NMB Zimbabwe Limited’s profit after tax slowed 11,7% to $84 million during the period ended December 2019 as the financial institution battles the impact of inflation and weakening exchange rate.
BY FIDELITY MHLANGA
During the same period last year, it recorded a profit of $94,7 million The group, which controls NMB Bank in Zimbabwe, reported a revenue growth of 13% to $566,5 million during the period from $500 million prior year.
“The operating environment continues to be challenging mainly due to the constantly weakening exchange rate, high month-on-month inflation, incessant power outages, fuel shortages, drought-induced food shortages and general low investor confidence in the country,” said group chairman Benedict Chikwanha.
Net interest income tumbled to $128,5 million from $251,1 million.
The financial institution’s total assets plunged to $2 billion from $3,3 billion prior year.
Operating expenses amounted to $240 ,5 million and were down 17% from a prior year amount of $289,5 million.
“The decrease in operating expenditure was due to cost containment measures as well as improved efficiencies arising out of digital innovations adopted by the group,” said Chikwanha.
The bank’s non-performing loans ratio stood at 1,37% as at December 31, 2019, lower than the December 31, 2018 ratio of 7,43% largely due to aggressive collections and stricter credit underwriting standards.
Loans and advances tumbled 67% from $1 629 493 700 as at December 31, 2018 to $533 110 289 as at December 31, 2019 reflecting the reduction in the value of monetary assets as a result of the hyperinflationary environment.
“The group’s total assets decreased by 37% from $3 294 291 270 as at December 31, 2018 to $2 089 311 325 as at December 31, 2019 mainly due to an 85% decrease in investment securities, a decrease of 30% in cash and cash equivalents and a 46% decrease in loans, advances and other assets. These reductions were partly offset
by a 77% increase in investment properties and a 207% increase in property and equipment,” Chikwanha said.
Total deposits decreased by 56% from $2,7 billion restated as at December 31, 2018 to $1,19 billion as at December 31, 2019 as a result of the effects of the hyperinflationary operating environment.
“Value preservation will be the group’s key focus area in light of the likely negative impact of inflation and the deteriorating exchange rate. The bank has embarked on a digitalisation trajectory marked by the introduction of paperless low-cost account opening. The bank will continue to focus on operational efficiencies and service excellence across all market segments,” he said.
The bank’s regulatory capital as at December 31, 2019 was $360, 8 million and is above the minimum required regulatory capital of $25 million remains confident that its plan to meet the recently announced minimum capital of US$30 million by year end.
The banking subsidiary owed US$13, 8 million to various providers of lines of credit at December 31,2019 and has registered foreign debts with the central bank as required by the regulatory directives.