Bad loans eat into NMB Bank profit

By DAILY NEWS Reporter

NMB Bank profit after tax for 2017 declined to 95bn/- from 154bn/- of the previous year due to provision for credit losses reflecting setbacks that faced customers.

The dismissal of civil servants with forged academic records of which a portion have unsecured personal facilities with NMB and inability of some corporate clients to honour their loan obligations are some of the challenging environments that affected bank’s performance in the year under review.
NMB Managing Director, Ms Ineke Bussemaker said in a statement yesterday there was an ongoing dialogue with the government and was confident that some decisions will allow the bank to mitigate risks, reduce loan impairments and ultimately improve the bottomline.
“At a time where businesses have had to make vital adjustments to cope with changes in the business environment, the bank took proactive measures in managing the bad debts,” she said.
Some of the measures included downgrading a number of facilities and writing-off bad debts which led to the decrease of the bank’s Non- Performing Loans (NPL) ratio from 9.3 per cent recorded in the previous quarter to 6.4 per cent in quarter ended December 2017.
Amidst the challenging business environment observed in the year, NMB was able to grow its total income by 5 per cent to 647bn/- in 2017 from 614bn/- in 2016. Ms Bussemaker said that NMB would remain committed to its mission to offer affordable customer focused financial services to the Tanzanian community.
During 2017, the bank opened 23 new branches, 10 new CCPs (cash collection points) and 2,389 new NMB Agents. As of January 2018, the NMB boss confirmed that the bank has a strong capital base that will remain well above the minimum regulatory levels to end the year with a Total Capital Adequacy Ratio of 17 per cent against the required 14.5 per cent and a Liquid Asset Ratio (LAR) of 39 per cent against the regulatory minimum of 20 per cent. In the fourth quarter of 2017, customer deposits rose by 9 per cent to 4.2tri/- trillion from 3.9tri/-as at the end of the third quarter.
“As a result of the prudent approach the bank adopted in growing its loan book, loans and advances grew slightly from 2,786bn/- in the previous quarter to 2,787bn/- in the fourth quarter.