NBS records its first profit since inception

Harare – National Building Society has recorded its first profit since inception in 2016 overcoming years of losses.

The building society was created by the NSSA as way of alleviating housing shortages in Zimbabwe. The country has housing backlog estimated at 1.3 million houses. Under its 5 year plan dubbed the ZIMASSET govt also undertook to scale up housing financing and development.

Against this background the National Building Society recorded a profit of $0.6 million in the half year period to June 2018 which was ahead of its planned break-even period which gives confidence for a greater future.

Board Chairman Stanley Kudenga said as a business they have gone through some strategic realignment driven by technology which he considers to be another step in the right direction towards becoming the housing finance service provider of choice in Zimbabwe.

“In the past few months management had made some telling strategic decisions in cost containment as well as the introduction of new products and services that include business banking, integration to mobile to mobile money services, the hospital cash plan, retail point of sale solutions and are also on the verge of introducing very attractive diaspora mortgage and international remittance propositions all of which are poised to enhance our mortgage finance product and customer experience,” he said.

Kudenga said in the period under review, all the key financial indicators were positive evidence of growth and the beginning of a return to the shareholders.

Total income of $5.1 million was realised in the first half of the year registering a growth of 59.3 percent from $3.2 million realised in the same period last year.

Growth in income was spurred by growth of 69 percent in net interest income from $2.2 million to $3.2 million buttressed by the growth of 8 percent in lending assets and the 71 percent in investment securities.

Kudenga also said management put measures in place which significantly reduced cost of funds to enhance the net interest margin and the resultant earnings.

He also said despite the growth income, the adoption of the International Financial Reporting Standard, IFRS 9: Financial Instruments, had a dent on profitability as was envisaged in the entire market.

“This among other factors saw a significant increase in loan impairment charges as compared to the same period last year.”

Growth in customer accounts, products and services resulted in a 74 percent increase in non-funded income.

He said cost containment was a key strategy as there was only an 18 percent growth in costs as the business expanded to meet the needs of its customer base.

Total assets grew by 10 percent which was mainly channelled into the investment securities and the loan book.

“Non-performing loans ratio, a key indicator of our asset quality, recorded a marginal decrease from 2.24 percent as at December 2017to 1.81 percent as at June 2018 as the Society progressed strategies to manage the asset quality.

“The growth in the balance sheet was largely propelled by the 23 percent growth in deposits from $55 million in December 2017 to $68 million as at June 2018.”

Going forward, Kudenga said their focus remains on the provision of affordable housing finance solutions to millions of Zimbabweans who need and the Bank strongly believe that the foundation to achieve that has been properly set out.

In its election manifesto Zanu PF which emerged victorious, pledged to ensure the construction of over a million houses over the next 5 years. It is therefore likely that the profitability momentum at the bank will be sustained into the full year.

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