• Monetary loss widened by 1563% to ZWL 29 bn
  • Taxation skyrocketed to ZWL 12 bn from ZWL 5 bn
  • However, after tax profit more than doubled by 147%

Harare- Zimbabwe Stock Exchange (ZSE) listed Group, Commercial Bank of Zimbabwe Holdings (CBZ Holdings) has endured another detrimental monetary loss during the six months to June 30 2022, which is the worst in 3 years since 2019, pointing to failed economic policies by the government to restore currency sanity.

 During the full year to 31 December 2021, the Group capped the year with a 500% monetary loss which narrowed after-tax profit by 4%.

However, during the period under review, it widened by over 1000% to 1563%, almost tripling which is a record monetary loss since the introduction of the Zimbabwe dollar in 2019.

In its latest financial results, CBZ Holdings (The Group) said a confluence of calamities, both within and outside the nation’s borders have contributed to the economic mess in the country.  The Russia-Ukraine war and currency depreciation have been the factors brought forward to have caused economic instability through inflationary pressures and volatile exchange rates. 

“The period was also characterised by an increase in downside risks including external factors such as rising global inflation and interest rates and firming prices of key raw materials such as fuel, fertilisers and agricultural commodities, which translated into higher domestic production costs, and thus, rising inflationary pressures,” the Group’s chairperson Mark Holtzman said in a statement accompanying the half-year financials. 

“Internal factors such as adverse expectations, currency depreciation and general uncertainties also inhibited economic activity during the period under review.”

However, from Zimbabwe’s economic perspective, the Russian war with Ukraine only exacerbated the economic catastrophees that were already shooting above the roof, with a lack of principled governance holding the lion’s share.

The passing of retrogressive economic policies by the RBZ and the failure to maintain fiscal sanity by the Treasury have cost the economy at large. On the other hand, the government’s failure to deal with corruption and uphold rule of law has shunned the country of lucrative investors, getting traction from shenanigans Chinese ones.

These are stumbling debt relief bailouts from multilateral lenders and international lenders. Zimbabwe is currently in a debt trap due to mismanagement and the economy is on the edge of extinction due to retrogressive policies passed by monetary gaffers including a lack of clear policy on the currency of trade and excess RTGS liquidity to support government projects. 

These all, have a detrimental effect on the overall performance of the banking sector with the Group, not being spared. Banks acquire much of their income from lending through interest charges. However, the partial suspension of lending which coincided with the Group’s half-year period and record bank policy rates has stunned the interest income for Banks in Zimbabwe, leading to non-interest income to top the revenues.

Between January 1 2022 to June 31 2022, the Zimbabwe dollar depreciated by 80% on the overvalued RBZ-governed auction market while on the parallel market where the economic forces define market depriciation  more than doubled to over 200% within a space of six months.

During the same period under review, the Zimbabwe dollar also plunged by 33% in a single trade, the worst since 2019 when the bubble-gum currency was introduced. This denotes how serious a problem of currency is to banks' performance. 

Meanwhile, the Group is confident that the introduction of gold coins will enforce stability. 

“The anticipated introduction of an investment instrument to assist holders to store value in gold coins, announced by the RBZ on June 24, 2022, is an opportunity we will actively participate in as a financial institution”, Holtzman said. 

Gold coins, which were introduced by the Reserve Bank of Zimbabwe on the 25th of July this year have managed to stabilise the parallel market exchange rate between the range of US$1: ZWL850 for a period of 4 weeks. They were introduced to act as a hedge against inflation, supplementing the scarcely required United States dollar.

However, they are yet to show their impact on price reduction, exchange rate deceleration and currency resuscitation. 

Key Financial Highlights
The Group’s profit after tax more than doubled after spiking by 147% to ZWL 17 billion from ZWL 7 billion in 2021 during the same period. Key profit drivers were non-interest income which soared by 179% to ZWL 73 billion from ZWL 26 billion and net interest income which quadrupled by 96% to ZWL 20.5 billion from ZWL 5.9 billion in 2021. 

Due to record interest rates hike, banks are sceptic to lend while businesses are also reluctant to borrow as borrowing has become exorbitant. Inflationary pressures are also affecting long-term loans in the local currency as banks are charging high interest to offset losses. Tat, has resulted in banks earning more capital from fees and commission charges than the traditional way of through interest charges. 

Loans and advances to customers increased by 49% to ZWL 182.9 billion from ZWL 122 billion during the 2021 comparative period.

However, deposits registered a fingertip growth of 0.4% to ZWL 288.7 billion from ZWL 287.6 billion in 2021.

Due to a lack of confidence in the banking system of Zimbabwe which saw many businesses forfeiting millions during the record 2008 hyperinflation,  the public is reluctant to put money in banks but prefers to keep it under their pillows.

Meanwhile, cash and cash equivalents rose by 17% from ZWL 86 billion to ZWL 100 billion during the review period. 

Total assets grew by 11% to ZWL 462 billion from ZWL 416.6 billion. 


“Going forward, sectors such as mining and construction are expected to remain fairly strong and resilient, whilst recovery in the tourism and aviation sectors may be further catapulted by pent-up demand as tourists travel far and stay longer.”

“The Group will continue to closely monitor these developments to better meet the expectations of its customers, employees, shareholders and all stakeholders,” Holtzman said. 

However, lack of transparency within the mining, and retrogressive laws and policy inconsistencies remain detrimental factors to the prowess of the sector including the Mines and Minerals Marketing Act.

Also, companies have been bemoaning the 40%-60% surrender taxes. Retention thresholds force companies to cede 40% of their foreign earnings in return for the Zimbabwe dollar which is rejected by the market due to its lack of store and reserving value.

Besides that, corruption continues to haunt the sector CBZ Holdings pins hopes to. In 2020, the government alluded that it has been losing about US1.8 billion of mineral revenues; especially from gold smuggling.

In 2021, the International Crisis Group pointed out that a minimum of US$1.5 billion is being lost through gold smuggling.