NMB leads in profitability

National Microfinance Bank’s (NMB) impressive financial performance in the second quarter of the year might attract equity investors to scramble for the bank’s shares.

NMB posted a pre-tax profit increase of almost 76 per cent to about 28bn/- in the three- month quarter ending June 30, 2012 and emerged the most profitable bank in the quarter, topping the list of about 50 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 (NPL), any stock investor would like to invest in the bank.

“NMB has demonstrated a good performance…this will attract investors and increase trading activities at its counter,” Mr Marwa said, adding: “Projections are that many investors will rush for NMB shares.”

The bank’s NPL ratio is only 3.17 per cent of total loans of 1.2trn/-, the ratio that analysts say is not bad given the fact that the economy was affected during the global financial crisis.

Orbit Securities Head of Operations and Dealings, Juventus Simon said the investors in banking sectors are keen on NPL ratio that predicts the future profitability of the financial institution.

“Prudent lending that minimises NPL is what investors are looking at,” said Mr Simon.

On CRDB bank, the stockbrokers said although the bank made a relative good profit increase of almost 20 per cent to 17.5bn/- backed by healthy balance sheet NPL level are on the bad side.

“The profit is good but NPL is on the higher side, it remains at discouraging level,” Mr Simon said.

CRDB’s non performing loans at the end of June stood at 10 per cent of total advances of  1.516tr/-, translating into   151bn/- bad debts, which according to brokers, send discouraging statement to investors.

But the brokers said they anticipate CRDB share price to increase on the back of good profit from the current level of 110/- at the close of the market on Monday.

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

According to the DCB financial statement, its profit loss was attributable 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, bringing to five the total numbers of branches. Its workforce expanded to 161 from the previous 149 staff members.

Three banks — NMB, CRDB and DCB — are listed on the Dar es Salaam Stock Exchange (DSE). Tanzania women bank wants to list on the alternative market —Enterprise Growth Market (EGM).
Source: The Daily News, http://dailynews.co.tz, reported by Abduel Elinaza
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