NMB earnings slid on investment properties fair value adjustments and currency devaluation

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  • Total income declined by 3% to ZWL$1.2bn
  • Gross loans and advances increased by 3% to ZWL1.439bn
  • The banking subsidiary is enhancing digital offerings to provide convenience in transacting

Harare- NMB Holdings’ basic earnings per share of 170.53 cents in the half year period to 30 June 2020 fell by 2% compared to 174.77 cents in the prior year. This translated into the headline losses per share of 1.28 cents, a 96% decline from EPS of 35.82 cents in the prior year.

In a statement accompanying the financials, Group chairperson Benedict Chikwanha said, “The significant differential between the basic and headline losses per share is largely due to investment properties fair value adjustments and gains arising from the translation of foreign currency balances due to the depreciation of the Zimbabwe dollar against the USD and other major currencies.”

Total income during the period under review declined by 3% to ZWL$1.2 billion from ZWL$ 1.3 billion recorded in the same period last year largely attributed to a reduction in net interest income due to sub-optimal market interest rates.

Net interest income for the period under review came in at ZWL$166.8 million, down 16% from ZWL$199.4 million.

“The Group recorded an impairment credit loss on financial assets measured at amortised cost amounting to ZWL25 219 962 compared to an expected credit loss reversal of ZWL7 896 544 during the six months ended 30 June 2019 due to growth in the banking subsidiary’s financial assets,” said Mr Chikwanha.

Meanwhile, the Group’s flagship asset, NMB Bank managed to reduce non-performing loans (NPLs) which saw the NPL ratio reduce from 1.37% as at December 2019 to 0.81% as at 30 June 2020.

“The drop in the NPL ratio is largely due to aggressive collections and stricter credit underwriting standards,” said Mr Chikwanha.

Gross loans and advances increased by 3% from ZWL1.396 billion as at 31 December 2019 to ZWL1.439 billion as at 30 June 2020 largely attributed to a slowdown in advances during the period under review in view of the prevailing economic conditions.

The Group’s total assets increased by 21% from ZWL5.473 billion as at 31 December 2019 to ZWL6.936 billion as at 30 June 2020 mainly due to a 47% increase in property and equipment, a 126% increase in investment properties and a 6% increase in cash and cash equivalents.

Commenting on the outlook and the impact of COVID-19 on operations, Mr Chikwanha said, “Amongst several initiatives, we have enabled remote working for staff, accelerated the Bank’s digital transformation drive and we continue to encourage our customers to fully utilize the Bank’s enhanced digital banking platforms thereby minimizing the need for them to physically visit the Bank’s banking halls and offices.

“As aforementioned, the banking subsidiary has continued to enhance its digital offerings and some digital platforms will be launched shortly which will provide customers with simplicity and convenience in transacting and digitally meet a greater part of their information requirements”, he added

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