TANZANIA: THE Tanzanian banking sector displayed varied performance across different financial institutions during the first quarter of 2024.
CRDB Bank Plc has declared a dividend of 50/- per share, while NMB Bank Plc’s board has proposed a dividend of 361/18 per share. Combined, these two leading banks will return approximately 311bn/- to shareholders this year, providing significant funds for reinvestment.
With a combined total of 26.43tri/- in assets, CRDB and NMB are pivotal to the sector’s dynamics. Given their substantial contribution to the sector’s growth over the past three years, examining the financial sector through the lens of their performance in the first quarter of 2024 is crucial.
These banks continue to drive growth and stability within Tanzania’s financial landscape. CRDB Bank Plc, with total assets of 13.966tri/-, and NMB, with 12.455tri/-, also lead in loan advances, holding 8.858tri/- and 7.857tri/-, respectively.
This dominance in the market, with substantial loan portfolios, significantly contributes to their asset base. CRDB leads with 344.008bn/- in interest income, followed by NMB with 329.296bn/-.
Exim Bank and NBC which are also top tier banks showed competitive interest incomes of 58.598bn/- and 86.929bn/-, respectively.
In terms of non-interest income, Stanbic Bank reported a notable figure of 37.679bn/-, while Standard Chartered Bank performed well with 23.744bn/-. CRDB and NMB showed strong net incomes after tax, with CRDB at 127.505bn/- and NMB at 160.361bn/-, marking substantial growth from the previous year.
Notably, Exim Bank and NBC also had significant improvements in their net incomes, reflecting effective cost management and revenue generation.
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CRDB and NMB posted healthy return on assets (ROAs) of 5.5 per cent and 5.0 per cent, respectively, while Citi Bank excelled with the highest ROA of 8.9 per cent, indicating efficient asset utilization. CRDB and NMB maintained robust return on equity (ROEs) of 27.5 per cent and 29.0 per cent, respectively.
Exim recorded the highest ROE at 38.0 per cent, showcasing high profitability relative to shareholders’ equity. A lower cost-to-income ratio (CIR) indicates better efficiency.
The industry average for CIR hovered around 50 per cent to 60 per cent. CRDB had a CIR of 46, demonstrating high operational efficiency. Exim showed significant improvement with a CIR of 49. Non-performing loans (NPL) ratios are critical indicators of asset quality. In the first quarter of 2024, CRDB and NMB had NPL ratios of 3.23 per cent and 2.80 per cent, respectively, reflecting good credit risk management.
Smaller banks like TIB Development Bank and I&M Bank had higher NPL ratios, indicating potential challenges in credit quality. Staff productivity and cost management are crucial for operational efficiency.
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