We have extracted the Chairman’s statement from the 2018 annual report of NMBZ Holdings Limited, listed on the Zimbabwe Stock Exchange, under the share code NMB.zw. NMB is a registered financial-services holding company in Zimbabwe operating in retail and commercial banking sector aswell as treasury, international banking and corporate finance.
The following is an excerpt from the 2018 Annual Report:
The profit before taxation was US$27 143 275 (2017 – US$13 017 690) during the period under review and this gave rise to total comprehensive income of US$21 267 632 (2017 – US$10 029 136). The Group achieved a basic earnings per share of 5.43 cents (2017 – 2.58 cents).
Operating expenses amounted to US$34 720 428 and these were up 26% from a prior year amount of US$27 578 347. The increase in operating expenses was due to increased transaction processing and operational costs arising from the Bank’s digital drive, continued expansion into the broader market segments and general inflationary pressures largely driven by foreign currency shortages.
Impairment losses on financial assets measured at amortised cost amounted to US$4 011 952 for the current period from a prior year amount of US$3 853 149 and the increase was mainly due to the adoption of IFRS 9 with effect from 1 January 2018. The bank has continued with its drive to reduce non-performing loans (NPLs) and the ratio stood at 7.43% as at 31 December 2018. This was lower than the 31 December 2017 ratio of 7.98%. The decrease in the NPL ratio was largely due to aggressive collections and stricter credit underwriting standards.
The Group’s total assets increased by 25% from US$422 564 352 as at 31 December 2017 to US$527 067 596 as at 31 December 2018 mainly due to a 27% increase in investment securities, a 21% increase in loans, advances and other assets, a 10% increase in investment properties, an increase of 26% in cash and cash equivalents and a 143% increase in property and equipment.
The bank continued with its intermediation role and support for the productive sectors as reflected by a 24% increase in gross loans and advances from US$211 005 418 as at 31 December 2017 to US$262 335 026 as at 31 December 2018.
Investment securities (Treasury Bills and Bonds) increased by 27% from US$92 245 425 as at 31 December 2017 to US$117 249 434 as at 31 December 2018 mainly due to some purchases from both the primary and secondary bond markets. The bank has set maximum limits for investment securities to ensure most of our funds are channeled towards loans and advances.
Total deposits increased by 25% from US$348 956 385 as at 31 December 2017 to US$434 957 949 as at 31 December 2018 as a result of strong deposit mobilisation strategies coupled with a significant improvement in market liquidity.
The Bank’s liquidity ratio closed the period at 41.62% (2017 – 47.53%) and this was above the statutory requirement of 30%.
OUTLOOK AND STRATEGY
In line with the Bank’s financial inclusion drive, we have intensified efforts to open low cost accounts. Further investment is continuously being directed towards the digital channels to enhance service delivery as well as accommodate the increased transactional volumes created by the broadened customer base as the Bank continues to increase its footprint. The Bank has intensified its efforts in rolling out the low-cost Point of Sale devices (mPOS) in order to support our growing SMEs and sole traders’ clientele base.
The year 2019 is likely to be a period in which inflation, currency fluctuations and a shortage of foreign currency play a pivotal role in determining the impact on revenue generation and operating costs. The combination will require a steady guiding hand from the relevant authorities as well as management and Board focus. Early indications point to a tough operating environment for the banking sector.
NMBZ Holdings Limited is a Company Member of AfricanFinancials.com.