Tanzanian Shillings. Photo: The Citizen
Three banks have
more than 50 per cent of non-performing loans ratio in this year's
quarter one as banks loan repayment default rate soars to record high.
Efatha Bank, linked
to Efatha ministry and foundation, has the highest nonperforming loans
ratio in
this year's quarter one so far at 63 per cent increased by
almost five times from the same period last year. The industry benchmark
for NPLs ratio is pegged at five per cent, however experts said on
average in Q1 NPLs ratio is between 9.0 and 10 per cent.
During the same
quarter, the bank posted a profit loss of 23m/- from a net profit of
12m/- in quarter-to-quarter. Efatha is followed by EconBank Tanzania
after reporting NPLs of 57 per cent in Q1, this year up from 38 per cent
in similar quarter last year.
EcoBank made a loss
of 4.75bn/- up from 1.26bn/-, in the said quarter. Tanzania Women's
Bank, which CAG suggested central bank intervention, reported NPLs ratio
of 52 per cent, which also went up from 43 per cent of last year's Q1.
The Women's Bank,
however, profit losses eases after posted a loss of 107m/- a better
level in Q1 compared to a loss of 473.4m/- in Q1 last year. TIB
Development Bank was also among financial institutions which posted high
NPLs.
The bank NPLs
increased to 38 per cent from 34 per cent. Due to high NPLs posted a
pretax profit loss of 996m/- from a profit of 4.49bn/-. BancABC also was
among those which reported high NPLs at 31 per cent slightly going up
from 30 per cent.
Another was
Commercial Bank of Africa that reported an NPLs ratio of 23 per cent
however down from 28 per cent of previous quarter. Mwanga Community Bank
also reported high NPLs of 21 per cent up from 18 per cent.
TIB Development
Bank, economist Dr Hildebrand Shayo said high NPL levels ultimately have
a negative impact on bank and lending to the economy affecting balance
sheet quality, profitability and capital.
"... Based on the
first quarter published audited financial give the impression that
bank's risk controls for loans are unsuccessful because the banks own a
disproportionate levels of bad loans," Dr Shayo, providing personal
views as an economist, told the 'Daily News.'
He said to address
the problem of rising NPLs banks, investors and borrowers need to work
together and be creative in finding solutions to the problems they
collectively face. "There is no one size fits all approach. Different
banks pursue different strategies in relation to different types of
loans," Dr Shayo said.
Nevertheless, most
financial statements posted by the banks so far show that many banks had
NPLs of between 7.0 per cent and 15 per cents. Those which are in 7.0
to 15 per cent bracket include CRDB Bank (14 per cent), Azania Bank
(13.4 per cent), First national Bank (13 per cent), Barclays (11.9 per
cent), and NIC Bank (10 per cent).
Others are
Kilimanjaro Co-operative Bank (9.2 per cent), Standard Chartered Bank
(9.1 per cent), NBC (8.5 per cent), Access Bank (7.9 per cent), Akiba
Commercial Bank (7.9 per cent), and KBC (7.6 per cent), Banks which
their NPLs were below the benchmark of 5.0 per cent include Diamond
Trust Bank (3.3 per cent), Citibank (4.6 per cent), NMB (4.6 per cent),
Maendeleo Bank (4.8 per cent), and TIB Corporate Bank (5 per cent).
In establishing how
to deal with a problem loan, banks, now 59 in total, have tightened
their credit terms as bad loans top 1.98tri/- in the stock of credit in
the economy reaching 20.89tri/-.
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