NMB Bank profit sligthly up in Q1

The National Microfinance Bank (NMB) says its net profit has slowed down as the result of reviewing lending procedures to maintain low defaulting ratio, as opposed to claims that the strategy was part of competition.

NMB, the biggest bank in term of profitability, said despite a profit slightly increase by 0.5 per cent to 38.36bn/- during the first quarter of 2015, the firm’s balance sheet is very healthy.

NMB Chief Financial Officer, Mr Waziri Barnabas, said though its profitability in the quarter one slowed down in a quarterly basis the balance sheet grew substantially to 4tri/-, which is the largest in the banking industry.

“The slowdown does not relate to competition on the ground, but a result of consolidated and risk management, as well as prudent lending,” Mr Barnabas said.

The CFO said the bank want to be predictable, consistent and sustainable without any slips... but things will be okay in the remaining quarters.”

The ‘Daily News’ wanted to know if NMB profit was the results of increased competition from its nearest rival CRDB Bank, which recently won a huge chunk of government business.

CRDB claims to have taken 50 per cent share of the government business this year, which made CRDB group net profit jump up by 56 per cent to 37.84bn/-.

However, NMB’s Chief Risk Officer Tom Borghols said they still maintain a good chunk of government business but focus on prudent lending to maintain low NPLs.

“We put a break on lending toward the end of last year (2014), which affects our revenues...we are now lending and your will see better results for the rest of the year,” Mr Borghols said.

NMB, NPLs ratio is among the lowest in the industry that almost stagnated at 2.6 per cent. The industry benchmark is 5.0 per cent. “Profit (slowdown) has no link with government business.

No relation at all. It was our internal decision to slow lending analysing some risks,” Mr Borghols said. Dhow Financials Chief Executive Officer, Prof Mohamed Warsame said NMB and CRDB previously took different lanes where the former a retail bank and the later a corporate but today both venture into the same path.

“Today if you analyse closely their businesses NMB is venturing also into corporate and CRDB enters retail business as well,” Prof Warsame, a financial analyst, said.

The Prof said CRDB is a biggest bank in terms of balance sheet-deposits, loans, assets-while NMB is the largest in terms of profitability-pushed by retail businesses.

“The two banks, (at the moment), control almost 50 per cent of total banking sector profit,” Prof Warsame said, “These are two big competitors.”

Analysts have it that, NMB with some 160 branches while targeting 250 bank agents, and CDRB over 120 branches and over 1600 agent banking units, are likely to dominate the sector top two seats in many years to come.
Source: Daily News, reported from Dar es Salaam,Tanzania

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