Brokers divided on banks' performance

Stockbrokers have welcomed the performance of financial institutions in the second quarter with mixed feeling. 

They said for instance National Microfinance Bank (NMB) posted an impressive finance performance in the second quarter expects to be a magnet for equity investors to scramble for the bank's shares.

The CRDB Bank despite posting a good profit, its bad debt ratio would hurt its share trading while DCB Bank loss may send a negative picture on its rights issue bid in the next few days.

NMB Bank posted a pre-tax profit increase of almost 76 per cent to 27.53bn/- in three months ending June, and emerged as the most profitable banks in that particular quarter leading over 45  institutions.

Tanzania Securities Chief Executive Officer Moremi Marwa told the 'Daily News' that given NMB's profitability level and its 3.17 per cent ratio of non-performance loans (NPLs), any stock investor would like to buy the bank.

"NMB has demonstrated a good performance-this will attract investors and increase trading activities at its counter," Mr Marwa said, "projections are that many will go for (NMB) share as most are dividend conscious. Profits portrayed a good dividend in the first half."

The bank NPL ratio is only 3.17 per cent of total loans of 1.21tr/-, which analysts said is a relatively "good ratio" given the fact that economy was affected during the global financial crisis.

Orbit Securities Head of Operations and Dealings, Juventus Simon said though CRDB made a relatively good profit increase of almost 20 per cent to 17.5bn/-backed by healthy balance sheet NPLs level are on the bad side.

"The profit is good but NPLs is on the higher side, it still at discouraging level" Mr Simon said,  "we expected this time around the level to drop somehow." 


CRDB non performing loans at the end of June were at 10 per cent of total advances of 1.52tr/- translating to 151bn/-, which according to brokers is sending discouraging signals to buyers.

However, the brokers are worrying about the outcome of the coming of DCB's rights issue at a time when the bank posted a net loss of 47.7m/- from a profit of 879.69m/- in three months ending June.

"This will lead to negative impact on the coming issue," Mr Marwa said, "remember the bank did not issue dividend last year instead gave a bonus share."

This, according to Tanzania Securities weekly report, was attributable to a modest growth of only 0.4 per cent in interest income. Net interest income shrunk 22 per cent dragged by a 44 per cent increase in interest expense. NPLs reduced by 1.0 per cent to 2.8bn/-.

But Zan Securities CEO Mr Raphael Masumbuko said: "posting loss in one quarter does not mean the bank will lose in full year results...it can correct its losses and ending up making a better profit."

In cumulative year that ending June, the DCB which got a new licence from regulator as a public entity, posted a net profit of 548.57m/- from 1.09bn/- of last June. 

According to the DCB financial statement, its profit loss was attributed to money set aside for bad debts but also on the increase of other operating expenses from 909.64m/- to 1.22bn/-.

The bank opened an additional branch to have five total numbers of branches. It workforce expands to 161 from 149 staff. 

During the week, the report shows, CRDB was relatively active despite encountering 2.27 per cent drop of its share price to close the week at 108/- per share, further down from a weekly low of 110/- per share.

NMB recovered 2.15 per cent of its value to end the week at 950/- per share. It also accounted for 52 per cent of the Bank, Finance & Investment sector (BI) market value for the week.

"The continued good performance by the counter may be explained by a continued local support resulting from its recently published strong second quarter of this year," Mr Marwa said. DCB activities dropped significantly for the week by trading at 620/- per share a drop of 3.13 per cent.

"This was a sharp week on week drop from 640/- traded from the previous week," Mr Marwa said. There are three listed banks on Dar es Salaam Stock Exchange (DSE) which are NMB, CRDB and DCB. Tanzania Women Bank is eyeing to list on the second market-Enterprise Growth Market (EGM).
Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza
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