NMB earnings hit by loans impairment

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NMB Holdings Ltd’s total comprehensive income in the full year to December declined marginally to US$5 million from US$5,4 million in the prior comparative period after a US$8 million impairment on loans and advances.

By Chris Muronzi

Total income declined to US$50 million from US$59 million in FY15 after both interest and non-funded income lines declined in the year.

Interest income at US$33 million was down from US$35 million while fee and commission income was US$15 million from US$20,9 million in the prior year.

The central bank in June last year announced a new set of bank charges following an agreement between the providers of payment platforms and the Bankers’ Association of Zimbabwe.

Interest from banking customer fees declined from US$17 million to US$13 million.

A total US$29 million of income came from loans and advances to customers, down from US$32 million in the prior financial year. Investment securities contributed US$2,8 million to interest income in the same period.

Under the new charges, electronic funds transfer (ZIPIT) now costs between 33 US cents and US$2,10; RTGS transfers have been reduced to US$5 from a US$10 charge, ATM withdrawals will now cost a maximum of US$2,50; point-of-sale (POS) transactions of up to US$10 will cost 10UScents while a POS transaction above US $10 will cost 45 US cents at the most.

NMB’s loan book declined 15% from US$243 million to US$205 million owing to constrained lending stemming from a challenging operating environment.

The financial services group surrendered loans amounting to US$12,6 million to the Zimbabwe Asset Management Company, a special purpose vehicle to assume bad loans.

The decline in the loan book also saw the group’s total assets declining by 4%.

“The group’s total assets decreased by 4% from US$333 831 107 as at December 2015 to US$320 984 926 as at 31 December mainly due to a decrease of 15% in loans, advances and other assets and this was partly offset by increases of 9% in cash and cash equivalents, 70% in investments securities and 75% in investment properties,” the bank said in a statement attached to its results.

Total deposits stood at US$260 million from US$277 million owing to what the group said were “restricted funding opportunities”.

The group withheld a dividend, citing the need to conserve cash and to meet the Reserve Bank of Zimbabwe’s statutory capital requirements.

Under the central bank’s requirements, banks should have minimum capital of US$100 million by 2020.

“The group has continued to broaden the market catchment for the banking subsidiary by tapping into some segments of the mass market and this sawn the launch in August 2016 of the NMBLite product offering which targeted at the low income segment,” the group said.

“The uptake of the mass market products has been encouraging and this has contributed to the financial inclusion agenda.”

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