HARARE - Old Mutual’s mortgage lending unit Central African Building Society (CABS)’s asset base increased by 21 percent to $694 million in the half year to June 2014 up from $574 million recorded in the prior period.
Group chairman, Leonard Tsumba, said the group’s deposits also grew by 23 percent while loans and advances grew by 19 percent from $296,8 million in June 2013 to $52,1 million.
However, the group’s earnings experienced a knock due to an increase in operating costs.
Earnings for the period under review stood at $7,1 million from $10,6 million for the prior year comparative.
“Net interest income increased by six percent compared to the same period in 2013.
“Non-interest income increased by 31 percent due to the increase in the number of transactions passing through the society’s various delivery channels,” said Tsumba in a statement
accompanying the financial results.
“Comparatively, operating expenses increased by 44 percent mainly due to the impact of business growth.
“Consequently, the society’s cost income ratio increased from 62 percent to 77 percent,” he said.
The society’s prudential liquidity ratio stood at 38,8 percent against the regulatory rate of 30 percent.
Interest income advanced to $17,5 million from $13,4 million.
During the period under wreview the mortgage lender resumed its 20-year housing bonds which it had stopped when inflation spiralled out of control in 2008.
Early this year, CABS secured a $10 million loan facility from a French development agency, Proparco, for housing development and to bail out hard pressed manufacturing firms.
The building society indicated that it would use part of the funds to bankroll its housing project of over 3 000 units in the high density suburb of Budiriro, south west of central Harare.
CABS is also planning to develop an additional 12 000 housing units around the country.
The building society also deployed more automated teller machines, resulting in growth in non-interest income.