NMB Holdings has reported a 7.8 percent drop in after-tax profit to $5 million in the full-year to December citing ‘extreme pressure’ from limits placed on interest rate charges and fees.
The central bank in 2015 capped interest rates to no more than 12 percent per annum and lowered charges for various services.
“The interest caps, controlled transactional and plastic money fees had an adverse effect on our performance which we had to partly counter through increased volumes,” chief executive Benefit Washaya told analysts.
Net interest income increased by 10.3 percent from $20.6 million in the previous year to $22.8 million, but fees and commissions income decreased by 27.7 percent to $15.2 million.
Operating expenses were down three percent from $26.9 million in the previous year to $26.2 million.
Impairment losses on loans and advances declined from $9.5 million in the previous year to $8.1 million on the back of strict credit underwriting.
As such non-performing loans decreased from 13.2 percent in the previous year to 10.7 percent.
Washaya said the bank is targeting a non-performing ratio of 5 percent by December 31 this year.
The group’s total assets declined by four percent from $333.8 million in the previous year to $320.9 million on the back of a 15 percent fall in loan and advances.
Loan and advances dropped from $243.2 million previously to $205.9 million due to constrained lending owing to the tough operating environment.
The bank wrote off loans and advances amounting to $8.3 million during the period after recovery efforts failed.
“The bank surrendered loans amounting to $12.7 million to ZAMCO since ZAMCO’s inception up to December 2016,” said Washaya.
Total deposits fell by six percent from $277.2 million in the previous year to $260.6 million due to restricted funding opportunities.
NMB’s liquidity ratio increased to 40.06 percent from 30.04 percent in the previous period.
The bank’s regulatory capital stood at $50.2 million and twice above the minimum central bank capital requirement of $25 million.
NMB increased its treasury bills (TBs) holdings by 70 percent from $14.5 million in the previous year to $24.7 million.
Wabaya said going forward more focus will be on cost optimisation, reduction and rationalisation. –The Source