Financial sector continued to shine in 2013

The banking sector performed well in 2013, as profitability level continued to rise in most banks. Three banks, however, stole the show this year, namely -- National Microfinance Bank, Bank M and Maendeleo Bank.

By mid this year the bank reported a record after-tax profit of 97bn/-, up by 36 per cent from preceding year. This means the bank will not only retains its position as the most profitable bank in the country but also cross the 100bn/- profit mark which will be a historic record.

NMB total assets was 2.8tri/- in the first half of 2013, while retaining a strong balance sheet with a Non Performing Loan (NPL) ratio of less than 2.4 per cent.

The country’s leading bank had over 1.8 million customers by end of 2012, which means that up to 40 per cent of all Tanzanians who have a bank account actually are banking with NMB’s 150 branches.

NMB has extensive branch coverage in 95 per cent of districts in the country of which a total of 60 per cent of these branches are in rural areas. No wonder in July, 2013, NMB was named “the Best Bank in Tanzania for 2013” by pre-eminent international finance magazine Euromoney.

CRDB is chasing closely NMB. The beauty of these two banks is that they are local banks and listed on the Dar es Salaam Stock Exchange (DSE) therefore its profits are distributed to wananchi.

On the other hand the most interesting bank is Bank M. After operating for slightly over half a decade, the bank poses a real challenge to the existing top ten banks. Bank M last year made to the top ten banks in term of profit share. But going by profitability making level it’s a matter of time it will hit to top five brackets in less than two years.

The bank surpassed its entire 2012 pre-tax profit of 12.4bn/- in the first nine months of 2013 after posting a pre-tax 13.17bn/-. The sixyear old bank in a quarter ending September 2013 increased its profit by 41 per cent to 4.27bn/- from 3bn/- recorded in similar period last year.

The bank’s Deputy Chief Executive Officer, Ms Jacqueline Woiso has attributed the bank’s success to deep understanding of the clients’ requirements and excellence in service delivery. “It is obvious that our bank is the most preferred by Tanzanian corporate clients,” she said.

Bank M’s total assets rose to 486bn/-, with total deposits growing by 16 per cent to 407.87bn/- compared to 349.68bn/- by the end of 2012. Maendeleo Bank becomes the first company to successfully raise capital at DSE’s second window - Enterprise Growth Market (EGM).

Its Initial Public Offer (IPO) was oversubscribed by 1.2 million shares to push it share price at market up by 20 per cent to 600/- from 500/-. The oversubscription was described as a testimony that start-up companies can now raise the required capital through the alternative window at the DSE.

The Premier, Mr Mizengo Pinda, said when launching the EGM that 9.2 million shares were sold during the IPO against 8.0 million the company had put on offer. “Allow me to congratulate the Maendeleo Bank for taking the initiative and for leading the way and enabling the bank to have a successful IPO,” Mr Pinda said amid cheers.

The PM was the chief guest. The PM said the financial sector borrowed a leaf from London’s Alternative Investment Market (AIMS) which has enabled multinational corporations to raise capital for expansion through the bourse.

“This way will also enable the ordinary Tanzanians to own stake in big companies and participate in big businesses and indeed trickle down effects will be felt in our economy,” Mr Pinda said.

The Maendeleo Bank Managing Director, Mr Ibrahim Mwangalaba, told the ‘Business Standard’ all shares were sold resulting to the oversubscription of 1.2 million shares, thus permitting the greenshoe option. “We had a green-shoe option and we utilise it by taking all addition shares instead of returning to the subscribers,” Mr Mwangalaba said.

Maendeleo Bank is a public limited liability company incorporated in 2011, with the Head-Office at Luther House in Dar es Salaam. The bank’s financial plan is projected to make profit in its third year of 288.6m/- and increase to 776.7m/- in its fourth year of operation.

The sad moment was realised by Stanbic Bank in the first nine months of 2013 it suffers a 15bn/- loss. The bank was said to buy a banking product made in Harvard and introduced it at the busy Kariakoo market -- despite protests from its local top management -- in the hope that it would boost its presence and profit.

Attracted by the multimillionshilling transactions at Kariakoo every day, Stanbic gave traders in the busy inner city 18bn/--worth of unsecured loans last year. But the deal went soar. To smooth the balance sheet and the bank performance, it received capital injection of 24bn/- from its parent, Standard Bank Group, on 31 July 2013.

Otherwise, the banking sector continued to improve the ability to withstand adverse economical shocks and is collectively in a much stronger capital position. The Bank of Tanzania (BoT) says in a recently report that the stress test results for the year ended December 2012, indicates that the banking sector was generally resilient to applied shocks.

The report conducted by the Directorate of Banking Supervision, covers credit, foreign exchange, interest rate and liquidity risks. It involved top ten banks which account for about 75 per cent of total assets of the sector.

“The Stress Test Results indicate that the sector is generally resilient to applied shocks and there will be no significant impact to the sector should the applied shocks materialize,” reads part of the report.

BoT’s Director Banking Supervision, Mr Agapiti Kobello, said the directorate will continue to ensure safety, soundness and stability of the banking sector to facilitate smooth implementation of the monetary policy.
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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