Community banks seem to walk out of red

DAILY NEWS Reporter

TWO community banks have demonstrated a good performance if quarter one financial statements are anything to go by.

The banks, MuCoBa and Mwanga Community Bank, posted surging net profit in quarter one, signifying a new start for the community banks. MuCoBa, listed at Dar es Salaam Exchange (DSE) posted net profit increase by almost 15 per cent to 54m/- in Q1 from 47m/- in Q1 last year.

The profit elevated slightly earnings per share to 7/- from 6/- of similar quarter last year. MuCoBa net interest income increased slightly to 442m/- from 421m/- in the said quarter. The bank share has been trading at 400/- since listed on DSE some two years ago.

Mwanga Bank, also, came from the red to post a net profit of 796.3m/- from a net loss of 582.82m/-. The profit pushed, the community bank in Mwanga District in Kilimanjaro, earnings per share to 17 cents from a minus 15 cents.

Non-performing loans have dropped by 1.0 percentage points to 22 per cent from 23 per cent. Mwanga is not listed on the bourse but is a public limited company whose shareholders are individuals, Institutions, NGOs and Mwanga District Council.

The bank has no majority shareholders and the highest subscriber has only 11.35 per cent of total share capital. The two performances portray that the community banks are coming out of the blues after a year of turbulences.

At the beginning of this year the Central Bank closed Njombe Community, Kagera Farmers’ Cooperative and Meru Community three community banks for being “critically undercapitalised.” The Central Bank gave another two community banks up to next month to raise capital to 2.0bn/- or face an axe.

The other two community banks under the microscopes of central bank are Kilimanjaro Co-operative Bank and Tandahimba Community Bank which has partnered with CRDB. Tandahimba Bank, last year, posted a good profit and seems walking to prosperity.

The Bank of Tanzania (BoT) said the revoking of the licences was envisaged to protect financial stability in the economy. There are about 40 commercial banks and a dozen community banks, which target savings from specific communities or sectors such as farming, but the financial sector is largely dominated by just a handful of big banks.