BY FIDELITY MHLANGA
LISTED financial services group NMBZ’s profit after tax for the period ended June 2020 was flat at $689,2 million, weighed down by sub-optimal market interest rates.
During the same period last year, profits for NMB Bank’s holding company, were pegged at $690 million.
In the period under review, revenue went down to $543 million from $776,8 million.
“Total income amounted to $1,24 billion and this was down 3% from $1,29 billion recorded during the six months ended 30 June 2019 mainly due to a reduction in net interest income due to sub-optimal market interest rates,” NMBZ chairman Benedict Chikwanha said in a statement accompanying the results.
Net interest income was $168,7 million, down from $199, 4 million in the comparative period.
Operating expenses amounted to $327,8 million and these were down 4% from $341,1 million recorded during the six months ended June 30, 2019.
“The reduced costs were a result of cost containment measures adopted by the group in addition to improved efficiencies arising out of the group’s digital drive,” Chikwanha said.
The group’s total assets increased by 27% from $5,47 billion as at December 31, 2019 to $6,93 billion as at June 30, 2020 mainly due to a 47% increase in property and equipment, a 126% increase in investment properties and a 6% increase in cash and cash equivalents.
Investment properties increased from $602,2 million as at December 31, 2019 to $1,36 billion as at June 30, 2020 whilst property and equipment increased from $1 billion at December 31, 2019 to $1,51 billion as at June 30, 2020 mainly due to the significant increase in property values in local currency terms in line with market changes.
“The group recorded an impairment credit loss on financial assets measured at amortised cost amounting to $25,21 million compared to an expected credit loss reversal of $7,896 million during the six months ended June 30, 2019 due to growth in the banking subsidiary’s financial assets,” Chikwanha said.
Gross loans and advances increased by 3% from $1,39 billion as at December 31, 2019 to $1,43 billion as at June 30, 2020 mainly due to a slowdown in advances during the period under review as a result of the prevailing economic conditions.
Cash and cash equivalents increased from $1,28 billion as at December 31, 2019 to $1,36 billion at June 30, 2020 mainly due to the upward foreign exchange revaluation of the group’s foreign-denominated liquid assets.
Total deposits increased by 12% from $3,12 billion as at December 31, 2019 to $3,49 billion as at June 30, 2020 as a result of deposit mobilisation strategies and the translation of foreign-denominated deposits to the local currency.
The bank has continued with its drive to reduce non-performing loans (NPLs) and this saw the NPL ratio go down from 1.37% as at December 31, 2019 to 0.81% as at June 30, 2020.
The drop in the NPL ratio is largely due to aggressive collections and stricter credit underwriting standards.
NMB Bank maintained a sound liquidity position with a liquidity ratio of 73.90% which was significantly above the statutory minimum of 30%.
The group’s shareholders’ funds and shareholders’ liabilities increased by 54% from $1,85 billion at December 31, 2019 to $2, 86 billion as at June 30, 2020 as a result of the current period’s total comprehensive income.
The bank’s regulatory capital as at June 30, 2020 was $1,46 billion and was above the minimum regulatory capital of $25 million.
“The bank submitted its capitalisation plan to the RBZ (Reserve Bank of Zimbabwe) in terms of the requirements for a Tier 1 bank to have a minimum Zimbabwe dollar equivalent of US$30 million by December 31, 2021,” Chikwanha said. “We await approval of our capitalisation plan by the RBZ.”