Dar es Salaam. The year 2020 will go in history books as one when the world economy was ravaged by the Covid-19 pandemic but to Tanzania’s two largest banks, the story is different.
NMB Bank Plc and CRDB Bank Plc registered their record profits last year which they say was a result of smart execution of their strategic plans, which focus primarily on growing income and improving operational efficiency.
The two largest banks – which normally account for up to two-thirds of the sector’s profitability – registered a total of Sh358 billion in net profits.
This amount is 25 percent more than what the entire banking industry registered in the 2017 calendar year.
In 2017, the entire sector registered a combined net profit of Sh286 billion.
Tanzania is home to about 50 banks, operating a total of approximately 840 branches and about 23,500 agents.
NMB Bank Plc registered a record net profit of Sh205 billion in 2020, up from Sh142.335 billion in 2019.
On the other hand, CRDB Bank Plc managed to break its 2015 record when its net profit jumped to Sh153 billion last year from Sh123 billion in 2019. Prior to last year, the record net profit to have attained by CRDB Bank was Sh129 billion which was registered in 2015.
Commenting on her bank’s numbers, NMB Bank Plc chief executive officer, Ms Ruth Zaipuna, said the record performance portrayed that the execution of the bank’s strategic plans was well on track.
The plans, she said, focus on growing income and improving operational efficiency by leveraging on technology to drive customer experience and cost efficiency.
“Despite the global uncertainties in the wake of a global pandemic, we delivered a record-setting performance with strong stakeholder support, operational excellence, and solid strategy execution,” she said.
The monetary and fiscal support by the Bank of Tanzania (BoT), said Ms Zaipuna, also played a key role in jerking the sector’s performance in 2020.
At the height of the Covid-19 pandemic, the BoT took several measures to cushion the economy from the impact of the pandemic. It (the BoT) lowered its statutory minimum reserve requirement reduced the discount rate.
The BoT also allowed banks to borrow from it (the BoT) with less collateral than before by reducing haircuts on government securities from 10 percent to five percent for treasury bills and from 40 per cent to 20 per cent for treasury bonds.
NMB’s results show its operating income rose by 15 percent while operation costs rose by a marginal two percent on year-on-year basis. Both funded and non-funded incomes streams ended in green last year, with the former rising by 11 percent while the latter increased by 19 percent.
The CRDB CEO, Mr Abdulmajid Nsekela said the performance was not an accident but rather, the outcome of the lender’s successive transformations that have been implemented over the past two years.
He said the bank implemented operational changes in June 2019, which increased its (CRDB’s) efficiency and, to a great extent, enhanced delivery of service.
He said in order to respond to the shifting business landscape, they deployed an adaptative strategy which helped them to navigate through the crisis period. The support the bank offered to its customers during the pandemic, said Mr Nsekela, made a huge difference. The band had close engagements with customers which allowed them the flexibility to align with the external dynamics brought about by the Covid-19 pandemic.
“I am happy that because of this, many of our customers were able to cope with the challenging times and continued with their business despite the difficult circumstances. For us, it translated into continued business as seen in the results,” he said. CRDB Bank Plc registered growths in both interest and non-interest income streams, with the former rising from Sh522 billion in 2019 to Sh570 billion in 2020 while the latter surged to Sh284 billion in 2020 from Sh252 billion in 2019.
With many other banks reporting their financial statements today, much more could be seen on how the sector traversed through the Covid-19 pandemic.
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