Strong share rally propels CBZ into US$1 billion club

Nelson Gahadza, [email protected]

CBZ Holdings has surpassed the US$1 billion valuation mark on the Zimbabwe Stock Exchange (ZSE), underlining growing investor confidence in the diversified financial services group as management pursues an ambitious target of US$100 million in annual net profit by 2028.

CBZ chief executive officer Mr Lawrence Nyazema said the group’s market capitalisation had grown from approximately US$200 million at the beginning of 2024 to levels equivalent to around US$1 billion, driven by a strong appreciation in its share price.

Briefing analysts while presenting CBZ’s half-year results yesterday, Mr Nyazema said the group’s share price had risen by nearly 250 percent over the past eight months, pushing market value from about ZiG6 billion at the start of the year to almost ZiG25 billion.

“When we started the year, the share was valued at ZiG6 billion and on Friday, we approached ZiG25 billion. When you look at this ZiG25 billion by the ZIG exchange rate, that is almost a billion US$,” said Mr Nyazema.

He said the milestone placed greater responsibility on the group to ensure that its market value is supported by sustained earnings growth, with management targeting net profit of US$100 million by 2028.

Mr Nyazema said the group could not afford to allow its valuation to outpace its underlying business performance, adding that accelerating profitability would be crucial in defending current market levels.

“The only way we can defend such levels of valuation is for us to generate value for our shareholders. We have been talking about wanting to lift net profit to US$100 million by 2028. We simply have to establish that growth and ensure that that US$100 million is achieved as fast as possible,” he said.

He said the group’s first-half performance had laid a solid foundation for achieving the target, while also highlighting the growing contribution of businesses outside the traditional banking unit.

Mr Nyazema said CBZ was deliberately reducing its reliance on banking operations by accelerating the growth of its insurance, agriculture and investment businesses.

Traditionally, the banking arm has generated the bulk of group earnings. However, Mr Nyazema said its contribution to profits had declined from 93 percent during the comparable period last year to 86 percent.

The development, he said, reflected early success in the group’s strategy to build a more balanced and diversified financial services business.

Agro-Yield, which has undergone restructuring and recapitalisation, contributed approximately 5 percent of group profits, while the life insurance business accounted for 4 percent. Other subsidiaries collectively generated a further 5 percent.

“We now call them growing subsidiaries. They don’t want to be called small subsidiaries anymore,” Mr Nyazema said.

He said the long-term objective was to create a portfolio of subsidiaries capable of making meaningful contributions to group earnings by 2028.

“If we have six or seven subsidiaries, all contributing 5 percent as a minimum, it means by the time we get to 2028, the contribution from the bank will be around 65 percent and the other subsidiaries will be at least 10 percent,” he said.

The diversification strategy is expected to provide additional growth opportunities while reducing concentration risk across the group.

However, Mr Nyazema stressed that the banking business itself would continue expanding, noting that maintaining its market-leading position would require stronger growth as competition intensifies.

The bank’s balance sheet strengthened during the first half, with total assets increasing by more than US$100 million from approximately US$1,4 billion to US$1,5 billion.

Deposits continued to rise, while advances increased from about US$359 million at the end of last year to US$454 million.

Mr Nyazema said the group remained well positioned to support further lending growth, backed by strong liquidity levels and access to funding.

“Liquidity is there in the market. We have got capacity in terms of funding and we have got a credible pipeline,” he said.

He revealed that the group had already secured an additional US$150 million in new lines of credit, with drawdowns currently underway, while negotiations for a further US$100 million facility were at an advanced stage.

“The additional funding would take the group’s new lines of credit raised during the year to at least US$250 million. We are not stopping there,” he said.

“When we look at some of our high-profile, high-impact projects, we believe some of the international funders will come directly into those projects.”

Mr Nyazema said CBZ could raise between US$350 million and US$500 million in lines of credit by year-end.

“By the end of the year, we would have raised between US$350 million and potentially half a billion in lines of credit,” he said.

He added that global financial institutions were increasingly providing direct funding to Zimbabwean projects.

Mr Nyazema said CBZ was positioning itself as a key mobiliser of both domestic and international capital for projects capable of stimulating economic growth and development.

The expanding funding pipeline is also expected to underpin growth in advances during the second half of the year after the bank increased lending by about US$100 million in the first six months.

Mr Nyazema said lending growth was expected to accelerate further, supported by available liquidity, fresh funding lines and a robust pipeline of bankable projects.

He also revealed that CBZ Capital had secured mandates to raise significant amounts of capital, including a US$130 million mining-sector transaction against an original mandate of US$75 million. Another mining transaction worth US$150 million is expected to close shortly.

“The group’s mandates for future transactions had reached at least US$1 billion, highlighting the potential pipeline beyond the current financial year.

“For CBZ, the challenge now is to convert the stronger market valuation, growing subsidiaries and funding pipeline into sustained earnings growth,” he said.

Looking ahead, Mr Nyazema said the group anticipated stronger performance in the second half of 2026, supported by the recovery of some business units and increased lending activity.

He said CBZ was targeting net profit of more than US$60 million this year as it advances towards its longer-term goal of US$100 million in annual earnings.

The group also expects continued balance-sheet growth, with deposits projected to reach approximately US$1,5 billion by year-end, up from about US$1,1 billion at the end of 2025.