has called on the Zimbabwean government to collaborate with the private sector in mitigating the effects of climate change, particularly the El Niño-induced drought currently gripping the nation. This comes as CBZ reported a significant loan exposure of ZWL$7.12 trillion in the first quarter of 2024.
With Zimbabwe experiencing below-average rainfall and a projected decline in harvests by half, the drought poses a significant risk to financial institutions heavily invested in agriculture. President Emmerson Mnangagwa has declared the drought a national disaster in recognition of its severity.
CBZ, which extended 22% of its ZWL$2.07 trillion loans in 2023 to the agricultural sector, is particularly vulnerable to the drought's impact. Lower agricultural yields could translate into loan defaults, negatively affecting the company's bottom line.
Despite these concerns, CBZ maintains a strong financial position. The company boasts a ZWL$16.99 trillion customer deposit base and ZWL$7.12 trillion in loans and advances. Additionally, its insurance arm possesses a ZWL$108.64 billion insurance liabilities book backed by ZWL$50.09 billion in assets.
In a trading update for the quarter ended March 31, 2024, CBZ highlighted its robust capital base, digital presence, and customer-centric approach as key drivers of its competitive edge. However, the company acknowledges the long-term threat posed by climate change and emphasizes the necessity for collaborative efforts between the government and private sector to implement mitigation, adaptation, and relief programs.
Looking ahead, CBZ pledges to continue adapting its business model to unlock long-term value for stakeholders. The company reported a commendable financial performance in the first quarter, generating a consolidated inflation-adjusted operating revenue of ZWL$1.42 trillion from a total revenue of ZWL$2.38 trillion. This growth is attributed to an increase in customer numbers, deposits, transactional activity, and product adoption.
CBZ assures that all its subsidiaries are adequately capitalized. The board expresses confidence in the company's ability to remain a going concern, citing its strong financial performance, sound financial position, and resilient business strategy. The board's commitment to continually evaluate the company's viability is further emphasized.
While climate change poses a challenge to the agricultural sector, CBZ previously anticipated a robust performance from the mining industry in its 2023 year-end financial statement. The company is also exploring opportunities in the accommodation and food services, as well as wholesale and retail trade sectors.
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