- Total income up 203% in the quarter to ZWL1.3 trillion
- Loan portfolio of ZWL1.7 trillion, with 92% denominated in US$
- Deposits of ZWL1.4 trillion, with 87% denominated in US$
- Non-performing loan ratio improved to 0.73% from 1.11% in December 2023
Harare- After securing a US$15 million loan facility from the African Development Bank, NMB Bank Zimbabwe Limited has reported strong financial performance largely constituting high total income, an expanded loan portfolio, and significant deposit growth – with over 85% of deposits and loans denominated in US dollars.
The bank's financial performance during the quarter was impressive, with the group generating operating income of ZWL1.3 trillion, a 203% increase from the ZWL429 billion recorded in the same period the previous year.
This strong performance was attributed to increased transaction volumes, a diversified product offering, and a robust balance sheet composed of USD-denominated assets that drove foreign currency earnings.
Loans and advances amounted to ZWL1.7 trillion at the end of the quarter, with 92% denominated in USD, while deposits totaled ZWL1.4 trillion, with 87% denominated in USD. The group reported a favorable non-performing loan (NPL) ratio of 0.73%, down from 1.11% in December 2023.
The high proportion of USD-denominated loans and deposits, along with the low non-performing loan (NPL) ratio, suggests several positive implications for NMB Bank. The high level of USD-denominated assets and liabilities indicates that NMB Bank has effectively managed its currency risk exposure. This helps the bank mitigate the impact of exchange rate fluctuations and economic instability in the local currency.
Further, the USD-denominated loans and deposits allow NMB Bank to generate foreign currency earnings, which are typically more stable and valuable than local currency earnings. This can enhance the bank's profitability and competitive position in the market.
On the other hand, the low NPL ratio of 0.73%, down from 1.11% in December 2023, suggests that NMB Bank has effectively managed its credit risk and maintained a high-quality loan portfolio. This indicates strong risk management practices and a resilient overall financial position.
The Bank secured a US$15 million Trade Finance Transaction Guarantee Facility from the African Development Bank. The signing took place on 7 March 2024 at NMB Bank Headquarters in Harare. The African Development Bank’s board approved the project in November 2023.
The facility offered up to 100% coverage to confirming Banks, effectively mitigating non-payment risks linked to NMB Bank's trade transactions on a per-transaction basis.
This stella performance also came at a time NMB Bank has successfully migrated to its new core banking system on April 2, 2024, enhancing its digital transformation on both the front-end and back-end systems.
NMB became the first bank to implement this new core banking system, followed by AFC Bank this year as well.
"The Bank reviewed and revamped its policies and procedures to embed sustainability standards," the bank stated in its latest trading update for the first quarter of the 2024 fiscal year.
The bank's capital adequacy ratio stood at 28.17%, well above the regulatory minimum of 12%. "The Group and the Bank (regulated subsidiary) are well capitalised, and the Directors continue to ensure that the capital levels remain adequate as prescribed and in line with the business requirements," the bank stated.
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