Africa-Press – Tanzania. Dar es Salaam.
Shareholders in some large banks will be keeping their fingers crossed in anticipation that their dividends will increase further if the lenders’ second quarter performance is maintained.
Recently released financial statements show that a number of large banks reported improvements in profits and a further reduction in non-performing loans (NPLs) as the sector braves the Covid-19 pandemic to remain strong.
NMB Bank Plc, CRDB Bank Plc, National Bank of Commerce (NBC) and Standard Chartered Bank are some of the largest banks that registered improvements in profitability during the second quarter of the current calendar year.
The list also has Citibank, KCB Bank and Peoples’ Bank of Zanzibar among others.
The seven lenders registered a total of Sh143.052 billion in net profits during the second quarter of 2021. This is a 46 percent improvement compared to a combined net profit of Sh98.075 billion the banks posted in the second quarter of last year (2020).
Despite maintaining a low NPLs to total gross loans ratio of 4.3 percent during the second quarter of the year, NMB Bank Plc’s cumulative net profit jumped by 43 percent to reach Sh134 billion at the end of June 2021 while its cost to income ratio (CIR) was also quoted at 47 percent.
In January, the Bank of Tanzania (BoT) issued a circular that requires commercial banks and financial institutions to effectively manage NPLs and their operating expenses. This would ultimately bring down borrowing costs as well as yield more returns to shareholders. According to the circular, NPLs are to be maintained at a level that is not more than five percent of total gross loans while cost-to-income ratios are to be maintained at a ceiling of 55 percent.
The bank says its performance was a reflection of relationship management and increased customer activity, disciplined cost optimization, and overall credit portfolio quality improvement.
“We are extremely pleased with our financial results for the first half of 2021 as we continue to build momentum on the strong performance we registered in Q1 2021 and leveraging off the stance, monetary measures undertaken by the Bank of Tanzania,” said the NMB Bank Plc’s chief executive, Ms Ruth Zaipuna.
She said efforts would be directed towards making good strides in the execution of its strategic initiatives while keeping a keen eye on the opportunities that lay ahead as the global economy continues to recover from the adverse impacts of the Covid-19 pandemic.
“We remain committed to delivering strong returns to our shareholders and we look forward to further serving our esteemed customers and supporting the communities we serve as we progress along the second half of the year and beyond,” she said.
CRDB Bank Plc’s cumulative profit before tax rose by 26.6 percent to Sh127 billion in the period under review compared to Sh100 billion recorded the same period last year.
Apart from further dropping its NPLs to only 4.4 percent at the end of June 2021, from 4.8 percent last year, CRDB Bank also saw its total assets reaching a record Sh8.1 trillion. Its customer deposits and loans also rose by double-digits to Sh6.1 trillion and Sh4.2 trillion respectively. The bank kept cutting on its CIR by bringing it down to 59.3 percent at the end of June 2021 from 63.2 percent.
The bank’s chief executive, Mr Abdulmajid Nsekela, said the lender performance was pleasing and especially how his team helped businesses and Tanzanians easily access banking services and critical funding amidst challenges brought by the Covid-19 pandemic.
“Looking at the quarters ahead, we are poised for strong earnings growth fuelled by our digital financial services, retail momentum, robust balance sheet, and operational efficiency,” he said.
NBC also managed to maintain its NPLs at only 3.3 percent, while its cumulative net profit rose to Sh17.28 billion – a 313 percent rise from only Sh4 billion that was registered during a cumulative period to June 30, 2020. The bank’s managing director, Mr Theobald Sabi, the secret behind the performance was in the improvements in the bank’s loans to the private sector, individuals and in the agricultural sector. “We have increased our lending to the private sector through loans to individuals as well as small businesses. Our entry in the agricultural sector lending has been quite successful,” he said.
With the improvements, the bank’s year-on-year loans and advances increased by 20 percent.
Looking forward, the bank remains optimistic that it will continue to offer improved services to its customers and in effort to achieve stronger financial results going forward, thanking the government for putting in place conducive operating environment despite the Covid-19 pandemic.
“We commend the government and the Bank of Tanzania for building an increasingly conducive environment for private sector growth,” he said.
