eBusiness Weekly
Michael Tome and Kudzanai Sharara
NMB Holdings posted a 532 percent jump in profit after tax to $57,4 million for the first six months up to June 30, 2019 from $9 million recorded in the prior comparable period in 2018.
Much of the earnings growth was, however, realised from net foreign exchange gains which grew to $32,6 million from $1,1 million prior year.
Significant contribution also came from fair value adjustment on investment properties which stood at $27,9 million. There were no value adjustments prior year comparative.
There wasn’t much growth from the bank’s normal business operations with net interest income only increasing by $1,7 million to $16,3 million a 11 percent improvement from $14,6 million recorded in June last year.
Net interest income was largely impacted by a 76,9 percent increase in interest expense to $6,9 million from $3,9 million prior year comparative.
Financial director Benson Ndachena said the increase in the interest expense “was mainly out of forex denominated interests which after the change in functional currency had to be accounted for at the ruling exchange rate when the interest accrued.”
This is against a marginal 25 percent growth in Interest income to $23,2 million as the Group’s loan book grew by just 7 percent.
Chief executive Benefit Washaya told an analysts and media briefing that lending was constrained due to a number of factors including liquidity constraints. The bank’s liquidity ratio stood at 34,1 percent down from 41,6 percent prior year comparative, but was above the regulatory requirement.
Ndachena added that liquidity issues in the market had also pushed interest rates upwards. The Group recorded a 10 percent growth in total deposits to $480 million from $435 million realised in December.
But income generating activities elsewhere had helped grow income with fees and commission increasing by 45 percent to $18,5 million from $12,7 million prior year comparative.
Ndachena said the 45 percent was largely driven by banking activities across the group in particular retail and digital banking fees. Fees from corporate banking also contributed substantially.
Total comprehensive income grew 576 percent to $61,4 million from $9,1 million in the same period last year.
The group’s total assets improved by 31 percent from $527 million as at December 2018 to 691 million as at 30 June 2019 attributed mainly to182 percent increase in property and equipment and 228 percent surge in investment properties.
NPL ratio stood at 3,38 percent on 30 June 2019 down from 7,43 percent recorded as at 31 December 2018 which the bank attributed to aggressive collections and stricter credit underwriting standards.
Washaya highlighted that the plausable performance was realised amidst tough economic conditions as the country tries to settle after introduction of new policy measures.
“Challenges in 2018 persisted into the first half of 2019 characterised by contraction of business operations throughout the economy, foreign currency shortages and inflationary pressures as the country’s year-on-year inflation for June 30, 2019 stood at 176 percent,” said Mr Washaya.
The bank’s performance was also attributable to intensified efforts in rolling out point of sale devices (m-POS) in order to support the growing SMEs and sole trader clientele base.
NMB stuck to its drive of opening low cost bank accounts and investment expansion towards digital channels in order to promote service delivery and accommodate increased transactional volumes created by the broadened customer base.
Mr Washaya said: “We continued to open more NMB Lite accounts as our contribution to the financial inclusion agenda. We intensified the roll-out of the mPOS devices to SMEs and sole traders and take up continues to be encouraging.”
