NMB Bank has the fourth highest non-performing loans (NPLs) at US$17 million out of the 18 banks operating in the country, a survey by the Zimbabwe Independent has revealed.
These represent the loans that the borrower is neither servicing the interest nor the principal debt. They are not yet regarded as write offs due to a number of factors, including the possible fact that the collateral security could still be sufficient to recover the loan. CBZ has the largest NPLs of US$95 million, with CABS coming a distant second with US$42 million.
When expressed as a ratio of loans issued they come to 7,98%, a marked improvement from 10,69% as at December 31 2016.
The bank’s gross loans and advances increased by 3% from US$205,8 million as at December 31 2016 to US$211 million as at December 31 2017, reflecting the bank’s tight credit sanctioning regime.
Investment securities (Treasury Bills and bonds) increased by 273% from US$24,7 million as at December 31 2016 to US$92,2 million at year end, mainly due to some purchases from both the primary and secondary bond markets.
Deposits increased by 34% from US$260,5 million as at December 31 2016 to US$348,9 million as a result of a significant improvement in market liquidity and deposit mobilisation strategies.
The bank’s liquidity ratio closed the period at 46,08% compared to prior year’s 40,06% and this was above the statutory requirement of 30%.
During the year under review, NMB Bank reported total net income of US$41 million with US$32 million of that being generated from interest income, making it one of the top performing banks in the country.
The bank is a subsidiary of NMB Holdings. Its top shareholders, namely Arise, African Century of the UK, AfricInvest and Old Mutual now control 60% of the bank.
Arise is an investment vehicle through which FMO of the Netherlands, Norfund of Norway and Rabobank, also of the Netherlands, pooled their investments in financial services in African countries.
FMO, which is owned by the Dutch government, is one of the largest bilateral private sector development banks in the world, with a committed portfolio of 9,2 billion euros spanning 85 countries while Norfund, which is owned by the Norwegian government, has a portfolio of about US$1,8 billion, 53% of which is in Sub-Saharan Africa.
AfricInvest is a fund largely owned by European development finance institutions with US$1,2 billion assets under management in 25 African countries.
According to the survey, the bank’s regulatory capital as at December 31 2017 was US$61,1 million which is above the minimum required regulatory capital of US$25 million.
Resultantly, NMB Bank’s capital adequacy ratio at 24,26% is adequate to support the underwriting of new business. The minimum required by the RBZ is 12%.
The survey also revealed that NMB has an excessively high cost-to-income ratio at 68%. This ratio depicts the efficiency with which an entity manages their costs relative to earnings, and the smaller the ratio the more efficient they are.
Ecobank tops the list with a ratio of 42% and BancABC is last with a figure of 82%. Of the big banks, only Stanbic and CABS have better ratios of 60% and 63% respectively.
The bank’s staff costs account for 47% of total expenses.
During the year under review, the bank sought to broaden the target market by launching low-cost accounts in an effort to promote the national financial inclusion agenda.
The bank also launched the life and retirement products which are underwritten by Old Mutual.
NMB says it will continue to leverage on its strong shareholder base to access the best technology platforms to accelerate its digital strategy and drive responsible inclusive growth and financial inclusion in Zimbabwe.