Connect with us

Support The NewsHawks

Business

CABS receives more than half of US$28m owed by central bank

Published

on

CABS, Zimbabwe’s oldest building society says it received more than half of the nearly US$30 million that was owed to it by country’s the central bank after a change in the monetary system resulted in the apex bank assuming a huge legacy debt.

BERNARD MPOFU

During the transition from the multi-currency system to mono-currency in 2019, there were outstanding foreign payments estimated at US$3.3 billion as a result of shortages of foreign exchange. The outstanding payments were shelved as blocked funds/legacy debt.

On 31 December, the Finance Act No. 7 of 2021 was enacted. Part 8 of the Act resulted in a mechanism through which foreign obligations would be settled through the state by way an assumption of liabilities by the same.

“A total of US$27.73 million was approved by the RBZ in 2019 for CABS with respect to blocked funds and a balance amounting to US$9.51 million was outstanding at 30 June 2022,” reads part of the footnotes accompanying the company’s half-year financials.

During the half-year ended 30 June, inflation-adjusted results show that CABS recorded a net surplus of ZW$1.14 billion against ZW$3.12 billion that was achieved in June 2021.

“The decline was mainly attributable to a ZW$9.97 billion loss in value of monetary assets compared to a loss of ZW$1.16 billion for the same period last year,” the mortgage lender says.

Despite experiencing a challenging operating environment characterised by rising inflation and a weakening domestic currency, CABS grew its net interest income by 52% to ZW$7.69 billion (2021: ZW$5.06 billion) during the period, mainly driven in the loan book.

Turning to lines of credit, the building society says facilities received during the period under review nearly quadrupled to ZW$41.1 billion and were securitised in the event of default. The mortgage lender also get support from its parent company, Old Mutual. The credit lines came from Shelter Afrique, African Development Bank, African Export and Import Bank, Trade and Development Bank (TDB) and the European Investment Bank.

 “As security for the TDB loan, the building society registered and issued powers of attorney to register bonds (in the event of default) over properties with a total value of ZW$16.87 billion as at 30 June 2022 (both investment properties and owner-occupied properties),” the financial institution says.

“The Shelter Afrique loan is secured by a guarantee from Old Mutual Zimbabwe Limited as well as cession of the performing loan book covering two times the exposure at any given time.”

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Advertisement

Popular