- The group is leveraging on technology specifically for the Bank
- This is expected to increase efficiency and cut costs
- PAT soared to ZWL 194 billion from ZWL 8 billion
Harare- NMB Holdings Limited has emphasised its strategic reliance on digitalisation initiatives aimed at achieving cost reductions and operational efficiencies. This focus was highlighted in the company's half-year financial report for the Half-Year (HY) ended 30 June 2023 where the Group’s profit after tax soared to ZWL 194 billion from ZWL 8 billion in the comparative 2022 HY period.
The half year financials specifically noted that NMB Bank Limited, the primary subsidiary of NMB Holdings Limited, has enhanced its core product portfolio through the implementation of a virtual card application platform and an online query resolution platform.
By introducing a virtual card application platform, the company's subsidiary, NMB Bank Limited, eliminates the need for paper in the card application process. This moves streamlines operations, reduces administrative burdens, and cuts costs associated with printing, storage, and handling paper documents.
The implementation of an online query resolution platform simplifies communication between clients and the bank. Clients can lodge their queries through this platform, eliminating the need for time-consuming manual processes. Timely resolution of inquiries is assured, which enhances efficiency and improves customer satisfaction.
These digitalisation initiatives automate routine tasks, optimize resource allocation, and improve data management, leading to enhanced productivity and cost savings for NMB Holdings Limited.
NMB Bank Limited, the flagship asset, maintained a strong capital position, demonstrating its financial stability. The bank's total capital adequacy ratio stood at 27.79%. This ratio reflected the bank's ability to meet regulatory requirements and indicates a solid capital base to support its operations and absorb potential risks.
During the period under review, risk-weighted assets experienced a significant increase, reaching ZWL 1.2 trillion. This represented a substantial growth of 675% compared to the levels recorded in December 2022. The expansion of risk-weighted assets highlighted the bank's growth, increased market presence, and expanded lending activities.
According to Benedict Chikwanha, the Group’s chairperson, NMB Bank Limited is actively engaged in discussions with various providers of debt financing. These discussions are said to be currently at different stages of completion, indicating the bank's commitment to exploring additional funding sources.
It is anticipated that draw-downs from these financing arrangements will commence in the third quarter of 2023. These strategic financing partnerships will further enhance the bank's capital position and provide necessary funding for its operations, expansion, and strategic initiatives.
Meanwhile, the Group accomplished a significant achievement in its operating income, which surged from ZWL 51 billion in the comparative period to ZWL 283 billion. This substantial increase highlights the Group's remarkable progress and financial growth.
“This was driven by a significant increase in interest income and continued growth in fees and commission income,” Benedict Chikwanha, the Group’s chairperson said in a statement accompanying the half-year financials.
Total assets experienced a substantial surge, rising by 145% to reach ZWL 1 trillion by the end of the period. This growth was largely attributed to factors such as inflationary pressures and fluctuations in the exchange rate. The Group's ability to adapt to these economic conditions and effectively manage its assets has contributed to this significant increase in total assets.
Loans and advances reached ZWL 363 billion, indicating a significant increase of 151%.
Chikwanha highlighted that the Group maintained a measured approach to risk management, as evidenced by its strong asset quality.
The non-performing loan (NPL) ratio stood at 0.57%, a notable improvement from 1.09% as of December 31, 2022. This demonstrates the Group's effective risk mitigation strategies and prudent lending practices.
The Group reported a reversal in expected credit losses amounting to ZWL 906 million during the period under review. This highlights the success of NMB Holdings in managing credit risk and maintaining a healthy loan portfolio.
Deposits and other liabilities also experienced significant growth, increasing by 109% from December 2022 levels. This was courtesy of the impact of exchange rate depreciation on USD deposits.
“NMB Holdings continues to adapt to market conditions and effectively manage its liabilities, contributing to its overall financial performance.”
During the period under review, there was a significant growth of 109% in deposits and other liabilities compared to December 2022 levels. This growth was due to the impact of exchange rate depreciation on USD deposits. The weakening of the exchange rate resulted in higher valuation of foreign currency deposits when converted to the local currency.
To ensure accurate financial reporting, the spot inter-bank mid rate was utilised for converting foreign currency-denominated transactions, while the closing inter-bank mid rate was applied for determining the closing balances.
Going forward, Chikwanha said the Group remains dedicated to exploring opportunities for revenue growth and value preservation as it continues to pursue its strategic objectives. This commitment reflects the Group's proactive approach to identifying and capitalising on favourable market conditions, emerging trends, and innovative business strategies.
By continuously seeking revenue growth opportunities, the Group aims to expand its market presence, increase its customer base, and diversify its revenue streams. This may involve exploring new markets, introducing new products or services, or leveraging technological advancements to enhance operational efficiency and customer experience.
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