Summary
· The combined net profit of 13 first-tier- lenders which account for over 90 percent of the industry's profitability-rose by 20 percent during the first quarter of 2023 compared to the corresponding period in 2022
Dar es Salaam. The first quarter of 2023 was good for banks and other
financial institutions in Tanzania, thanks to the rise of digital financial
services, favourable legislature and brighter economic prospects.
An analysis of 13 first-tier banks
by The Citizen shows that they did generally well across such performance
parameters as profit levels, customer deposits, loans, asset value and
non-performing loans (NPLs), among others.
Lenders that featured in the review
are CRDB Bank Plc, NMB Bank Plc, Standard Chartered Bank, Exim Bank, Stanbic
Bank, Diamond Trust Bank (DTB) and Absa Bank Tanzania. Others are KCB Bank
Tanzania, Tanzania Commercial Bank (TCB), People’s Bank of Zanzibar (PBZ),
Citibank, NBC Bank and Azania Bank.
In terms of profitability, the
combined net profit of the 13 lenders – which account for over 90 percent of
the industry’s profitability – rose by 20 percent during the first quarter of
2023 compared to the corresponding period in 2022.
The banks registered Sh334.56
billion in net profits from January to March this year compared to Sh278.29
billion recorded in the first three months of 2022.
The success of the banking industry
also came on the back of rising confidence among customers, improved access to
banking services and an overall positive economic outlook that has resulted in
an increase in demand for banking services.
During the first three months of
2023, an eye-popping Sh27.54 trillion was deposited by customers in the 13
banks, which is Sh944 billion more than the Sh26.5 trillion that was deposited
during the first quarter of 2022.
Nearly Sh25 trillion in loans was
issued in this year’s first quarter, being six percent more than the total sum
issued in last year’s corresponding period.
Although a few lenders struggled
with NPLs, the overall situation was better than in the first quarter of 2022.
Only two first-tier lenders have
double-digit NPL levels of 14.58 percent each and the rest are in single
digits.
In fact, five are in levels that
even surpass the regulatory recommended rate of five percent. They are KCB Bank
(2 percent, CRDB (2.9 percent), NMB (3 percent), Standard (2.2 percent), NBC
(3.8 percent) and Stanbic (4.9 percent).
Bankers who spoke to The Citizen
said the outcomes were an indication that the economy was doing well and that
the government, through the Bank of Tanzania (BoT), was improving the business
environment, which has seen lenders increasingly gaining the trust of their
customers as they also expand their investments in digital systems to reach the
unbanked segment of the population.
“NBC Bank has continued its growth
trajectory with another strong performance in the first quarter of 2023. The
performance parameters broadly reflect increasing profitability and a
performing loan book….We recognize the trust of our customers and the general
public in the NBC Brand,” said NBC Bank managing director Theobald Sabi.
During the period, the bank recorded
a 22 percent year-on-year growth in revenue to Sh73.1 billion from Sh59.6
billion, with profit before tax increasing by 49 percent year on year to Sh27.2
billion from Sh18.6 billion for the same period last year. Its customer assets
grew by 31 percent growth while deposits grew by 17 percent.
The bank continues investing in
digital systems and expanding its customer network to support growth ambitions
and reach the unbanked.
And, according to the NMB Bank Plc
chief executive Ruth Zaipuna, the results for the first quarter of 2023 have
set a strong and optimistic tone for the year.
“The results demonstrate that we
have a solid foundation for sustained growth, given the existing enabling
environment created by the government's ongoing strong efforts to enhance
business and investment climate,” she said yesterday.
The bank, she said, continues to
become more efficient and innovative, whilst optimally investing in technology
to strengthen our capabilities for the future.
Going forward, Ms Zaipuna added, NMB
Bank plans to build on the current momentum through disciplined execution of
its strategy, with a clear path towards delivering on its strategic priorities.
CRDB Bank Group chief executive
Abdulmajid Nsekela attributed his bank’s bottom line growth to its sustained
efforts to expand its services to the existing client base and the investments
in its distribution channels.
The bank’s focus for this year, he
said, was expand its product and service offerings to meet the evolving needs
of our customers.
“This includes supporting small and
medium-sized enterprises (SMEs), as well as special groups such as women and
youth. We believe that by providing tailored solutions to these groups, we can
help them grow and thrive, which in turn supports the overall economy. This is
what is driving our success,” Mr Nsekela said yesterday.
The bank, he added, was also
investing in innovation and automation to improve our processes and increase
cost efficiency.
“This includes the use of digital
tools and platforms to streamline our operations, as well as leveraging data
and analytics to better understand our customers and their needs…. Of course,
there are many other factors that have contributed to our success, and we are
proud of the hard work and dedication of our team in achieving these results.
We look forward to continuing to build on this momentum in the coming
quarters,” he said.
KCB Bank Tanzania managing director
Cosmas Kimario said with the current growth rate of the banking industry it was
significant to recognize the role of Digital financial services (DFS) in
accelerating financial inclusion through digital channels, such as the internet
and mobile phones, instead of traditional physical channels.
He said another factor was the
growth of loan services to the private sector and the government ensuring
significant improvement in interest income for the banks.
“We have seen a significant rise in
credits by banks to the private sector, and the government which borrows to
fund different development projects across the country,” Mr Kimario said.
The impressive loan books coupled
with supportive monetary and fiscal policies by the government had pushed for
more profitability levels for banks.
TCB chief executive Sabasaba
Moshingi cited the impressive numbers continue to lie with the growth in both
interest income, non-funded income as well as recovery from non-performing
assets.
“The outlook for the year is bright
and we are looking forward to posting improved financial performance,” Mr
Moshingi said of the State-owned institution.
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