Business / Companies
NMB prioritises attaining minimum capital and raising more lines of credit
02 Apr 2013 at 06:17hrs | Views
NMBZ will be focusing on attaining the $50 million capital threshold as its medium term target, group CEO James Mushore told an analyst briefing on Thursday.
"Our medium term anchor is on ensuring we attain $50 million by June despite there being some talk of the minimum capital requirements deadline having been revised," Mushore said.
Mushore told the meeting that they will be aiming at raising more credit lines. "Country risk continues to limit access to lines of credit mainly from Europe. We will however continue to focus on accessing them," he declared.
"In light of the general elections to be held this year and liquidity challenges, we expect a slowdown in most sectors of the economy including the banking sector," the group CEO added as he highlighted that it was likely to impact its operations.
"The Memorandum of understanding (MOU) between the RBZ and banks will also adversely affect the profitability of the sector going forward. We are sadly concerned about the price controls in our sector." Mushore added.
Turning to F12 performance Mushore said; "... F12 was a good year as we managed to register a Return on Equity of 28% compared to 22% in prior year."
"We also secured $26 million line of credit. We drew down $20 million from Afreximbank of which $5 million will be channelled towards lease finance," he informed the briefing.
Mushore also disclosed that NMB has signed up $6 million from ZADT for communal farmers and wholesalers.
NMBZ during F12 launched international VISA debit and credit card. "Our credit card is created in such a way that you only need one card to access it everywhere. We believe that it is one of the first credit cards in Zimbabwe which is Visa granted."
Mushore also told the gathering that NMB launched SMS alerts where clients receive notifications on their mobile phones and also launched E-statements in October F12.
"One of the products we also launched where most clients are happy is the Zimra Straight through Processing (STP) in December F12."
Mushore also said; "...we managed to launch DSTV payments and completed the ATM upgrade programme."
"We will be focussing on launching mobile banking by end of April and will also launch our upgraded internet banking during the year," he added.
The group CFO Benson Ndachena told the meeting that attributable profits grew by 67% to $7.57million as he presented the financial highlights.
"Basic earnings per share were up 69% to 0.27c whilst the asset base of NMB grew by 35% to $226.53 million," Ndachena said.
"Gross loans also grew by 27% to $152.42 million whilst deposits registered a 37% growth to $191.42 million. Worth noting is the 27% growth in loans which is lower than the deposits growth. The low growth in lending was meant to maintain a decent level of liquidity.
"Loans to deposit ratio declined to 80% from 86% and our target however, is 78-79% target."
Ndachena told the meeting that equity grew by 32% to $30.94 million driven by increased capital as well as from retained earnings.
"Capital adequacy ratio rose to 15.5% compared with 14.37% in F11. The 15.5% compares favourably to the central banks minimum requirement of 12%," Ndachena added.
"Gross Non-Performing Loans-to-Loan and advances rose to 15.7% from 8.6% adversely affected by the rigorous review of exposures in Q4 in preparation for Basell 2 requirements," said Ndachena.
"Net Interest Income was 23% up at $17.49 million in line with the growth in loans whilst non funded income was 59% higher at $15.61 million. Commissions and fees grew by 33% within non funded income due to increased activity and various new products."
Net interest income accounted for 49% of total income compared to 56% in prior year whilst non funded income composition rose from 44% to 51% in F12. "...we continue to grow non funded income through increasing branches and we have also put in place measures to focus on throughput that is increasing volumes going forward," the group CFO told the meeting.
Ndachena told the meeting that operating expenses grew by 26%, but were lower than the growth in total income. "Staff costs were static at 40% in as far as their composition to total expenditure whilst Administration expenses composed 37% compared to 44%.
Cost to income ratio improved to 72% from 76% with Ndachena saying that they were targeting the ratio to go below 7% in the medium term and below 60% in the long run. He added; "...we will focus on increasing revenues as well as cost containment measures."
"Impairments provision grew by 74% to $3.98 million as we had to relook at our book and chose to be conservative. We also downgrade some accounts," he added.
"Impairments composed 16% compared to 12% of total expenses; the increase is explained by the progress we are making towards Basel 2."
Deposits were 37% higher with Ndachena telling the meeting that they will be focusing on growing current accounts and harnessing lines of credit. "We will focus on these areas as they will impact positively on our cost of funding and it's an area which we can manage."
Grade A loans stood at 75% compared to 81% whilst grade B loans stood at 10% down from 11% in prior year.
"The combined grade A and B loans accounted for 85% compared to 92% in prior year because of the higher NPLs," Ndachena noted.
NMB bank managing director Benefit Washaya told the meeting in response to a question that they were targeting NPL of 5% by end of F13 and expects the ratio to come down to 3% in 2014.
He also said that the MOU will have a lower impact on its operations compared to other players as they deal with high net worth clients rather than those who fall within the $800 bracket.
The group CFO also said the total impact of the MOU to their operations was around $3 million for the year but told the meeting that they had strategies put in place to cover the shortfall mainly focussing on volumes.
"Our medium term anchor is on ensuring we attain $50 million by June despite there being some talk of the minimum capital requirements deadline having been revised," Mushore said.
Mushore told the meeting that they will be aiming at raising more credit lines. "Country risk continues to limit access to lines of credit mainly from Europe. We will however continue to focus on accessing them," he declared.
"In light of the general elections to be held this year and liquidity challenges, we expect a slowdown in most sectors of the economy including the banking sector," the group CEO added as he highlighted that it was likely to impact its operations.
"The Memorandum of understanding (MOU) between the RBZ and banks will also adversely affect the profitability of the sector going forward. We are sadly concerned about the price controls in our sector." Mushore added.
Turning to F12 performance Mushore said; "... F12 was a good year as we managed to register a Return on Equity of 28% compared to 22% in prior year."
"We also secured $26 million line of credit. We drew down $20 million from Afreximbank of which $5 million will be channelled towards lease finance," he informed the briefing.
Mushore also disclosed that NMB has signed up $6 million from ZADT for communal farmers and wholesalers.
NMBZ during F12 launched international VISA debit and credit card. "Our credit card is created in such a way that you only need one card to access it everywhere. We believe that it is one of the first credit cards in Zimbabwe which is Visa granted."
Mushore also told the gathering that NMB launched SMS alerts where clients receive notifications on their mobile phones and also launched E-statements in October F12.
"One of the products we also launched where most clients are happy is the Zimra Straight through Processing (STP) in December F12."
Mushore also said; "...we managed to launch DSTV payments and completed the ATM upgrade programme."
"We will be focussing on launching mobile banking by end of April and will also launch our upgraded internet banking during the year," he added.
The group CFO Benson Ndachena told the meeting that attributable profits grew by 67% to $7.57million as he presented the financial highlights.
"Basic earnings per share were up 69% to 0.27c whilst the asset base of NMB grew by 35% to $226.53 million," Ndachena said.
"Gross loans also grew by 27% to $152.42 million whilst deposits registered a 37% growth to $191.42 million. Worth noting is the 27% growth in loans which is lower than the deposits growth. The low growth in lending was meant to maintain a decent level of liquidity.
"Loans to deposit ratio declined to 80% from 86% and our target however, is 78-79% target."
Ndachena told the meeting that equity grew by 32% to $30.94 million driven by increased capital as well as from retained earnings.
"Capital adequacy ratio rose to 15.5% compared with 14.37% in F11. The 15.5% compares favourably to the central banks minimum requirement of 12%," Ndachena added.
"Gross Non-Performing Loans-to-Loan and advances rose to 15.7% from 8.6% adversely affected by the rigorous review of exposures in Q4 in preparation for Basell 2 requirements," said Ndachena.
"Net Interest Income was 23% up at $17.49 million in line with the growth in loans whilst non funded income was 59% higher at $15.61 million. Commissions and fees grew by 33% within non funded income due to increased activity and various new products."
Net interest income accounted for 49% of total income compared to 56% in prior year whilst non funded income composition rose from 44% to 51% in F12. "...we continue to grow non funded income through increasing branches and we have also put in place measures to focus on throughput that is increasing volumes going forward," the group CFO told the meeting.
Ndachena told the meeting that operating expenses grew by 26%, but were lower than the growth in total income. "Staff costs were static at 40% in as far as their composition to total expenditure whilst Administration expenses composed 37% compared to 44%.
Cost to income ratio improved to 72% from 76% with Ndachena saying that they were targeting the ratio to go below 7% in the medium term and below 60% in the long run. He added; "...we will focus on increasing revenues as well as cost containment measures."
"Impairments provision grew by 74% to $3.98 million as we had to relook at our book and chose to be conservative. We also downgrade some accounts," he added.
"Impairments composed 16% compared to 12% of total expenses; the increase is explained by the progress we are making towards Basel 2."
Deposits were 37% higher with Ndachena telling the meeting that they will be focusing on growing current accounts and harnessing lines of credit. "We will focus on these areas as they will impact positively on our cost of funding and it's an area which we can manage."
Grade A loans stood at 75% compared to 81% whilst grade B loans stood at 10% down from 11% in prior year.
"The combined grade A and B loans accounted for 85% compared to 92% in prior year because of the higher NPLs," Ndachena noted.
NMB bank managing director Benefit Washaya told the meeting in response to a question that they were targeting NPL of 5% by end of F13 and expects the ratio to come down to 3% in 2014.
He also said that the MOU will have a lower impact on its operations compared to other players as they deal with high net worth clients rather than those who fall within the $800 bracket.
The group CFO also said the total impact of the MOU to their operations was around $3 million for the year but told the meeting that they had strategies put in place to cover the shortfall mainly focussing on volumes.
Source - zfn
