- Operating income plummeted to ZWG 688 million from ZWG 1.14 billion
- NPL ratio increased to 1.2% from 1.1% in December 2023
- Total assets declined to ZWG 3.5 billion from ZWG 3.9 billion
- New funding from British International Investments and others is expected to drive growth in H2
Harare- NMB Holdings Limited's non-performing loan (NPL) ratio rose to 1.2% in the first half of 2024, up from 1.1% at the end of 2023.
This increase, coupled with the recalibration of the local currency book following the change of currency and exchange rate deterioration in the first quarter, took a toll on the bank's profitability.
An elevated NPL ratio indicates higher credit risk and potential losses.
To address this, NMB Bank can tighten lending criteria, enhance credit monitoring and risk assessment, implement recovery measures for distressed loans, and diversify its loan portfolio to reduce exposure.
As a result, NMB Bank's profitability slumped significantly, with operating income plummeting to ZWG 688 million from ZWG 1.14 billion in the comparative period.
Fees and commission income remained stagnant, while net interest income dropped substantially from ZWG 126 million to ZWG 74 million.
“The reduction in interest income largely reflects the recalibration of the local currency loan book to the new ZWG currency and attendant interest rates,” the bank’s chairperson, Pearson Gowero said in a statement accompanying the financials.
As a result, Profit After Tax (PAT) plummeted to ZWG 71,486, down sharply from ZWG784,036 in the comparative period.
The bank's financial position also reflected the challenging operating environment.
Total assets decreased to ZWG 3.5 billion from ZWG 3.9 billion, primarily due to a decline in the value of investment properties.
“The first quarter of 2024 was characterized by volatility of the exchange rate and notable deterioration of the local currency.”
Loans and advances stood at ZWG 1.1 billion as of June 30, 2024, down from ZWG 1.2 billion at the end of 2023.
However, the bank secured new funding from various sources, including US$10 million from British International Investments.
The new funding will support economic growth and financial inclusion by increasing access to credit for underserved sectors. This aligns with NMB Bank's commitment to empowering women. Notably, 43% of consumption loans and 28% of micro-enterprise loans were granted to women and women-owned entities, respectively.
Despite the challenges, NMB Bank maintained a strong liquidity position, consistently exceeding the statutory minimum requirement of 30%.
NMB Bank's half-year results reflect the broader challenges facing Zimbabwe's banking sector, which has been grappling with currency fluctuations, inflation, and economic uncertainty.
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