NMBZ Holdings, NMB Bank’s holding company, recorded a profit before tax of $3,558 801 for the half-year ended June 30, 2016, resulting in an attributable profit of $2 640 274.
The attributable profit was, however, 17 percent less than that for the same period last year, which was $3 166 684, a reflection of the difficult operating environment.
Total income for the period decreased by nine percent to $26 096 925 compared to $28 802 534 in the first six months of 2015. The drop in income was partially cushioned by a drop in operating expenses at $13 537 382, down by four percent compared to $14 070 828 the previous year, as a result of cost rationalisation and containment measures
Interest income was almost flat, at $17 451 237 compared to the $17 583 627 in 2015. A bigger drop was recorded on the fee and commission income, down from $10 561 243 in 2015 to $7 584 529.
The drop was a combination of the controls on bank charges and a drop in transactional volumes due to the cash and nostro challenges besieging the banking sector. The bank has also been on a drive to migrate customers to the less expensive electronic delivery channels. Net foreign exchange gains, which in the first six months of 2015 had amounted to $609 218, came to $353 209.
Shareholder funds increased by five percent from $50 543 864 at 31 December 2015 to $53 184 655, as a result of the attributable profit recorded for the half-year. The bank’s capital adequacy ratio at 20,8 percent was substantially higher than the Reserve Bank’s minimum requirement of 12 percent, while its liquidity ratio, at 32,5 percent, was again above the Reserve Bank’s minimum requirement of 30 percent.
Its non-performing loans ratio came down from 14,9 percent as at June 30 2015 to 11,1 percent as a result of aggressive collection efforts and loan disposals to ZAMCO
Total assets decreased by seven percent from $333 831 107 as at December 31, 2015, to $311 941 890 as at June 30, 2016, mainly due to a reduction in the loan book from $243 241 018 to $225 292 910. In view of the deteriorating operating environment, the bank went on a drive to reduce exposures on clients in vulnerable sectors while selectively issuing loans to those in strong and growth sectors, hence the decline. Further, the bank surrendered to the Zimbabwe Asset Management Corporation (ZAMCO) loans amounting to $11,6 million
In his statement accompanying the unaudited accounts for the half year, NMBZ chairman Benedict Chikwanha, said NMB Bank continued to make inroads into the broader market.
“The banking subsidiary continued to make inroads into the broader market segments, thereby laying a foundation for a strategic shift towards small to medium-sized enterprises,” he said.
He said the group continued to source more international lines of credit. It was in the process of drawing down a $20 million line of credit and finalising the legal documentation for an approved further $15 million facility.
Mr Chikwanha said the decision by two of NMBZ’s shareholders, FMO of the Netherlands and Norfund of Norway, to join forces with Rabobank of the Netherlands to pool investments in financial institutions across Africa through a new investment vehicle, Arise, would enable NMBZ to benefit from a wide network of other African banks that are part of the new partnership.
He said this should assist NMBZ in its quest for much needed lines of credit to serve small and medium enterprises, the rural sector and clients who previously did not have access to financial services.
Arise will have a presence in 20 African countries. It would allocate capital, Mr Chikwanha said, to support current investee companies, as well as new minority investments in the market.
Banco Montepio, a Portuguese financial group with banking investments in Africa, is expected to join the partnership in the near future.
Mr Chikwanha said the bank’s Tier One capital was, as at June 30, $44 288 514.
“We will continue to put strategies in place to work towards meeting the required minimum regulatory capital of US$100 million for a Tier One bank by 31 December 2020, subject to improvements in the operating environment as forecast in our capitalisation plan submitted to and approved by the central bank,” he said.
He pointed out that the difficult operating environment that had been evident throughout 2015 had persisted in the first half of 2016, characterised by nostro funding challenges, liquidity constraints, deflationary pressures, depressed levels of capacity utilisation in the productive sector and company closures.
“This prompted the central bank and the banks to introduce cash withdrawal limits and prioritisation of imports,” he said.
He said that the bank had the cash resources to allow withdrawals of the controlled daily limits. Furthermore, more bank customers were now using electronic channels such as point of sale (POS) and mobile banking thereby reducing the pressure on cash requirements.