NMB Bank Plc. has recorded a Tshs 95billion unaudited profit after Tax (PAT) for the year ending 31 December 2017.
Amidst the challenging business environment observed in the year, NMB was able to grow its total income by 5percent from Tshs 614billion in 2016 to Tshs 647billion in 2017.
The bank’s customer business remained strong; for the 5th time in a row, the bank was named the Best Bank in Tanzania and for the first time, the Best Bank Transformation in Africa by the leading global financial markets magazine Euromoney.
NMB has recorded a PAT of Tshs 95billion for the year ending 31 December 2017, down from Tshs 154billion reported for the same period in 2016.
The decrease is attributed to an increase in credit provisions reflecting setbacks faced by our customers. A high interest rate environment existed earlier in year. This resulted in an 18percent increase of interest expense from Tshs 102billion recorded in the same period the previous year to Tshs 120billion in 2017.
Consequently, net interest income grew by 4percent from Tshs 449 billion recorded the same period in 2016 to Tshs 467billion in 2017.Year on year, revenue from foreign currency dealings grew by 15percent from Tshs 15billion in 2016 to Tshs 18billion in 2017.
Other fees and commissions grew by 11percent specifically from an increase intransactions in the various distribution channels; total non-interest revenue (NIR) increased by 9percent toTshs 180billion. In the fourth quarter of 2017, customer deposits rose by 9percent to Tshs 4.2 trillion from Tshs 3.9 trillion as atthe end of the third quarter.
As a result of the prudent approach the bank adopted in growing its loanbook, loans and advances grew slightly from Tshs 2,786 billion in the previous quarter, to Tshs 2,787billion in the fourth quarter.
The dismissal of civil servants with forged academic records in the first half of 2017, of which a portionhave unsecured personal facilities with NMB, coupled with the inability of some corporate clients to honour their loan obligations with the bank translated into a significant increase in loan impairment provisions.
NMB has an ongoing constructive dialogue with the Government and is confident that some decisions will be forthcoming which will allow the bank to mitigate risks, reduce loan impairments and ultimately improve the bottom line. At a time where businesses have had to make vital adjustments to cope with changes in the business environment, the bank took proactive measures in managing the bad debts.
This included down grading a number of facilities and writing-off bad debts which led to the decrease of the bank’s Non-Performing Loans (NPL) ratio from 9.3percent recorded in the previous quarter to 6.4percent as at 31 Dec 2017.
The Bank’s Managing Director, Ms. Ineke Bussemaker reassured that NMB remains committed to its mission to offer affordable customer focused financial services to the Tanzanian community. In 2017, the bank opened 23 new branches, 10 new CCPs (cash collection points) and 2,389 new NMB Agents (Mawakala).
On the implementation of IFRS 9, effective 1 January 2018, Ms. Bussemaker confirmed that NMB has a strong capital base which will remain well above the minimum regulatory levels. NMB ended the year with a Total Capital Adequacy Ratio of 17percent against the required 14.5percent and a Liquid Asset Ratio (LAR) of 39percent against the regulatory minimum of 20percent.
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