HARARE- NMB bank has issued a profit warning ahead of its half year results release advising shareholders to take caution when dealing in its securities.
The bank is listed on the ZSE and is due to release its half year results for the period ended June 2019. According to the ZSE listings requirements, all listed companies are expected to warn shareholders once they establish that there is a reasonable expectation of profit rising above a certain percentage threshold from the previous year.
Accordingly NMB estimates that its basic earnings for the half year will likely come in at 14.55c per share from 2.34c which is a growth of 522%.
The company said the expected increase in the basic earnings per share is largely due to investment properties fair value adjustments and translation of foreign currency balances arising out of the change in functional and reporting currency from United States Dollars to the new local currency (ZWL).
Due to the change in currency, properties, which form a fair amount of total assets, is subject to revaluations from the previous USD regime.
However the challenge is that 2018 values were estimated in ZW$ terms as at 2019 without adjusting for currency conversion.
The implication is that the adjustment arising from revaluations as at 2019 does not equally adjust the 2018 figures which were in essence USD. This phenomena likely result in higher revaluations thus impacting profitability. Another bank, FCB, also issued a profit warning last week.
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