eBusiness Weekly
Business Writer
Despite not earning much interest income from investment securities such as Treasury Bills, banking group NMB grew this asset base more than any other financial institution for the full year to December 2020.
The decision to pile more funds into investment securities, is reflective of the bank’s cautious lending approach or a struggling economic environment where lending options are limited.
During the period under review, NMB earned only $36 million from investment securities (2019: $145 million) but chose to grow the asset base by 108 percent to $1 billion from $480 million prior year comparative.
The Group now holds Treasury Bills and Government Bonds amounting to $1.086 billion with interest rates ranging from 5 percent to 18 percent.
In a statement accompanying the results, board chairman Benedict Chikwanha, said the bank has, however, set maximum limits for investment securities in order to ensure that most of the funds are channelled towards the productive sectors of the economy.
Investment properties also got a bump to $1,65 billion from $1,03 billion.
The Bank’s loan to deposit ratio was below 40 percent after gross loans and advances amounted to $2,45 billion against deposits of $6,26 billion.
Loans and advances to customers, where the group earned as much as $708 million only grew to $3,9 billion from $3,8 billion prior year comparative.
Overall, the Group’s total assets increased by 17 percent to $10,9 billion as at December 31, 2020 from $9,3 billion prior year comparative mainly due to a 125 percent increase in investment securities, a 60 percent increase in investment properties and an increase of 25 percent in property and equipment.
However just like most banks operating in Zimbabwe, NMB earned the bulk of its $2,1 billion operating income from fees and commission amounting to $1,1 billion.
Of the fees and commission, $687 million was from digital banking fees, $312 million from retail banking customer fees while $99 million was from corporate banking credit related fees.
Commenting on the financial performance Chikwanha said the Group had adopted a number of value preservation strategies in order to ensure that shareholders’ value is not eroded.
“These measures culminated in the Group’s remarkable financial performance in spite of the difficult operating environment,” said Chikwanha.
The profit before taxation was $705 million (2019 – $691 million) during the period under review and this gave rise to total comprehensive income of $1 billion.
The Group achieved a basic earnings per share of 210,12 cents up from 96,49 cents prior year comparative.
The bank has continued with its drive to reduce non-performing loans (NPLs) and the ratio stood at 0.44 percent as at 31 December 2020.
This was lower than the December 31, 2019 ratio of 1,37 percent and below the Bank’s and regulatory target of 5 percent as at December 31, 2020.
Chikwanha said the decrease in the NPL ratio was largely due to aggressive collections and stricter credit underwriting standards.
