Africa-Press – Tanzania. TIB Development Bank has staged a significant financial turnaround last year rebounding into profitability from substantial losses incurred in the previous year, its audited financial statement showed.
The state-owned development bank moved from a pre-tax loss of 5.8bn/- in 2023 to a 672m/- profit in 2024 and from a post-tax loss of 7bn/- to 4bn/- profit, largely due to a substantial tax credit from prior year losses.
The rebound into profitability comes despite headwinds in key areas. While interest income inched up 0.6 per cent to 38.8bn/-, a sharp 26.2 per cent jump in interest expenses to 14.7bn/- squeezed the bank’s net interest income by 12.1 per cent to 24bn/- from 27.4bn/- in 2023.
The bank’s non-performing loans to gross loans ratio edged up to 21.6 per cent in 2024 from 21.5 per cent in 2023, significantly exceeding the central bank benchmark of 5 per cent signaling a weakening of the bank’s credit portfolio and potential problems with asset quality.
It also indicates that TIB Development Bank is facing challenges in recovering its loans, which could have implications for its profitability, lending capacity, and overall financial health.
This is further underscored by a surge in impairment losses, which jumped by 133.2 per cent to 5.4bn/-. Bad debts written off saw a peculiar dip to negative 8m/- from 4.7bn/- in 2023, suggesting some recoveries, but the overall picture points to increasing credit risk.
Adding to the challenges, TIB Development Bank’s non-interest income turned negative, registering a loss of 3bn/-, a sharp 127.3 per cent decline from 11.4bn/- in 2023. This indicates that expenses related to non-core activities, such as fees and investments, outstripped the revenue generated from them, potentially weighing on overall profitability.
The primary driver was a significant negative swing in foreign currency dealings and translation, resulting in a 4.5bn/- loss from 6.3bn/- in 2023. Offsetting this somewhat was a more than doubling of fees and commissions to 1.4bn/- from 699m/- in the previous year.
On the balance sheet, the state-backed lender saw modest expansion. Total assets grew by 6.4 per cent to 450bn/- from 422bn/- in 2023. Loans, advances, and overdrafts also increased, rising 10.3 per cent to 337.9bn/-, while customer deposits saw a 4.9 per cent increase to 219.2bn/-.
Despite the return to profitability, key performance metrics paint a more nuanced picture. Return on Average Total Assets and Return on Average Shareholders’ Funds remained negative at -1.60 per cent and -134.211 per cent respectively, suggesting that the profitability generated is still weak relative to the bank’s asset and equity base.
On the balance sheet, the state-backed lender saw modest expansion. Total assets grew by 6.4 per cent to 450.015 billion shillings. Loans, advances, and overdrafts also increased, rising 10.3 per cent to 337.973 billion shillings, while customer deposits saw a 4.9 per cent increase to 219.283 billion shillings.
Despite the return to profitability, key performance metrics paint a more nuanced picture. Return on Average Total Assets and Return on Average Shareholders’ Funds remained negative at -1.60 per cent and -134.211 per cent respectively, suggesting that the profitability generated is still weak relative to the bank’s asset and equity base.
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