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NMB move stuns investors

Ngoni Chanakira

THE suspension of NMB Holdings Ltd (NMB)’s foreign currency licence by the Reserve Bank of Zimbabwe (RBZ) has sent shock waves among investors on the Zimbabwe Stock Exchange (ZSE) as shares f

or financial counters tumbled.

The financial institution’s sha-res fell from a high of $115 last week to $110 yesterday.

This is not the first time that thebank whose target market are high profile individuals and corporates has been served with suspension for flouting regulations.

Trading in NMB shares were suspended from July 7-9 this year.

NMB had its stockbroking subsidiary, Continental Securities Trading (Pvt) Ltd, suspended after two of its directors were found to have flouted ZSE regulations. The two have since been removed from trading on the bourse but are appealing against the move.

NMB chairman Paddy Zhanda this week said CST had contributed negatively to net income as it continued to recover from loss of business resulting from its suspension.

The subsidiary contributed a historical loss of $464 million to the net loss after tax.

NMB Holdings shocked investors when it revealed that it had made an inflation-adjusted loss of $165 million.

Zhanda said this was due to the “harsh economic environment”, and the group’s banking subsidiary increased its provisions for bad and doubtful debts.

“The inflation-adjusted loss after taxation of $165 million is reflective of the hyperinflationary conditions in the country and a low return on investment assets,” Zhanda said. “The high levels of monetary assets as at June 30 of $129,3 billion contributed to the loss on net monetary position of $9 731 million.

The net operating income of $15 290 million after operating expenditure and bad and doubtful debts expense was partly eroded by the large loss on net monetary position of $9 731 million.”

Finance and Economic Development minister Herbert Murerwa when he presented his $672 billion Supplementary Budget to parliament warned commercial banks that government would strengthen the RBZ’s Supervision and Surveillance Division to investigate the country’s financial state of affairs.

Without revealing names, Murerwa said it had been established that a number of financial institutions were involved in illegal foreign exchange market activities.

“It must be noted that, while the Exchange Control (General) Order of 1996 confers authorised dealership status to all commercial banks and accepting houses upon registration, authorised dealership is a privilege and not a right,” Murerwa said.

NMB was later slapped with a ban on its foreign currency activities.

Stock market analysts said industrials on Wednesday dipped a further 1,33% on the back of weaknesses in several financial counters and the main industrial index declined 8 956,56 points to 662 138,03 points on Wednesday.

The mining index on the other hand marginally recovered 0,52% (697,65 points) to 133 894,64 points.

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