DISTRIBUTORS of fuel and fast moving consumer goods received the lion’s share of aggregate loans advanced by CBZ Bank as the financial institution increased its market lending in line with Reserve Bank calls.
Distribution, according to year-end financial statements for CBZ Holdings, accounted for 37% of the US$248 million sectoral loans made by the bank.
CBZ, which now accounts for 33% market share in terms of deposits, advances and total assets, granted US$62 million in loans to the agricultural sector, doubling its allocation in four months from November last year, the manufacturing sector received US$36,6 and parastatals were allocated US$11 million.
Last November, the central bank advised banks to up their loans directed towards agriculture after noting with “great concern” that some banking institutions were not playing a “meaningful role” in extending credit to the sector which is the backbone of the economy.
Reserve Bank governor Gideon Gono then encouraged banks to “orient their lending portfolios” to meet a recommended 30% threshold in agriculture.
The central bank said banks should allocate 25% apiece of their loans towards manufacturing and mining. The average industry wide loans to deposits, net of the statutory reserves and foreign currency accounts, according to official figures, then stood at 12,37%.
“As monetary authorities, we may however, be compelled to put in place measures to achieve the desired objectives, should banking institutions be reluctant to meaningfully support the above sectors,” Gono said
CBZ Bank managing director John Mangudya on Tuesday told businessdigest that the bank advanced a larger portion of its loans to distribution owing to the lower risk associated with the sector.
“Risk for the distribution sector is generally low because they generally deal with finished products hence such businesses are ideal for short term financing,” Mangudya said.
The bank primarily offers short term financing with an interest of up to 12% per annum. The CBZ Bank chief said the bank was engaged in negotiations to seek more lines of credit for medium and long-term credit.
CBZ currently with 158 356 active accounts in its 83 branches across the country received US$361 million in deposits last December compared to US$64 million in 2008 on the back of improved confidence on the financial services sector.
Public enterprises accounted for US$149 million of total deposits of the bank, a development analysts said buoyed the bank’s “monopolistic deposit base”.
Most government institutions, according to market watchers, bank with CBZ.
“Services” accounted for US$136 million of the deposits followed by private depositors and manufacturing jointly with US$120 million.
Meanwhile, CBZ Holdings recorded a US$8,1 million profit after tax on the back of 293% growth in assets. Basic Earnings per share stood at US1, 20 cents.