CBZ half year Ended 30 June 2013.pdf

7/27/2019 CBZ half year Ended 30 June 2013.pdf

1/16

UNAUDITED FINANCIAL RESULTS for the Half Year Ended 30 June 2013

1U na ud it ed F in an cial R es ults or t he h al ye ar e nd ed 30 J un e 2013

Chairmans Statement Consolidated Statement o Comprehensive IncomeFor the hal year ended 30 June 2013 Unaudited Unaudited

Notes 30 June 2013 30 June 2012

US$ US$

Interest income 2 78 830 358 67 588 727Interest expense 2 (34 905 489) (26 158 745)Net interest income 43 924 869 41 429 982Non-interest income 3 21 348 792 20 341 596Underwriting income (net) 4 3 915 632 2 244 813Total income 69 189 293 64 016 391Operating expenditure 5 (42 094 083) (37 319 506)Operating income 27 095 210 26 696 885

Charge or impairment 11.5 (6 629 237) (3 076 387)Transer to Lie Fund (164 346) (630 614)Prot beore taxation - 20 301 627 22 989 884

Taxation 6.1 (4 338 518) (4 657 651)Prot or the hal year ater tax 15 963 109 18 332 233

Other comprehensive income

Fair value adjustment on available-or-sale(AFS) nancial instruments 6.3 - 26 018Income tax relating to components oother comprehensive income 6.3 - (2 602)Other comprehensive income or the hal year net o tax - 23 416

Total comprehensive income or the hal year 15 963 109 18 355 649

Prot or the hal year attributable to:

Equity holders o parent 15 803 529 18 266 944Non-controlling interests 159 580 65 289 15 963 109 18 332 233Total comprehensive income or the hal year attributable to:

Equity holders o parent 15 803 529 18 290 360Non-controlling interests 159 580 65 289 15 963 109 18 355 649Earnings per share annualised cents:

Basic 8 5.64 5.84Fully diluted 8 5.58 5.84Headline 8 5.64 5.88

Consolidated Statement o Financial PositionAs at 30 June 2013 Unaudited Audited

Notes 30 June 2013 31 Dec 2012

US$ US$

ASSETS

Balances with banks and cash 9 148 422 509 180 186 510Money market assets 10 120 356 404 24 896 421Advances 11 917 353 172 854 689 983Insurance assets 12 7 175 643 4 706 525Other assets 13 28 734 259 52 217 859Investments in other nancial assets 14 19 958 461 2 181 257Investment properties 16 20 302 084 20 335 977Property and equipment 15 78 347 416 74 248 554Intangible assets 17 1 678 024 2 090 819Deerred taxation 18 7 853 084 7 539 322TOTAL ASSETS 1 350 181 056 1 223 093 227

LIABILITIES

Deposits 19 1 155 829 353 1 032 352 075Insurance liabilities 20 8 219 884 6 647 107Other liabilities 21 7 247 671 16 019 797Current tax payable 578 833 5 013 168Deerred taxation 18 2 375 902 2 383 845TOTAL LIABILITIES 1 174 251 643 1 062 415 992

EQUITY AND RESERVES

Share capital 22.1 6 841 445 6 841 445

Share premium 22.5 26 708 659 26 708 659Treasury shares 23 (8 193 228) (8 195 417)Non-distributable reserve 22.2 13 000 000 13 000 000Revaluation reserve 20 392 736 20 392 736Revenue reserves 22.3 115 814 766 100 943 928Share option reserve 719 208 499 637Equity and reserves attributable to equity holders o the parent 175 283 586 160 190 988Non-controlling interests 22.4 645 827 486 247TOTAL EQUITY & RESERVES 175 929 413 160 677 235

TOTAL LIABILITIES, EQUITY AND RESERVES 1 350 181 056 1 223 093 227

Consolidated Statement o Changes in EquityFor the hal year ended 30 June 2013

Non-

Share Share Treasury Revaluation Share option AFS Revenue controlling

capital premium shares NDR reserve reserve reserve reserve interests TotalUS$ US$ US$ US$ US$ US$ US$ US$ US$ US$

June 2012 (Unaudited)

Opening balance 6 841 445 26 708 659 (587 510) 13 000 000 15 966 335 - (636 497) 57 565 187 391 723 119 249 342Total comprehensive income - - - - - - 23 416 18 266 944 65 289 18 355 649

Treasury shares disposal - - 5 454 - - - - 91 252 - 96 706

Dividends - - - - - - - (816 948) - (816 948)

Closing balance 6 841 445 26 708 659 (582 056) 13 000 000 15 966 335 - (613 081) 75 106 435 457 012 136 884 749

June 2013 (Unaudited)

Opening balance 6 841 445 26 708 659 (8 195 417) 13 000 000 20 392 736 499 637 - 100 943 928 486 247 160 677 235

Total comprehensive income - - - - - - - 15 803 529 159 580 15 963 109

Treasury shares disposal - - 2 189 - - - - 28 614 - 30 803

Dividends - - - - - - - (961 305) - (961 305)

Employee share option reserve - - - - - 219 571 - - - 219 571

Closing balance 6 841 445 26 708 659 (8 193 228) 13 000 000 20 392 736 719 208 - 115 814 766 645 827 175 929 413

I take great pleasure in presenting our nancial results or the hal year ended 30 June 2013.

Operating EnvironmentThe economy witnessed a subdued perormance during the rst hal o the year with the operating environment remaining largely illiquid. Real GrossDomestic Product (GDP) is now expected to grow by at most 4%, compared to the average 7% per annum recorded in the previous periods. Thissluggish perormance lies in the severe decline in net investment in the productive sectors, weak medium term export growth prospects and internalmacroeconomic resource imbalances resulting rom a growing public debt.

The nancial services industry in particular has been negatively aected by a declining deposit base coupled with the impact o the adoption o theMOU on bank charges. National savings continue to decline in tandem with the liquidity levels in the market.

InationThe rate o ination has however remained relatively stable, within the single digit levels and is broadly in line with that o major trading partners.Annual ination opened the year at 2.51%, and declined margin ally to close the rst hal o the year at 1.87%. The downward trend in the annual rateo ination has been attributed to the all in crude oil prices and movements o the South Arican Rand exchange rate.

Capital MarketTrade on the stock market saw a marked improvement compared to trades and stock values witnessed during year ended 31 December 2012.

The benchmark industrial shares index closed the rst hal o year 2013 at 211.19 points thereby registering a growth o 38.58% since January whilethe mining shares index closed at 73.29 points, achieving a growth o 12.55%.

The local bourse has the potential or better perormance i the underlying listed entities are in a position to achieve at least 60% capacity utilisation.In the absence o such perormance, most value gains are quickly eroded by ensuing bearish trends.

The CBZH stock opened the year 2013 at 10 cents and thereater rose steadily, reaching a high o 16.5 cents on 8 March and thereater traded loweruntil it closed the rst hal o the year 2013 at 13.5 cents. Closing at 13.5 cents, the share price achieved a year to date growth o 35% With 684.1million shares in issue, the company closed the rst hal o 2013 with a market capitalisation o US$92.36 million.

Overview o the Groups perormance

The Group continued to show impressive results which reect sound execution o business plans. Below are the key highlights o the Groupsperormance or the stated period:

UnauditedHalf Year

30-Jun-13$m

UnauditedHalf Year

30-Jun-12$m

AuditedYear

31-Dec-12$m

Financial Perormance

Prot beore taxation 20.3 23.0 55.6

Prot ater taxation 16.0 18.3 45.0

Total comprehensive income 16.0 18.4 50.1

Total assets 1 350.2 1 173.6 1 223.1

Total equity and reserves 175.9 136.9 160.7

Total deposits 1 155.8 985.7 1 032.4

Total advances 917.4 789.8 854.7

Other statistics

Basic earnings per share(cents) 5.64 5.84 7.39

Non- interest Income to total Income % 36.5 35.3 33.9

Cost to income ratio % 60.8 58.3 57.8

Annualised return on assets % 2.96 3.8 4.5

Annualised return on equity % 16.6 23.6 32.2

Growth in deposits % 11.96 18.8 24.4

Growth/(decline) in advances % 7.3 (0.7) 8.1

(Decline)/Growth in PBT % (11.7) 19.3 45.4

(Decline)/Growth in PAT % (12.9) 34.1 48.4

The Group has enjoyed synergistic benets, maximized eeciencies and productivity through the consolidation o activities o its respective units.I am encouraged by the continuous innovation in leading products which have met the increasing demands o our stakeholders.

Perormance awardsMay I also take this opportunity to highlight some o the awards that the Group received during the period under review. These include; TheAfreximbankFinancialInstitutionsAwardfor2013(Goldcategory). ZimbabweNationalChamberofCommerce(ZNCC)BusinessAwardforhavingtheBestCorporateSocialResponsibility-HIV/AIDSProgramme

during 2012. Best2012SMEsCSRSupportbytheRegionalCentreforSocialResponsibility(RCSR.) 2012/2013,EmployerofChoiceAwardintheFinancialServicesSector,followingasurveywhichwasundertakenbytheEmployersConfederation

o Zimbabwe (EMCOZ) in conjunction with the Institute o People Management in Zimbabwe (IPMZ).

DirectorshipIn May 2013, Mr. M. I. O. Ben Ghali announced his retirement rom the Board. I would like to thank him or the strategic role he has played as ashareholder representing the Libyan Foreign Bank. On behal o the Board I would like to wish him well in his uture endeavours.

GovernanceThe Group is cognisant o its undamental role in our economy and thereore strong governance is integral to our long term success. The Group hasremained compliant with all requirements o the regulatory bodies in its business environment and continually assesses its governance structures toensure its eectiveness.DividendIn line with the Groups dividend growth policy, and the need to uphold shareholders investment value, the Board has declared an interim dividend o0.1673 cents per share translating to $1 144 768.

OutlookThe economic climate is set to become more certain and predictive ater the harmonised elections. We remain optimistic o a conducive and riendlyeconomic environment which osters sustain able investment. The Group will strive to contribute positivel y to the economic growth o the country andto make urther progress in the second hal o the year.

AppreciationI would like to thank the Boards o the Group and its subsidiaries, management and sta or their commitment to the common goals o growth andsuccess. To all who share our optimism or seizing great opportunities that lie ahead, we say thank you or your continuing condence and support.

L. ZembeChairman8 August 2013

Financial Highlights

UNAUDITEDFINANCIALRESULTSfor the Half Year Ended 30 June 2013

BANK INSURANCE ASSET MANAGEMENT

Prot Beore Taxation $20.3 millon Prot Ater Taxation $16 million Total Comprehensive income $16 million


2/16



Consolidated Statement o Cash FlowsFor the hal year ended 30 June 2013 Unaudited Unaudited 30 June 2013 30 June 2012 US$ US$CASH FLOWS FROM OPERATING ACTIVITIES

Prot beore taxation 20 301 627 22 989 884Non cash items:Depreciation 2 602 087 2 397 001Amortisation 414 577 328 204Fair value adjustments (423 258) 92 261Impairment on advances 6 629 237 3 076 387Unrealised gain on oreign currency position 197 325 (2 422 831)Loss on disposal o investment properties 10 800 -Unearned premium 435 026 464 765Claims provision Incurred But Not Reported (IBNR) 25 393 346 274Loss on sale o property and equipment 6 955 168 716Employee share option provision 219 571 -

Operating prot beore changes in operating assets and liabilities 30 419 340 27 440 661

Changes in operating assets and liabilitiesDeposits 123 279 953 158 240 641Advances (69 292 426) (2 560 283)Money market assets (95 459 983) (19 534 820)Insurance assets (2 469 118) (3 015 333)Insurance liabilities 1 112 357 4 107 620Other assets 23 819 577 (44 523 399)Other liabilities (8 772 125) (56 371 944)

27 781 765 36 342 482

Corporate tax paid (9 094 558) (8 552 035)Net cash inow/outow rom operating activities 6 456 983 55 231 108

CASH FLOWS FROM INVESTING ACTIVITIESProceeds on disposal o investment property 37 800 -Net change in investments (17 353 949) (446 077)Purchase o investment properties (14 707) -Proceeds on disposal o property and equipment 353 605 315 959Purchase o property and equipment (7 397 483) (3 660 205)Purchase o intangible assets (1 782) (78 008)Net cash outow rom investing activities 24 376 516 3 868 331CASHFLOWS FROM FINANCING ACTIVITIESTreasury shares disposal 30 803 96 707Dividend paid (961 305) (816 948)Net cash ow to nancing activities 930 502 720 241

NET INCREASE/DECREASE CASH AND CASH EQUIVALENTS 31 764 001 50 642 536Cash and cash equivalents at the beginning o the period 180 186 510 142 453 856

Cash and cash equivalents at end o period 148 422 509 193 096 392

Accounting PoliciesFor the hal year ended 30 June 2013

1. GROUP ACCOUNTING POLICIES

The ollowing paragraphs describe the main accounting policies applied consistently by the Group.

1.1 BASIS OF PREPARATION

The Groups nancial statements have been prepared in accordance with International Financial Reporting Standards(IFRS). The nancial statements are based on statutory records that are maintained under the historical cost conventionas modied by the revaluation o property, equipment, investment property and certain nancial instruments stated at airvalue.

The nancial statements are presented in United States dollars (US$).

Basis o consolidationThe Group nancial statements incorporate the nancial statements o the Company and its subsidiaries. Control existswhen the Group is exposed, or has rights, to variable returns rom its involvement with investee and has the ability to aectthe returns through its power over the investee. The results o subsidiaries acquired or disposed o during the year areincorporated rom the date control was acquired and up to the date control ceased.

The nancial statements o the subsidiaries are prepared or the same reporting period as the parent company, usingconsistent accounting policies.

All intra-group balances, transactions, income and expenses; prots and losses resulting rom intra-group transactions thatare recognised in assets and liabilities are eliminated in ull.

Non-controlling interests represent the portion o prot and net assets that is not held by the Group and are presentedseparately in the consolidated statement o comprehensive income and within equity in the consolidated statement onancial position, separately rom parent shareholdersequity.

1.2 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

In the process o applying the Groups accounting policies, management made certain judgements and estimates that havea signicant eect on the amounts recognised in the nancial results. Kindly reer to our website (www.cbz.co.zw) or adetailed analysis o the signicant accounting estimates and judgements.

Unaudited Unaudited30 June 2013 30 June 2012

US$ US$

3. NON-INTEREST INCOME

Net income rom trading securities 76 254 8 360

Fair value adjustments on nancial instruments 423 258 (92 261) Net income rom oreign currencies dealings 4 524 244 1 683 022 Commission and ee income 14 752 946 9 617 685 Loss on sale o property and equipment (17 755) (168 716) Other operating income 1 589 845 9 293 506

21 348 792 20 341 596

4. UNDERWRITING INCOME (NET)

Gross premium insurance 8 855 471 6 419 559 Reinsurance (3 233 408) (3 505 361) Net written premium 5 622 063 2 914 198 Unearned premium (348 290) (180 426) Net earned premium 5 273 773 2 733 772 Net commission (195 329) 262 855 Net claims (1 162 812) (751 814)

3 915 632 2 244 813

5. OPERATING EXPENDITURE

Sta costs 24 106 651 20 014 023 Administration expenses 14 689 728 14 310 799 Audit ees 281 040 269 479 Depreciation 2 602 087 2 397 001 Amortisation o intangible assets 414 577 328 204

42 094 083 37 319 506

Remuneration o directors and key management

personnel included in sta costs Fees or services as directors 406 126 341 733 Pension or past and present directors 70 529 51 644 Salaries and other benets 1 387 368 1 639 926

1 864 023 2 033 303Operating Leases

The ollowing is an analysis o expenses related to operating leases:Non cancellable lease rentals are payable as ollows:

Less than 1 year 197 929 174 087Between 1 and 5 years 701 250 1 113 157 899 179 1 287 244

The Group leases a number o branches under operating leases. The leases typically run or a period o less than 5 years withan option to renew the lease ater the expiry date.

During the hal year ended 30 June 2013, an amount o US$565 617 was recognised as rent expense in statement ocomprehensive income.

6. TAXATION

Current income tax and deerred tax on temporary dierences have been ully provided or. Deerred income tax is calculatedusing the statement o nancial position liability method.

Unaudited Unaudited

30 June 2013 30 June 2012

US$ US$

6.1 Analysis o tax charge in respect o the prot or the hal year

Current income tax charge 4 660 223 5 327 528Deerred income tax (321 705) (669 877)Income tax expense 4 338 518 4 657 651

6.2 Tax rate reconciliation % % Notional Tax 25.00 25.00 Aids levy 0.75 0.75 Permanent dierences (4.38) (5.49)

Eective tax rate 21.37 20.26

6.3 Tax eects relating to other comprehensive income

Gross revaluation adjustment Tax (expense)/creditGross air value adjustment on AFS nancial assets - 26 018Tax credit - (2 602)

Net air value adjustment on AFS nancial assets - 23 416

Total taxation rom other comprehensive income - 2 602

7. DIVIDENDS

Interim dividend paid - 903 071

Interim dividend proposed 1 144 768 -1 144 768 903 071

8. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net prot or the hal year attributable to ordinary equityholders o the parent by the weighted average number o ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the net prot attributable to ordinary equity holders othe parent by the weighted average number o ordinary shares outstanding during the period plus the weighted averagenumber o ordinary shares adjusted or the eects o all potentially dilutive ordinary shares.

Headline earnings per share amounts are calculated by dividing net prot or the hal year attributable to ordinary equityholders o the parent ater adjustments or excluded re-measurements by the weighted average number o ordinary sharesoutstanding during the period.

The ollowing reects the income and share data used in the basic, diluted and headline earnings per share computations:

Unaudited Unaudited

30 June 2013 30 June 2012

US$ US$Earnings per share annualised cents:

Basic 5.64 5.84Fully diluted 5.58 5.84Headline 5.64 5.88

8.1 EARNINGS

Basic earnings (earnings attributable to holders o parent) 15 803 529 18 266 944 Fully diluted 15 803 529 18 266 944

Headline 15 821 284 18 438 262

Number o shares used in calculations weighted

Basic 560 833 190 626 117 205 Fully diluted 565 636 886 626 117 205

Headline 560 833 190 626 117 205

8.2 Reconciliation o denominators used or calculatingbasic and diluted earnings per share:

Weighted average number o shares beoreadjustment or treasury shares 684 144 546 684 144 546Less: Treasury Shares held (123 311 356) (58 027 341)Weighted average number o shares used or basic EPS 560 833 190 626 117 205

Potentially dilutive shares (Employee Share Options) 4 803 696 - Weighted average number o shares used or diluted EPS 565 636 886 626 117 205

Notes to the Consolidated Financial ResultsFor the hal year ended 30 June 2013

1. INCORPORATION AND ACTIVITIES

The consolidated nancial statements o the Group or the hal year ended 30 June 2013 were authorised or issue inaccordance with a resolution o the Board o Directors on 8 August 2013. The Group oers commercial banking, mortgagenance, asset management, short term insurance, lie assurance and other nancial services and is incorporated inZimbabwe.

Unaudited Unaudited 30 June 2013 30 June 20122. INTEREST US$ US$

Interest IncomeOverdrats 48 104 240 37 495 379Loans 22 784 925 25 663 087Mortgage interest 6 503 608 3 790 142Sta loans 204 574 158 209

77 597 347 67 106 817

Short-term money market assets 1 011 822 448 632Other investments 221 189 33 278

78 830 358 67 588 727 Interest expense

Call deposits 172 334 40 715Savings deposits 3 354 828 2 302 071Money market deposits 20 224 564 16 702 278Other oshore deposits 11 153 763 7 113 681

34 905 489 26 158 745


3/16



Unaudited Unaudited

30 June 2013 30 June 2012 US$ US$

8.3 Headline Earnings

Prot attributable to ordinary shareholders 15 803 529 18 266 944

Adjusted or excluded re-measurements:Disposal loss on property and equipment and intangibles 17 755 168 716Tax relating to re-measurements - 2 602

15 821 284 18 438 262

Unaudited Audited30 June 2013 31 Dec 2012

9. BALANCES WITH BANKS AND CASH US$ US$

Balance with the Reserve Bank o Zimbabwe 112 485 542 102 502 494 Current accounts 112 485 542 102 502 494 Balances with other banks and cash 35 936 967 77 684 016 Cash oreign 23 558 178 38 778 884 Nostro accounts 12 331 805 33 137 879 Interbank clearing accounts 46 984 5 767 253

148 422 509 180 186 51010. MONEY MARKET ASSETS

Agro Bills 50 000 50 000 Call placements 4 792 127 13 239 994 Accrued interest 671 206 441 992

Treasury bills 114 843 071 11 164 435120 356 404 24 896 421

10.1 Money market portolio analysis

Held to maturity 1 205 910 1 081 658 Held or trading portolio 119 150 494 23 814 763120 356 404 24 896 421

Maturity analysisBetween 1 and 3 months 4 358 895 13 989 209Between 3 months and 1 year 109 037 520 10 800 401Between 1 and 5 years 6 959 989 106 811

120 356 404 24 896 42110.2 Financial assets held or trading

Trading bills and placements 120 356 404 24 896 421

Maturity value 157 722 343 25 014 327Book value 120 356 404 24 896 421

10.3 Financial assets classication Financial assets held or trading 120 356 404 24 896 421

120 356 404 24 896 421

The groups holds Treasury bills rom the Reserve Bank o Zimbabwewith a value o $25 150 889. The Treasury bills are classied at air valuethrough prot and loss.

11 ADVANCES

Overdrats 469 283 437 488 988 537 Loans 374 060 315 303 554 515 Mortgage advances 104 268 385 89 980 277

947 612 137 882 523 329 Interest accrued 10 314 651 7 621 860

Total gross advances 957 926 788 890 145 189

Impairment (40 573 616) (35 455 206)917 353 172 854 689 983

11.1 Sectoral analysis % %Private 103 230 689 11 94 382 701 11

Agriculture 273 818 812 29 266 467 187 30 Mining 13 646 880 1 13 562 452 2 Manuacturing 121 082 350 13 153 521 287 17 Distribution 226 638 607 24 216 351 971 24 Construction 4 144 602 0 4 607 354 1 Transport 30 453 685 3 21 584 514 2 Communication 11 985 434 1 6 636 850 1 Services 156 152 625 16 111 954 128 12 Financial Organisations 16 773 104 2 1 076 745 0

957 926 788 100 890 145 189 100

11.2 Maturity analysis Demand 571 964 126 524 181 656 Between 1 and 3 months 4 155 215 22 299 913 Between 3 and 6 months 44 207 680 14 543 293 Between 6 months and 1 year 23 815 921 59 863 136 Between 1 and 5 years 207 382 400 169 986 402 More than 5 years 106 401 446 99 270 789

957 926 788 890 145 189

Maturity analysis is based on the remaining period rom 30 June 2013 to contractual maturity.

11.3 Loans to directors, key management and employees

Loans to directors and key managementIncluded in advances are loans to executivedirectors and key management:-

Opening balance 6 133 293 3 674 690 Advances made during the period 2 399 065 3 532 271 Repayment during the period (939 006) (1 073 668)

Closing balance 7 593 352 6 133 293

Loans to employeesIncluded in advances are loans to employees: -

Opening balance 38 073 520 35 492 076Advances made during the period 3 407 495 9 281 704Repayments during the period (4 032 475) (6 700 260)

Closing balance 37 448 540 38 073 520

11.4 Non perorming advancesTotal advances on which interest is suspended 40 714 239 41 861 695

11.5 ImpairmentsOpening balance 35 469 479 21 667 170Charge or impairment on advances 6 629 237 4 618 173Interest in suspense 8 707 481 9 169 863Provision or doubtul insurance debt - 14 273Amounts written o during the period (10 218 309) -

Closing balance 40 587 888 35 469 479

Comprising:Specic impairments 27 268 628 19 213 448Portolio impairments 13 319 260 16 256 031

40 587 888 35 469 47911.6 Collaterals

Notarial general covering bonds 506 365 719 397 534 723Cash cover 24 728 707 26 543 980Mortgage bonds 700 061 388 726 740 897

1 231 155 814 1 150 819 600

NOTES TO THE CONSOLIDATED FINANCIAL RESULTS continued

Unaudited Audited

30 June 2013 31 Dec 2012

US$ US$

12. INSURANCE ASSETS

Reinsurance unearned premium reserve 2 095 425 1 060 418

Reinsurance receivables 1 702 790 2 322 194 Deerred acquisition costs 630 771 236 684

Insurance premium receivables 2 746 657 1 087 2297 175 643 4 706 525

13. OTHER ASSETS

Work in progress - 6 808 632 Land stands inventory 23 233 062 14 894 700 Prepayments and deposits 1 325 554 1 536 930 Receivables 4 175 643 28 977 597

28 734 259 52 217 859

14. INVESTMENTS IN OTHER FINANCIAL ASSETS

Investment in equity instruments 12 392 350 2 181 257Investments in debenture instruments 7 566 111 -

19 958 461 2 181 25714.1 Investments in equities

Listed investments 1 462 614 1 772 190 Unlisted investments 10 929 736 409 067

12 392 350 2 181 257

At cost 10 929 736 409 067 At air value 1 462 614 1 772 19012 392 350 2 181 257

Portolio analysis Trading 3 179 484 2 181 257 Available or sale 9 212 866 -

12 392 350 2 181 257

14.2 Investment in subsidiaries % % CBZ Bank Limited 21 839 891 100 21 839 891 100 CBZ Asset Management (Private) Limited 1 988 473 100 1 423 430 100 CBZ Building Society 19 114 990 100 19 114 990 100 CBZ Insurance (Private) Limited 374 579 58.5 374 579 58.5 CBZ Properties Limited 4 779 144 100 4 779 144 100 CBZ Lie Assurance (Private) Limited 1 388 014 100 1 388 014 100

49 485 091 48 920 04814.3 Investment in debentures

Investment in debentures are held to maturity and valued at amortised cost less impairments. Investments in debenturesheld by the group as at 30 June 2013 are convertible and had the ollowing eatures;

Tenure (years) 5 -Interest rate (%) 7-10% -

Value(US$) 7566111 -

15. PROPERTY AND EQUIPMENT

Leasehold Motor Computer and Work in Unaudited Audited

Land Buildings improvements vehicles equipment progress 30 June 2013 31 Dec 2012

Cost US$ US$ US$ US$ US$ US$ US$ US$

Opening balance 4 496 725 44 589 498 583 689 3 239 643 20 825 952 9 691 260 83 426 767 72 233 850

Additions - 158 082 66 746 73 365 941 001 6 158 289 7 397 483 8 087 695

Revaluation - - - - - - - 3 975 867Disposals - - - (44 660) (50 848) (323 200) (418 708) (870 645)

Transers - 21 588 - 63 110 221 339 (642 012) (335 975) -

Closing balance 4 496 725 44 769 168 650 435 3 331 458 21 937 444 14 884 337 90 069 567 83 426 767

Accumulated depreciation

Opening balance - - 135 461 1 642 160 7 400 592 - 9 178 213 5 732 274

Charge or the period - 547 069 29 335 280 377 1 745 306 - 2 602 087 4 784 926

Disposals - - - (27 393) (30 756) - (58 149) (298 554)Revaluation - - - - - - - (1 040 433)

Closing balance - 547 069 164 796 1 895 144 9 115 142 - 11 722 151 9 178 213

Net Book Value 4 496 725 44 222 099 485 639 1 436 314 12 822 302 14 884 337 78 347 416 74 248 554

There was no revaluation o property and equipment during the hal year ended 30 June 2013. Properties were revalued on an open

market basis by an independent proessional valuer, Mabikacheche and Associates as at 31 December 2012 in accordance with the

RoyalInstituteofCharteredSurveyorsAppraisalandValuationManualandtheRealEstateInstituteofZimbabweStandards.

The revaluation o land and buildings entailed the ollowing:

In determining the market values o the subject properties, the ollowing was considered:

Comparable market evidence which comprised complete transactions as well as transactions where oers had been made but

the transactions had not been nalised.

Proessional judgement was exercised to take cognisance o the act that properties in the transactions were not exactly com-

parable in terms o size, quality and location to the properties owned by the Group.

The reasonableness o the market values o commercial properties so determined, per above bullet, was assessed by reerence

to the properties in the transaction.

The values per square metre o lettable spaces or both the subject properties and comparables were analysed.

With regards to the market values or residential properties, the comparison method was used. This method entails carrying out

a valuation by directly comparing the subject property, which have been sold or rented out. The procedure was perormed as

ollows:

i. Surveys and data collection on similar past transactions.

ii. Analysis o the collected data.

Comparison o the analysis with the subject properties and then carrying out the valuation o the subject properties. Adjust-

ments were made to the ollowing aspects:

a) Age o property state o repair and maintenance

b) Aesthetic quality quality o xtures and ttings

c) Structural condition location

d) Accommodation oered size o land

The maximum useul lives are as ollows:

Buildings 40 years

Motor vehicles 3 5 years

Leasehold improvements 10 years

Computer equipment 5 years

Furniture and ttings 10 years

The carrying amount o buildings would have been US$26 899 636 had they been carried at cost.

Property and equipment was tested or impairment through comparison with the open market values determined by independentvaluers. No impairment was identied rom the test.


4/16




US$ US$

16. INVESTMENT PROPERTIES

Opening balance 20 335 977 17 821 110Additions 14 707 16 113

Disposals (48 600) -Fair valuation gain - 2 498 754Closing balance 20 302 084 20 335 977

The carrying amount o the investment property is the air value o the property as determined by a registered independentappraiser having an appropriate recognised proessional qualication and recent experience in the location and categoryo the property being valued. The valuation was in accordance with the Royal Institute o Chartered Surveyors AppraisalandValuationManualandtheRealInstituteofZimbabweStandards.Fairvaluesweredeterminedhavingregardtorecentmarket transactions or similar properties in the same location as the Groups investment properties. The properties werevalued as at 31 December 2012. There was no valuation, carried out or the hal year ended 30 June 2013

The rental income derived rom investments properties amounted to US$634 159, with direct operating expenses amount-ing to US$181 406.

Unaudited Audited 30 June 2013 31 Dec 2012

17 INTANGIBLE ASSETS US$ US$

Computer sotware

At cost 3 092 444 3 090 662 Accumulated amortisation (1 414 420) (999 843)

1 678 024 2 090 819 Movement in intangible assets: Opening balance 2 090 819 2 537 393 Additions 1 782 293 337

Amortisation charge (414 577) (739 911)Closing balance 1 678 024 2 090 819

Intangible assets are carried at cost less accumulated amortisation charge.The intangible assets are amortised over a useul lie o 3 years.

18 DEFERRE D TAXATION

Deerred tax related to items charged or credited to statement o othercomprehensive income during the period is as ollows:

Revaluation o property and equipment - 589 899 Fair value adjustment Available or sale nancial assets - 6 506

- 596 405

The deerred tax included in the statement o nancialposition and changes recorded in the incometax expenses are as ollows:

Deerred tax liability Fair value adjustments 28 548 208 547 Prepayments (875) 144 646 Property and equipment (35 642) 82 385 Impairment allowance - (1 092 359)

Other 26 (654 969)

7 943 1 311 750 Add: Opening balance 2 383 845 3 099 190


Deerred tax asset

Opening balance 7 539 322 5 759 724Assessed loss (43 347) 152 162Impairments and provisions 797 211 1 191 116Other (440 102) 436 320Closing balance 7 853 084 7 539 322

19. DEPOSITS

Call deposits 6 576 881 5 358 031 Savings and other deposits 523 273 869 499 758 972 Money market deposits 364 662 754 339 034 158

Oshore deposits 252 004 169 178 842 308 Accrued interest 9 311 680 9 358 606

1 155 829 353 1 032 352 075

19.1 Deposits by source Banks 53 279 184 36 114 207 Money market 322 997 963 314 843 174 Customers 524 885 306 500 978 085

Oshore deposits 254 666 900 180 416 6091 155 829 353 1 032 352 075

19.2 Deposits by type Retail 77 093 226 56 386 272 Corporate 447 792 080 444 591 814 Money market 376 277 147 350 957 380

Oshore deposits 254 666 900 180 416 6091 155 829 353 1 032 352 075

19.3. Sectoral Analysis % %

Private 117 698 554 10 125 243 743 12 Agriculture 36 913 301 3 33 347 322 3 Mining 13 566 835 1 11 436 926 1 Manuacturing 132 577 682 11 123 793 013 12 Distribution 139 318 293 12 131 278 594 13 Construction 25 529 224 2 23 659 081 2 Transport 16 912 288 2 15 994 662 2 Communication 66 511 364 6 61 966 512 6 Services 271 666 565 24 197 653 496 19 Financial organisations 308 441 314 26 281 568 065 27 Financial and investments 26 693 933 3 26 010 661 3

1 155 829 353 100 1 032 352 075 100

19.4 Maturity analysis Repayable on demand 522 539 179 643 962477 Between 1 and 3 months 341 170 586 159 132448 Between 3 months and 6 months 103 777 988 48 834 228

Between 6 months and 1 year 82 509 368 37 016 860Between 1 and 5 years 88 056 980 125 737 783

More than 5 years 17 775 252 17 668 2791 155 829 353 1 032 352 075

Maturity analysis is based on the remaining periodrom 30 June 2013 to contractual maturity.

20. INSURANCE LIABILITIES

Reinsurance payables 1 649 030 1 058 715Gross outstanding claims 1 885 218 1 864 220Gross unearned premium reserve 4 039 197 2 845 208

Deerred reinsurance acquisition revenue 646 439 878 9648 219 884 6 647 107

20.1 INSURANCE CONTRACT PROVISIONS

20.1 Insurance contract provision

a Provision or unearned premiums

Gross Reinsurance NetUS$ US$ US$

Unearned premiums beginning o period 2 845 208 1 060 418 1 784 790 Written premiums 8 855 471 3 280 110 5 575 361 Premiums earned during the period (7 661 482) (2 198 401) (5 463 081)

Unearned premiums at hal year end 4 039 197 2 142 127 1 897 070

Outstanding claims provision

Outstanding claims at beginning o period 2 406 605 1 240 933 1 165 672 Claims incurred 1 449 429 234 004 1 215 425 Incurred but not yet reported claims provision 25 393 - 25 393 Claims paid (2 221 076) (975 199) (1 245 877) Outstanding claims at hal year end 1 660 351 499 738 1 160 613

5 699 548 2 641 865 3 057 683

20.1 b Reinsurance payables

Gross Reinsurance

US$ US$

Reinsurance payables at beginning o period 1 058 715 840 582 Premiums ceded during the period 3 280 110 4 996 096 Reinsurance paid (2 689 796) (4 777 963)

Reinsurance payables at hal year end 1 649 029 1 058 715

Unearned DeerredCommission Acquisition Net

US$ US$ US$c Commissions

Unearned at beginning o period 236 684 243 478 (6 794) Written premiums 596 274 828 020 (231 746) Earned during the period (416 568) (516 723) 100 155 Unearned at hal year end 416 390 554 775 138 385


US$ US$

d Net claims Gross claims incurred 1 050 679 4 196 622 Reinsurance claims (234 004) (2 889 002) Incurred but not yet reported claims (25 393) 517 368 Gross outstanding claims 898 488 1 575 770 Reinsurance share o outstanding claims (499 738) (1 163 764)

1 240 818 2 236 994

e Net commissions

Commission received 872 708 1 189 541 Commission Paid (1 092 232) (1 394 464) Deerred acquisition costs 24 196 (19 108) Net commission 195 329 224 031

21. OTHER LIABILITIES

Revenue received in advance 924 385 859 007 Sundry creditors 5 226 968 13 087 114 Other 1 096 318 2 073 676 7 247 671 16 019 797

22. EQUITY AND RESERVES

22.1 SHARE CAPITALAuthorised

1 000 000 000 ordinary shares o US$ 0.01each 10 000 000 10 000 000

Issued and ully paid

684 144 546 ordinary shares o US$ 0.01each 6 841 445 6 841 44522.2 Non-distributable reserve

Opening balance 13 000 000 13 000 000Movement or the period - -

Closing balance 13 000 000 13 000 000

22.3 Revenue reserve

Revenue reserves comprise:Holding company 14 343 927 15 895 428Subsidiary companies 104 948 344 88 490 270Eects o consolidation journals (3 477 505) (3 441 770)

115 814 766 100 943 92822.4 Non controlling interests

Non controlling interests comprise:Opening balance 486 247 391 723Total comprehensive income 159 580 94 524

Closing balance 645 827 486 247

22.5 Share premiumOpening balance 26 708 659 26 708 659

Movement during the period - - Closing balance 26 708 659 26 708 659

22.6 Available or sale reserve

Opening balance - (636 497)Total comprehensive income - 636 497

Closing balance - -

22.7 Share option reserve

Opening balance 499 637 -Share options to employees 219 571 499 637

Closing balance 719 208 499 637

23 TREASURY SHARES

Opening balance (8 195 417) (587 510)Share buyback - (7 613 361)Disposal o shares 2 189 5 454




5/16



24. Categories O Financial Instruments

Held or Available Loans and Financial assets/liabilities Total carryingTrading or sale receivables at amortised cost amount

US$ US$ US$ US$ US$

June 2013Financial assetsBalances with banks and cash - - 148 422 509 - 148 422 509

Money market assets 120 356 404 - - - 120 356 404

Advances - - 917 353 172 - 917 353 172Insurance assets - - 7 175 643 - 7 175 643

Investments in other nancial assets 12 392 350 - 7 566 111 - 19 958 461

Other assets - - 28 734 259 - 28 734 259Total 132 748 754 - 1 109 248 694 - 1 242 000 448

Financial liabilities

Deposits - - - 1 155 829 353 1 155 829 353

Insurance liabilities - - - 8 219 884 8 219 884

Other liabilities - - - 7 247 671 7 247 671

Current tax payable - - - 578 833 578 833Total - - - 1 171 875 741 1 171 875 741

December 2012Financial assets

Balances with banks and cash - - 180 186 510 - 180 186 510

Money market assets 24 896 421 - - - 24 896 421Advances - - 854 689 983 - 854 689 983

Insurance assets - - 4 706 525 - 4 706 525

Investments o other nancial assets 2 181 257 - - - 2 181 257

Other assets - - 52 217 859 - 52 217 859Total 20 077 678 - 1 091 800 877 - 1 118 878 555

Financial liabilities

Deposits - - - 1 032 352 075 1 032 352 075

Other liabilities - - - 16 019 797 16 019 797

Current tax payable - - - 5 013 168 5 013 168Total 1 053 385 040 1 053 385 040

25. FUNDS UNDER MANAGEMENT Unaudited Audited

30 June 2013 31 Dec 2012 US$ US$

Pensions 109 330 162 90 399 455Private 14 134 009 11 208 428Unit trust 1 406 276 1 574 283Money market 11 234 587 7 918 821

136 105 034 111 100 987

26. CAPITAL MANAGEMENT

The primary objectives o the Group`s capital management are to ensure that the Group complies with external imposedcapital requirements and the Group maintains strong credit ratings and healthy capital ratios in order to support its businessand maximise shareholder value.

The Group manages its capital structure and makes adjustments to it in light o changes in economic conditions and therisk characteristics o its activities. In order to maintain or adjust the capital structure, the Group may adjust the amount odividend payment to shareholders, retain capital or issue capital securities. No changes were made in the objectives, policiesand processes rom the previous years.

27. CONTINGENCIES AND COMMITMENTS Unaudited Audited 30 June 2013 31 Dec 2012

US$ US$

Contingent liabilities

Guarantees 18 125 339 23 220 36618 125 339 23 220 366

Capital commitments

Authorised and contracted or 649 140 282 102Authorised and uncontracted or - -

649 140 282 102

The capital commitments will be unded rom theGroup`s own resources and borrowings.

28. OPERATING SEGMENTS

The Group is comprised o the ollowing operating units:

CBZ Bank Limited Provides commercial banking and mortgage nance products through retail banking,

corporate and merchant banking and investing portolios through the treasury unction.

CBZ Asset Management Provides und management services to a wide spectrum o investors through placement o either pooled portolios or individual portolios.

CBZ Insurance (Private) Limited Provides short term insurance.

CBZ Properties (Private) Limited Property investment arm o the business.

CBZ Lie (Private) Limited Provides long term lie insurance.

The ollowing tables present revenue and prot inormation regarding the Group s operating segments or the hal year ended 30June 2013:-

28.1 Segment operational resultsElimination o

Commercial Mortgage Asset Property Other inter segment

Banking nance management Insurance Investment operations amounts ConsolidatedUS$ US$ US$ US$ US$ US$ US$ US$

Income

Total income or the period ended 30 June 2013 54 720 333 10 158 953 1 086 166 4 298 403 7 922 241 403 (1 323 887) 69 189 293

Total income or the period ended 30 June 2012 53 187 221 8 678 890 606 876 2 442 136 509 7 989 989 (8 909 230) 64 016 391

Depreciation and amortisation or the period ended 30 June 2013 1 980 834 738 413 73 665 89 468 - 79 598 54 686 3 016 664Depreciation and amortisation or the period ended 30 June 2012 1 711 517 738 340 5 207 74 685 - 95 589 99 867 2 725 205

Results

Prot beore taxatio n or the period ended 30 June 2013 12 191 842 5 982 358 244 465 2 382 044 7 573 (587 803) 81 148 20 301 627Prot beore taxation or the period ended 30 June 2012 17 701 072 5 081 987 (185 440) 647 329 (12 573) 7 789 852 (8 032 343) 22 989 884

Cashows:

Used in operating activities or the period ended 30 June 2013 (7 158 318) (1 081 138) 351 602 145 953 (31 006) 1 113 957 201 967 (6 456 983)Used in operating activities or the period ended 30 June 2012 61 807 431 (1 736) 83 739 117 035 (83 416) 1 468 233 (8 160 178) 55 231 108

Used in investing activities or the period ended 30 June 2013 (23 254 820) (282 405) (19 881) (84 024) 37 800 (1 513 147) 739 961 (24 376 516)

Used in investing activities or the period ended 30 June 2012 (3 281 637) (398 894) (84 671) (70 061) - (484 632) 451 564 (3 868 331)

Used in nancing activities or the period ended 30 June 2013 - - (330 000) - - (961 305) 360 803 (930 502)Used in nancing activities or the period ended 30 June 2012 (8 000 000) - (45 000) - - (889 388) 8 214 147 (720 241)

Impairment o assets or the period ended 30 June 2013 6 315 437 313 800 - - - - - 6 629 237

Impairment o assets or the period ended 30 June 2012 3 101 282 (24 895) - - - - - 3 076 387

Reportable segment liabilities or the period ended 30 June 2013 1 130 260 025 92 824 977 231 055 9 262 867 1 468 837 2 401 961 (62 198 079) 1 174 251 643Reportable segment liabilities or the period ended 31 Dec 2012 1 019 818 563 86 427 121 1 066 570 7 831 977 1 480 416 1 357 150 (55 565 805) 1 062 415 992

Total segment assets or the period ended 30 June 2013 1 233 558 557 146 125 165 2 114 348 15 415 984 9 954 546 56 055 175 (113 042 719) 1 350 181 056

Total segment assets or the period ended 31 Dec 2012 1 115 110 169 133 744 951 2 203 548 11 706 841 9 957 383 56 342 296 (105 971 961) 1 223 093 227

29. EMPLOYEE BENEFITS

Employee benets are the consideration given by the Group in exchange or services rendered by employees. In summary suchbenets are:-

Short term benetsThese are earned by employees under normal employment terms, including salaries and wages, bonuses and leave pay. These areexpensed as earned and accordingly provisions are made or unpaid bonuses and l eave pay.

Post employment benets

i) The Group and employees contribute towards the National Social Security Authority, a dened contribution und. Costs applicableto this scheme are determined by the systematic recognition o legislated contributions.ii) The Group operates a dened contribution scheme, the assets o which are held in a separate trustee administered und. The costsare charged to the statement o comprehensive income as incurred. Unaudited Audited 30 June 2013 31 Dec 2012

US $ US $

NSSA contributions 237 656 353 960Dened contribution scheme 1 257 615 1 428 872

30.CLOSING EXCHANGE RATES

ZAR 9.9372 8.4767GBP 1.5261 1.6158EUR 1.3064 1.3192

31. CAPITAL ADEQUACY

The capital adequacy is calculated in terms o the guidelines issued by the Reserve Bank o Zimbabwe.

30 June 2013 31 Dec 2012

30 June 2013 CBZ Building 31 Dec 2012 CBZ Building

CBZBank Society CBZ Bank SocietyUS$ US$ US$ US$

Risk weighted assets 880 107 611 132 735 967 780 353 072 125 027 823

Total qualiying capital 110 616 715 52 316 075 100 702 263 46 237 295Tier 1

Share capital 5 118 180 7 500 000 5 118 180 7 500 000Share premium 11 198 956 9 028 622 11 198 956 9 028 622Revenue reserves 73 267 192 25 263 435 65 260 266 19 281 078Less tier 1 deductions (19 087 708) (2 637 353) (21 268 004) (4 723 173)

70 496 620 39 154 704 60 309 398 31 086 527Tier 2

Revaluation reserve 13 714 204 11 508 131 13 714 204 11 508 131General provisions 8 803 244 1 653 240 9 754 413 1 339 440 22 517 448 13 161 371 23 468 617 12 847 571Tier 3

Capital allocated or market risk 1 723 457 23 150 1 045 058 30 315

Capital allocated to operations risk 15 879 190 2 272 882 15 879 190 2 272 88217 602 647 2 296 032 16 924 248 2 303 197

Capital adequacy 12.57% 39.42% 12.90% 36.98%

-Tier 1 8.01% 27.77% 7.72% 24.86%-Tier 2 2.56% 9.92% 3.01% 10.28%-Tier 3 2.00% 1.73% 2.17% 1.84%

Regulatory capital consists o Tier 1 capital which comprises share capital, share premium and revenue reserves including currentperiod prot. The other component o the regulatory capital is Tier 2 capital, which includes hidden reserves agreed to by BankingSupervision o the Reserve Bank o Zimbabwe, general provisions and revaluation reserves.


RISK MANAGEMENT

32.1 Risk Overview

CBZ Holdings Board has adopted a High Risk Management and Compliance Culture as one o its major strategic thrusts which isembedded under a clearly dened risk appetite in terms o the various key risk exposures. This approach has given direction to theGroups overall strategic planning and policies. The Group regularly carries out stress testing as well as simulations to ensure that thereis congruency or proper alignment between its strategic ocus and desired risk appetite.

32.2 Group Risk Management Framework

The Groups risk management ramework looks at enterprise wide risks and recognises that or eective risk management to takeeect, it has to be structured in terms o acceptable appetite, dened responsibility, accountability and independent validation o setprocesses. Business Units, Management and sta are responsible or the management o the risks that all within their organisationalresponsibilities. Group Risk Management whose unction cuts across the Group is responsible or ensuring that the Business Units risktaking remain within the set risk benchmarks. The Group Internal Audit unction provides independent assurance on the adequacyand eectiveness o risk management processes. Group Enterprise Wide Governance and Compliance Unit evaluate quality ocompliance with policy, processes and governance structures.

In terms o risk governance, the Group Board has delegated authority to the ollowing Group Board Committees whose membershipconsists o exclusively o Non Executive directors o the Group:

Risk Management & Compliance Committee has responsibility or oversight and review o prudential risks comprising o butnot limited to credit, liquidity, interest rate, exchange, investment, operational, equities, reputational and compliance. Its otherresponsibilities includes reviewing the adequacy and eectiveness o the Groups risk management policies, systems and controlsas well as the implications o proposed regulatory changes to the Group. It receives consolidated quarterly risk and compliancerelated reports rom Group Executive Management Committee (Group EXCO) and Group Risk Management Sub Committee. Thecommittee governance structures ensure that approval authority and risk management responsibilities are cascaded down rom theBoard through to the appropriate business units and unctional committees. Its recommendations are submitted to the Group Board.

IT and Business Development Committee oversees the harmonisation, adequacy, relevance and eectiveness o Group IT systems indelivering services to the Groups stakeholders. In addition, it looks at the integrity o the Groups management inormation systems.

Audit & Finance Committee manages nancial risk related to ensuring that the Group nancial statements are prepared in line withthe International Financial Reporting Standards. This committee is responsible or capital management policy as well as the adequacyo the Groups prudential capital requirements given the Groups risk appetite. The committee is also tasked with the responsibility oensuring that efcient tax management systems are in place and that the Group is in ull compliance with tax regulations.

Human Resources and Remunerations Committee is accountable or people related risks and ensures that the Group has the optimalnumbers, right mix in terms o skills and experience or the implementation o the Groups strategy. The committee also looks atwelare o Group sta as well as the positive application o the Group code o ethics.

32.3 Credit Risk

This is the risk o potential loss arising rom the probability o borrowers and or counterparties ailing to meet their repaymentcommitments to the Group in accordance with agreed terms.

Credit risk management ramework

Credit risk is managed through a ramework o credit policies and standards covering the measurement and management o creditrisk. These policies are approved by the Board which also delegates credit approvals as well as loans reviews to designated subcommittees within the Group. Credit origination and approval roles are segregated.

The Group uses an internal rating system based on our internal estimates o probability o deault over a one year horizon andcustomers are assessed against a range o both quantitative and qualitative actors.

Credit concentration risk is managed within set benchmarks by counterparty or a group o connected counterparties, by sector, maturityand by credit rating. Concentrations are monitored and reviewed through the responsible risk committees set up by the Board.


6/16



32.2 e Credit Quality per Class o Financial Assets

The credit quality o nancial assets is managed by the Group using internal credit ratings. The table below shows the creditquality by class o asset or loan-related statement o nancial position lines based on the Groups credit rating system.

June 2013

*Doubtul and

*Normal *Special mention *Sub- standard loss

grade grade grade grade TotalUS$ US$ US$ US$ US$

Loans and advances to customers

Agriculture 236 395 013 34 040 478 2 451 612 688 382 273 575 485Manuacturing 108 617 188 19 857 582 10 684 444 5 923 135 145 082 349Commercial 99 140 594 1 847 392 1 639 807 - 102 627 793Individual and households 89 692 314 6 156 272 7 104 922 118 343 103 071 851Mining 9 498 536 2 625 236 6 865 1 516 244 13 646 881Distribution 237 784 001 10 577 614 5 222 828 2 981 159 256 565 602Construction 3 771 972 240 729 131 903 - 4 144 604Transport 28 025 370 183 719 2 244 596 - 30 453 685Communication 11 985 434 - - - 11 985 434Financial services 16 773 104 - - - 16 773 104

841 683 526 75 529 022 29 486 977 11 227 263 957 926 788

The Group has issued nancial guarantee contracts in respect o debtors or which the maximum amount payable by the Group,assuming all guarantees are called on is $18 125 339.

DECEMBER 2012

*Doubtul and

*Normal *Special mention *Sub- standard lossgrade grade grade grade Total

US$ US$ US$ US$ US$

Loans and Advances to Customers

Agriculture 205 106 497 45 540 772 8 094 884 7 725 034 266 467 187Manuacturing 136 882 592 5 876 761 6 785 432 3 976 502 153 521 287Commercial 105 367 132 3 949 359 2 578 387 59 250 111 954 128Individual and Households 90 848 606 2 692 997 835 572 5 526 94 382 701Mining 7 928 034 3 709 321 1 925 097 - 13 562 452Distribution 186 123 375 21 322 683 8 733 282 172 631 216 351 971Construction 4 492 674 201 114 479 - 4 607 354Transport 20 651 966 76 929 855 619 - 21 584 514Communication 6 636 850 - - - 6 636 850Financial services 1 076 745 - - - 1 076 745

765 114 471 83 169 023 29 922 752 11 938 943 890 145 189

Allowances or impairment

The Group establishes an allowance or impairment on assets carried at amortised cost or classied as available-or-sale that representsits estimate o incurred losses in its loan and investment debt security portolio. The main components o this allowance are a specicloss component that relates to specic exposures, and a collective l oan loss allowance established or groups o homogeneous assetsin respect o losses that have been incurred but have not been identied on loans that are considered individually insignicant aswell as individually signicant exposures that were subject to individual assessment or impairment but not ound to be individuallyimpaired.

Write-os

The Group writes o a loan or an investment debt security balance, and any related allowances or impairment, when the relevantcommittees determine that the loan or security is uncollectible. This determination is made ater considering inormation such asthe occurrence o signicant changes in the borrowers / issuers nancial position such that the borrower / issuer can no longer paythe obligation, or that proceeds rom collateral will not be sufcient to pay back the entire exposure. For balance standardised loans,write-o decisions generally are based on a product-specic past due status.

Concentration o credit risk

The directors believe that the concentration risk is limited due to the customer base being large and unrelated. The Group is notexposed to any customer by more than 10% o the total advance book.

32.2.2 Credit quality denitions

Normal gradeI the asset in question is ully protected by the current sound worth and paying capacity o the obligor, is perorming in accordancewith contractual terms and is expected to continue to do so.Special mention grade

(i) i the asset in question is past due or more than 30 days but less than 90 days; or(ii) although currently protected, exhibits potential weaknesses which may, i not corrected, weaken the asset or inadequately

protect the institutions position at some uture date, or example, where: the asset in question cannot be properly supervised due to an inadequate loan agreement; or the condition or control o the collateral or the asset in question is deteriorating; or the repayment capacity o the obligor is jeopardised because o deteriorating economic conditions or adverse

trends in the obligors nancial position; or there is an unreasonably long absence o current and satisactory nancial inormation or inadequate collateral

documentation in regard to the asset:Provided that, generally, a loan or advance shall require special mention only i its risk potential is greater than that under which itwas originally granted.

Substandard grade

(i) i the asset in question is past due or more than 90 days but less than 180 days; or(ii) is a renegotiated loan, unless all past due interest is paid by the borrower in cash at the time o renegotiation and a sustained

record o timely repayment o principal and interest under a realistic repayment programme has been demonstrated or aperiod o not less than 180 days; or

(iii) whether or not it is past due, is inadequately protected by the current sound worth and paying capacity o the obligor byreason o the act that: the primary source o repayment is insufcient to service the debt and the institution must look to secondary

sources such as collateral, sale o xed assets, renancing or additional capital injections or repayment; or there is an unduly long absence o current and satisactory nancial inormation or inadequate collateral

documentation in regard to the asset; or generally, there is more than a normal degree o risk attaching to the asset due to the borrowers unsatisactory

nancial condition.Doubtul:(i) i the asset in question is past due or more than 180 days but less than 360 days; or

(ii) exhibits all the weaknesses o a substandard asset and, in addition, is not well-secured by reason o the act that collection inull, on the basis o currently existing acts, is highly improbable, but the actual amount o the loss is indeterminable due topending events that have a more than reasonable prospect o mitigating the loss, such as a proposed merger, acquisition orliquidation, a capital injection, perecting liens on additional collateral, renancing plans, new projects or asset disposal.

Loss:

(i) i the asset in question is past due or more than 360 days, unless such asset is well secured and legal action has actuallycommenced which is expected to result in the timely realisation o the collateral or enorcement o any guarantee relating tothe asset; or

32.2.2 Credit quality denitions

(i) had been characterised as doubtul on account o any pending event , and the event concerned did not occur within 360days, whether or not the event is still pending thereater; or

(ii) is otherwise considered uncollectible or o such little value that its continuance as an asset is not warranted.


The Group through credit originating units as well as approving committees regularly monitors credit exposures, portolio perormanceand external environmental actors that are likely to impact on the credit book. Through this process, clients or portolios that exhibitmaterial credit weaknesses are put on watch list or close monitoring or exiting o such relationships where restructuring is notpossible.

Credit mitigation

Credit mitigation is employed in the Group through taking collateral, credit insurance and other guarantees. The Group is guidedby considerations related to legal certainty, enorceability, market valuation and the risk related to the guarantor in deciding whichsecurities to accept rom clients. Types o collateral that is eligible or risk mitigation include cash, mortgages over residential,commercial and industrial property, plant and machinery, marketable securities and commodities.

Non perorming loans & advances

The Groups credit policy also covers past due, deault and non perorming loans and advances, as well as specic and portolioimpairments.

Past due reers to a loan or advance that exceeds its limit or uctuating types o advances or is in arrears by 30 days or more.

Deault is where or example a specic impairment is raised against a credit exposure as a result o a decline in the credit quality orwhere an obligation is past due or more than 90 days or an obligor has exceeded a sanctioned limit or more than 90 days.

Impaired loans and advances are dened as loans and advances where the Group has raised a specic provision / impairment. Aspecic impairment is raised where an asset is classied as substandard, Doubtul or Loss under the prudential lending guidelinesissued by the Regulatory authorities and where collateral held against the advance is i nsufcient to cover the total expected losses.

Portolio impairment on the other hand applies under l oans and advances that have not yet individually evidenced a loss event i.e.advances classied as Passand Special Mentionunder prudential lending guidelines issued by the Regulatory authorities. For suchportolios, the Group calculates General provisions.

32.2. a Credit risk exposure

The table below shows the maximum exposure to credit or the components o the statement o nancial position .


US$ US$

Balances with Banks 124 864 332 141 407 626Money market assets 120 356 404 57 004 893Advances 917 353 172 854 689 983Other assets 16 927 707 52 217 859Total 1 179 501 615 1 105 320 361

Contingent liabilities 18 125 339 23 220 366Commitments 649 140 282 102Total 18 774 479 23 502 468

Where nancial instruments are recorded at air value the amounts shown above represent the current credit risk exposurebut not maximum risk exposure that could arise in the uture as a result o changes in value.

The Group held cash equivalents o US$124 864 332 (excluding notes and coins) as at 30 June 2013 which represents itsmaximum credit exposure on these assets. The cash and cash equivalents are held with the Central Bank and local andoreign banks.

32.2 b -Aging analysis o past due but not impaired loans Special Mention Loans:

Unaudited Audited

30 June 2013 31 Dec 2012 US$ US$

1 to 3 months 75 529 022 83 169 024

Past due but not impaired loans relate to loans in the special mention category. See denition o special mention categoryon note number 32.2.2

32.2 c Aging analysis o impaired loans Non perorming loans: Unaudited Audited

30 June 2013 31 Dec 2012 US$ US$

3 to 6 months 23 164 175 29 922 7526 to 12 months 17 550 064 11 938 943Total 40 714 239 41 861 695

32.2 dAn industry sector analysis o the Groups nancial assets beore and ater taking into account collateral heldis as ollows: Unaudited Unaudited Audited Audited 30 June 2013 30 June 2013 31 Dec 2012 31 Dec 2012 US$ US$ US$ US$ Gross maximum Net maximum Gross maximum Net maximum exposure exposure (not exposure exposure (not covered by covered by mortgage security) mortgage security)

Private 103 230 689 17 314 888 94 382 701 12 250 926Agriculture 273 818 812 71 314 769 266 467 187 48 681 925Mining 13 646 880 3 289 011 13 562 452 1 801 697Manuacturing 121 082 350 34 571 390 153 521 287 29 115 753Distribution 226 638 607 71 854 728 216 351 971 49 299 014Construction 4 144 602 2 276 408 4 607 354 2 280 646Transport 30 453 685 13 092 128 21 584 514 13 303 576Communication 11 985 434 3 848 126 6 636 850 -Services 156 152 625 40 346 242 111 954 128 20 357 059Financial Organisations 16 773 104 - 1 076 745 266 745Gross value 957 926 788 257 907 690 890 145 189 177 357 341


US$ US$

Collateral (mortgage security) 700 061 388 726 740 897Cash cover 24 728 707 26 543 980Other orms o security includingNotarial General Covering Bonds (NGCBs),cessions, etc 506 365 719 397 534 723 1 231 155 814 1 150 819 600

The Group holds collateral against loans and advances to customers in the orm o mortgage interests over property, other registeredsecurities over assets, guarantees, cash cover, and assignment o crop or export proceeds, leasebacks and stop-orders. Estimates oair value are based on the value o collateral assessed at the time o borrowing, and are regularly updated with trends in the market.

An estimate o the air value o collateral and other security enhancements held against loans and advances to customers and banksis shown above and analysed as ollows: Unaudited Audited

30 June 2013 31 Dec 2012 US$ US$Against doubtul* and loss* gradesProperty 3 369 417 3 583 000Other 11 787 388 12 534 574Against substandard* gradeProperty 4 921 864 4 982 480Other 34 885 554 35 315 191Against special mention* gradeProperty 11 437 899 70 576 852Other 85 069 692 40 963 046Against normal* gradeProperty 680 332 208 647 598 565Other 399 351 792 335 265 892 1 231 155 814 1 150 819600*See denition on note 32.2.2


7/16



32.3 Market Risk

This is the risk o loss under both the banking book and or trading book arising rom unavourable changes in market prices such asinterest rates, oreign exchanges rates, equity prices, credit spreads and commodity prices, which can cause substantial variations inearnings and or economic value o the Group and its SBUs i not properly managed. The Groups exposure to market risk arises mainly

rom customer driven transactions.

32.3.1 Group market risks management ramework

To manage these risks, there is oversight at Group Board level through the Group Board Risk Management Committeewhich covers Asset and Liability Management processes through periodic review o the Groups Asset and Liability as well asinvestment policies and benchmarks meant to assist in attaining the Groups liquidity strategic plan. The Groups subsidiary(SBU) Boards are responsible or setting specic market risks strategies or their respective SBU and Executive Managementimplements policy and track perormance regularly against set benchmarks through use o daily liquidity position reports,investment portolio mix, cash ow analysis, liquidity matrix analysis, liquidity gap analysis and liquidity simulations toevaluate ability o the SBU to withstand stressed liquidity situations.

32.4 Liquidity risk

Liquidity relates to the Groups ability to und its growth in assets and to meet obligations as they all due without incurringunacceptable losses. The Group recognises two types o liquidity risks i.e. Market liquidity risk and Funding liquidity risk.

Market liquidity risk is the risk that the Group cannot cover or settle a position without signicantly aecting the market pricebecause o limited market depth.

Funding risk on the other hand is the risk that the Group will not be able to efciently meet both its expected as well as theunexpected current and uture cash ow needs without aecting the nancial condition o the Group.

The Groups liquidity risk management ramework ensures that limits are set under respective Group SBUs relating to levelso wholesale unding, retail unding, loans to deposit ratio, counterparty exposures as well as prudential liquidity ratio.

The primary source o unding under the Group and its SBUs are customer deposits made up o current, savings and termdeposits and these are diversied by customer type and maturity. The Group tries to ensure through the ALCO processes andbalance sheet management that asset growth and maturity are unded by appropriate growth in deposits and stable undingrespectively.

32.4.1 GAP ANALYSIS

LIQUIDITY PROFILE AS AT 30 JUNE 2013

1 to 3 3 months 1 to 5 AboveDemand months to 1 year years 5 years Total

US$ US$ US$ US$ US$ US$

Assets

Advances 544 824 866 4 114 920 65 428 183 199 652 406 103 332 797 917 353 172Balances with banks and cash 43 677 001 104 745 508 - - - 148 422 509Investment in other nancial assets - 550 099 317 988 7 566 111 2 339 960 10 774 158Money market assets 41 560 230 70 327 930 8 468 244 - - 120 356 404Insurance assets - 750 144 3 913 683 - - 4 663 827Other liquid assets 1 275 121 14 059 162 1 593 425 - - 16 927 708Total 631 337 218 194 547 763 79 721 523 207 218 517 105 672 757 1 218 497 778

Liabilities

Deposits 522 539 179 341 170 586 186 287 356 88 056 980 17 775 252 1 155 829 353

Current tax payable (1 794) 580 627 - - - 578 833Insurance liabilities - 2 636 377 - - - 2 636 377Other liabilities - 4 773 656 2 315 179 158 837 - 7 247 672Financial guarantees - - 18 125 339 - - 18 125 339Total 522 537 385 349 161 246 206 727 874 88 215 817 17 775 251 1 184 417 573

Liquidity gap 108 799 833 154 613 483 127 006 351 119 002 700 87 897 506 34 080 205

Cumulative liquidity gap 108 799 833 45 813 650 172 820 001 53 817 301 34 080 205 34 080 205

LIQUIDITY PROFILE AS AT 31 DECEMBER 2012

1 to 3 3 months 1 to 5 AboveDemand months to 1 year years 5 years Total

US$ US$ US$ US$ US$ US$

Assets

Advances 488 726 450 22 299 913 74 406 430 169 986 402 99 270 788 854 689 983Balances with banks and cash 96 839 402 83 347 108 - - - 180 186 510Investment in other nancial assets 1 723 718 - 256 769 - 200 770 2 181 257Money market assets 9 773 025 14 213 170 803 414 106 812 - 24 896 421Financial guarantees - - - 196 279 - 196 279Other liquid assets 235 516 11 926 230 3 484 538 - - 15 646 284Total 597 298 111 131 786 421 78 951 151 170 289 493 99 471 558 1 077 796 734

LiabilitiesDeposits 643 962 477 159 132 448 85 851 088 125 737 783 17 668 279 1 032 352 075Current tax payable (724) 5 029 692 - - (15 800) 5 013 168Other liabilities - 4 647 128 11 042 669 330 000 - 16 019 797Financial guarantees - - - 23 220 366 - 23 220 366Total 643 961 753 168 809 268 96 893 757 149 288 149 17 652 479 1 076 605 406

Liquidity gap 46 663 642 37 022 847 17 942 606 21 001 344 81 819 079 1 191 328

Cumulative liquidity gap 46 663 642 83 686 489 101 629 095 80 627 751 1 191 328 1 191 328

The table above shows the undiscounted cash ows o the Groups non-derivative on and o statement o nancial position nancialassets and liabilities on the basis o their earliest possible contractual maturity and the related period gaps. For issued nancialguarantee contracts, the maximum amount o the guarantee is allocated to the earliest period in which the guarantee could be called.The Groups SBUs carry out static statement o nancial position analysis to track statement o nancial position growth drivers,the pattern o core banking deposits, statement o nancial position structure, levels and direction o the SBUs maturity mismatchand related unding or liquidity gap. The Asset and Liability Management Committee (ALCO) o the respective SBU comes up withstrategies through its monthly meetings to manage these liquidity gaps.

Details o the liquidity ratio or the relevant Group SBUs as at the reporting date and during the reporting period were as ollows:

CBZ Bank CBZ BuildingLimited Society

% %At 31 December 2012 33 14At 30 June 2013 37 11Average or the period 39 11Maximum or the period 44 12Minimum or the period 35 11

32.4.2 Interest rate risk

This is the possibility o a Banking Groups interest income being negatively inuenced by unoreseen changes in the interest ratelevels arising rom weaknesses related to a banking Groups trading, unding and investment strategies.

This is managed at both Board and Management level through the regular policy and benchmarks which related also to interest raterisk management. The major areas o intervention involves daily monitoring o costs o unds, monthly analysis o interest re - pricinggaps, monthly interest rate simulations to establish the Group and its SBUs ability to sustain a stressed interest rate environment.The use o stress testing is an integral part o the interest rate risk management ramework and considers both the historical marketevents as well as anticipated uture scenarios. The Group and its SBUs denominates its credit acilities in the base currency i.e. the USDin order to minimize cross currency interest rate risk. The Groups interest rate risk proling is displayed below:

32.4.2 Market Related Risk continued

a INTEREST RATE REPRICING

30 June 2013 Non-1 to 3 3 months 1 to 5 Above interest

Demand months to 1 year years 5 years bearing TotalUS$ US$ US$ US$ US$ US$ US$

AssetsBalance with banks and cash 43 677 002 104 745 507 - - - - 148 422 509Money market assets 42 160 019 69 728 141 1 508 254 6 959 990 - - 120 356 404Advances 544 824 864 4 114 922 65 428 183 199 652 406 103 332 797 - 917 353 172Insurance assets - - 3 913 684 - - 3 261 959 7 175 643Other assets 1 275 121 13 313 556 1 593 425 - - 12 552 157 28 734 259Investment in other nancial assets - - 317 988 7 566 111 - 12 074 362 19 958 461Investment properties - - - - - 20 302 084 20 302 084Property and equipment - - - - - 78 347 416 78 347 416Intangible assets - - - - - 1 678 024 1 678 024Deerred taxation - - - - - 7 853 084 7 853 084Total Assets 631 937 006 191 902 126 72 761 534 214 178 507 103 332 797 136 069 086 1 350 181 056

Liabilities and equityDeposits 522 539 179 341 170 586 186 287 356 88 056 980 17 775 252 - 1 155 829 353Insurance liabilities - - - - - 8 219 884 8 219 884Other liabilities - - - - - 7 247 671 7 247 671Deerred taxation - - - - - 2 375 902 2 375 902Current tax payable - - - - - 578 833 578 833Equity and reserves - - - - - 175 929 413 175 929 413Total equity and liabilities 522 539 179 341 170 586 186 287 356 88 056 980 17 775 252 194 351 703 1 350 181 056

Interest rate repricing gap 109 397 827149 268 460113 525 822126 121 527 85 557 545 58 282 617 -

Cumulative gap 109 397 827 39 870 633153 396 455 27 274 928 58 282 617 - -

December 2012 Non-1 to 3 3 months 1 to 5 Above interest

Demand months to 1 year years 5 years bearing TotalUS$ US$ US$ US$ US$ US$ US$

AssetsBalance with banks and cash 96 839 402 83 347 108 - - - - 180 186 510Money market assets 9 773 025 14 213 170 803 414 106 812 - - 24 896 421Advances 488 726 450 22 299 913 74 406 430 169 986 402 99 270 788 - 854 689 983Insurance assets - - - - - 4 706 525 4 706 525Other assets 235 516 7 405 492 - - - 44 576 851 52 217 859Investment in other nancial assets - - - - - 2 181 257 2 181 257Investment properties - - - - - 20 335 977 20 335 977Property and equipment - - - - - 74 248 554 74 248 554Intangible assets - - - - - 2 090 819 2 090 819Deerred taxation - - - - - 7 539 322 7 539 322Total assets 595 574 393 127 265 683 75 209 844 170 093 214 99 270 788 155 679 305 1 223 093 227

Liabilities and equityDeposits 643 962 477 159 132 448 85 851 088 125 737 783 17 668 279 - 1 032 352 075Insurance liabilities - - - - - 6 647 107 6 647 107Other liabilities - - - - - 16 019 797 16 019 797Current tax payable - - - - - 5 013 168 5 013 168Deerred taxation - - - - - 2 383 845 2 383 845Equity and reserves - - - - - 160 677 235 160 677 235

Total equity and liabilities 643 962 477 159 132 448 85 851 088 125 737 783 17 668 279 190 741 152 1 223 093 227

Interest rate repricing gap 48 388 084 31 866 765 10 641 244 44 355 431 81 602 509 35 061 847 -

Cumulative gap 48 388 084 80 254 849 90 896 093 46 540 662 35 061 847 - -

32.5. EXCHANGE RATE RISK

This risk arises rom the changes in exchange rates and originates rom mismatches between the values o assets and liabilitiesdenominated in dierent currencies and can lead to losses i there is an adverse movement in exchange rate where open positionseither spot or orward, are taken or both on and o statement o nancial position transactions.

There is oversight at Board level through the Board Risk Management Committee which covers ALCO processes by way o strategicpolicy and benchmarking reviews and approval. Management ALCO which is held on a monthly basis reviews perormance againstset benchmarks embedded under acceptable currencies, currency positions as well as stop loss limits. Derivative contracts withcharacteristics and values derived rom underlying nancial instruments, exchange rates which relates to utures, orwards, swapsand options can be used to mitigate exchange risk. The Group had no exposure to derivative transactions under the reporting period.

At 30 June 2013, i oreign exchange rates at that date had weakened or strengthened by 5 percentage points with all other variablesheld constant, post tax prot or the period would have been US$824 544 higher or lower respectively than the reported position. Thisarises as a result o the increase or decrease in the air value o the underlying assets and liabilities denominated in oreign currencies.The oreign currency position or the Group as at 30 June 2013 is as below:

Foreign currency position as at 30 June 2013

Position expressed in US$Other oreign

Total USD ZAR GBP currenciesAssetsBalances with banks and cash 148 422 509 135 683 427 7 579 466 2 542 675 2 616 941Money market assets 120 356 404 120 356 404 - - -Advances 917 353 172 916 921 698 28 511 9 225 393 738Insurance assets 7 175 643 7 175 643 - - -Other assets 28 734 259 28 454 447 161 824 34 260 83 728Investment-other nancial assets 19 958 461 19 814 818 - - 143 643Investment properties 20 302 084 20 302 084 - - -Property and equipment 78 347 416 78 067 780 129 234 - 150 402Deerred taxation 7 853 084 7 853 084 - - -Intangible assets 1 678 024 1 678 024 - - -Total assets 1 350 181 056 1 336 307 409 7 899 035 2 586 160 3 388 452

Liabilities and equityDeposits 1 155 829 353 1 125 748 829 28 833 904 435 959 810 661Insurance liabilities 8 219 884 8 219 884 - - -Other liabilities 7 247 671 7 243 483 2 609 1 408 171Current tax payable 578 833 578 833 - - -Deerred taxation 2 375 902 2 375 902 - - -Equity and reserves 175 929 413 175 929 413 - - -Total equity and liabilities 1 350 181 056 1 320 096 344 28 836 513 437 367 810 832

Foreign currency position as at 31 December 2012

Position expressed in US$Other oreign

Total USD ZAR GBP currencies

AssetsBalances with banks and cash 180 186 510 158 103 460 16 858 548 2 597 105 2 627 397Money market assets 24 896 421 11 731 755 6 339 123 2 161 870 4 663 673Advances 854 689 983 853 806 685 1 241 611 257 029 (615 342)Insurance assets 4 706 525 4 706 525 - - -Other assets 52 217 859 50 825 225 1 291 389 53 945 47 300Investment in other nancial assets 2 181 257 2 037 614 - - 143 643Investment properties 20 335 977 20 335 977 - - -Property and equipment 74 248 554 74 159 315 13 130 - 76 109Deerred taxation 7 539 322 7 539 322 - - -Intangible assets 2 090 819 2 090 819 - - -Total assets 1 223 093 227 1 185 336 697 25 743 801 5 069 949 6 942 780

Liabilities and equityDeposits 1 032 352 075 994 388 628 29 870 209 6 082 124 2 011 114Insurance liabilities 6 647 107 6 647 107 - - -Other liabilities 16 019 797 2 767 325 6 339 299 2 241 959 4 671 214Current tax payable 5 013 168 5 013 168 - - -Deerred taxation 2 383 845 2 383 845 - - -Equity and reserves 160 677 235 160 677 235 - - -Total equity and liabilities 1 223 093 227 1 171 877 308 36 209 508 8 324 083 6 682 328



8/16



32.12 Risk and Credit Ratings32.12.1 External Credit Rating

CBZ Bank Limited

Rating agent 2012 2011 2009 2008 2007 2006 2005

Global Credit Rating (Short Term) - - - - - - -

Global Credit Rating (Long Term) - A+ A A A A A

32.2.12.2 Reserve Bank Ratings

CAMELS RATING MATRIX

CompositeCapitalAdequacy

AssetQuality

Management Earnings LiquiditySensitivity tomarket risk

CBZ Bank 1 1 2 1 1 2 2

CBZ HoldingsGroup

2 2 2 - 2 2 2

Key

1. Strong2. Satisactory3 Fair4. Substandard5. Weak

OUR APPROACH TO CORPORATE GOVERNANCE

CBZ Holdings Limited (CBZH) recognises the need to conduct the aairs o the company with integrity and in line with best corporategovernance practices. To demonstrate this commitment to sound corporate governance the company applies the best practice in

corporate governance in managing the aairs o the Group.The governance o the company is guided by internal policies and external laws, rules, regulations and best practice guidelinesincluding the King Reports and the Reserve Bank o Zimbabwe Corporate Governance Guidelines. The Group is cognisant o its dutyto conduct business with due care and in good aith in order to saeguard all stakeholdersinterests and adheres to the corporategovernance structure detailed below:

Corporate governance structure as at 30 June 2013

BOARD OF DIRECTORS

NON-EXECUTIVE DIRECTORS EXECUTIVE DIRECTORS

Mr. Zembe* Dr. Mangudya

Mr. Wilde Mr. Nyemudzo

Mrs. Pasi

Mr. Lowe

Mr. Mugamu

Mr. Bere

Mr. Mutambara

Mr. Nanabawa

Mr. Ben Ghali

Mr. Dernawi

Mrs. Nhamo

Mr. Taputaira

*CHAIRMAN

BOARD COMMITTEES

AUDIT & FINANCE RISK MANAGEMENT & COMPLIANCE HUMAN RESOURCES & REMUNERATION IT&BUSINESSDEVELOPMENT

Mr. Mugamu** Mrs. Pasi** Mrs. Nhamo** Mr. Taputaira**

Mr. Nanabawa Mr. Ben G hali Mr. Zembe Mr. Zembe

Mr. Bere Mr. Bere Mr. Wilde Mr. Ben Ghali

Mr. Lowe Mr. Lowe Mr. Bere Mr. Dernawi

Mrs. Nhamo Mr. Dernawi Mr. Mutambara Mr. Bere

Mrs. Pasi Mrs. Pasi Dr Mangudya Mr. Mutambara

Dr Mangudya Dr Mangudya Dr Mangudya

Mr Nyemudzo

**COMMITTEE CHAIRPERSON

32.5 EXCHANGE RATE RISK continued

Foreign currency position as at 30 June 2013

Underlying currency Other oreigncurrencies

ZAR GBP US$AssetsCash and short term assets 75 318 669 1 666 126 2 616 941Advances 283 316 6 045 393 738Other assets 1 608 080 22 450 83 728Investments - - 143 643Total assets 77 210 065 1 694 621 3 238 050

LiabilitiesDeposits 286 528 267 285 669 810 661Other liabilities 25 926 923 171Total liabilities 286 554 193 286 592 810 832

Net position 209 344 128 1 408 029 2 427 218

Foreign currency position as at 31 December 2012

Underlying currency Other oreigncurrencies

ZAR GBP US$

AssetsCash and short term assets 142 904 856 1 607 318 2 627 397Advances 10 524 763 159 073 (615 342)Money market assets 51 812 191 - 4 663 674Other assets 10 946 709 33 386 47 300

Investments - - 143 643Total Assets 216 188 519 1 799 777 6 866 672

LiabilitiesDeposits 253 200 801 3 764 156 2 011 115Other liabilities 53 736 339 1 387 523 4 671 213Total liabilities 306 937 140 5 151 679 6 682 328

Net position 90 748 621 3 351 902 184 344

32.6 Operational risk

This is the potential or loss arising rom human error and raud, inadequate or ailed internal processes, systems, non-adherence toprocedure or other external sources that result in the compromising o the Group and its SBUs revenue or erosion o the Group andits SBUsstatement o nancial position value.

32.6.1 Operational risk management ramework

Group Risk Management Committee exercises adequate oversight over operational risks across the Group with the support o SBUBoards as well as business and unctional level committees. Group Risk Management is responsible or setting and approval o GroupOperational Policies and maintaining standards or operational risk.

The Group Board Audit Committee through Internal Audit unction as well as Group Enterprise Wide Governance and Complianceperorm their independent review and assurances under processes and procedures as set under Business Units policies and proceduremanuals. On the other hand Group Risk Management and Group IT Department with assistance rom Organization and MethodsDepartment within Group Human Resources ensures processes, procedures and control systems are in line with variables in theoperating environment.

32.7 Strategic risk

This is the risk that arises where the Groups strategy may be inappropriate to support its long term corporate goals due to underlyinginadequate strategic planning process, weak decision making process as well as weak strategic implementation programs.

To mitigate this risk, the Groups Board, SBU Boards and Management teams crat the strategy which is underpinned to the Groupscorporate goals. Approval o the strategy is the responsibility o the appropriate Board whilst implementation is carried out byManagement. On the other hand strategy and goal congruency is reviewed monthly by management and quarterly by the appropriateBoard.

32.8 Regulatory risk

Regulatory risk is dened as the ailure to comply with applicable laws and regulations or supervisory requirements, or the exclusiono provisions o relevant regulatory requirements out o operational procedures. This risk is managed and mitigated through theGroup Board Risk Management Committee and the Group Enterprise Wide Governance and Compliance unit which ensures that:

Comprehensive and consistent compliance policies and procedures exist covering the Group and its SBUs; A proactive and complete summary statement o the Group and its SBUs position on ethics and compliance; A reporting structure o the Group Enterprise Wide Compliance Function exits that ensures independence and eectiveness; and

that; Periodic compliance and awareness training targeting employees in compliance sensitive areas is carried out.

32.9 Reputation risk

This is the risk o potential damage to the Groups image that arise rom the market perception o the manner in which the Groupand its SBUs packages and delivers its products and services as well as how sta and management conduct themselves. It also relatesto the Groups general business ethics. This can result in loss o earnings or adverse impact on market capitalization as a result ostakeholders adopting a negative view to the Group and its actions. The risk can urther arise rom the Groups inability to address anyo its other key risks. This risk is managed and mitigated through:

Continuous improvements o the Groups operating acilities to ensure that they remain within the taste o the Groups variousstakeholders,

Ensuring that sta subscribe to the Groups code o conduct, code o ethics and general business ethics and that, Stakeholderseedback systems that ensures a proactive attention to the Banks reputation management.

32.10 Money-laundering risk

This is the risk o nancial or reputational loss suered as a result o transactions in which criminal nanciers disguise the origin ounds they deposit in the subsidiaries o the Group and then use the unds to support illegal activities. The Group manages this riskthrough:

Adherence to Know Your Customer Procedures; Eective use o compliance enabling technology to enhance antimoney laundering program management, communication,

monitoring and reporting; Development o early warning systems; and Integration o compliance into individual perormance measurement and reward structures.

32.11 Insurance risk

The principal risk the insurance company aces under insurance contracts is that the actual claims and benet payments or thetiming thereo, dier rom expectations. This is inuenced by the requency o claims, severity o claims, actual benets paid andsubsequent development o long-term claims. Thereore the objective o the insurance subsidiary is to ensure that sufcient reservesare available to cover these liabilities.

The above risk exposure is mitigated by diversication across a large portolio o insurance contracts and geographical areas. Thevariability o risks is also improved by careul selection and implementation o underwriting strategy guidelines, as well as the useo reinsurance arrangements.

The subsidiary also purchases reinsurance as part o

CBZ half year Ended 30 June 2013.pdf

Documents

Transcript of CBZ half year Ended 30 June 2013.pdf