NMB Bank acting CEO and MD Benefit P WashayaEconomy
The tough economic conditions continue to present the biggest challenge to our business. The falling consumer demand and the high rate of company closures is putting pressure on borrowing customers. Largely due to the erratic rains, the 2014/15 agricultural season is projected to be below expectations. The likely impact of this will be reduced inflows from tobacco sales and more pressure on imports as government and the private sector move in to import maize to supplement local production.
In light of this, we continue to pursue a controlled growth, bearing in mind the risks emanating from the environment, in particular loan defaults.
Just to update on our Strategic Initiatives
Broader Market Segments
On top of retaining our traditional markets, we have now fully transitioned into other broader market segments & the transition has gone on well. We have seen an increase in branch traffic and accounts opened and resultantly our non-funded income is on the increase driven by transaction volumes. Our transition into the broader market segments will require a physical presence in some of the major cities and towns.
- Our model will be supported by low cost branches, agency banking and technology. We recently opened a branch in Kwekwe and next week we will open a digital banking centre downstairs. We are also looking at Masvingo and Chinhoyi.
- In the second half of the year, we will open a Centre of Excellence at Borrowdale Sam Levy to service our High Net Worth individuals.
Leveraging on our strong shareholder base, we are actively sourcing for credit lines to support the productive sectors of the economy. The bank has approved lines of credit of $66.5 million and during the quarter we accessed an additional $5 million and we are hoping to access another $7 million in the next 2 months. We are also in discussion with 4 potential providers of credit lines with a bias towards SMEs and we hope to access additional funding before the end of the year.
We submitted our capitalization plan to RBZ and I am happy to advise that the RBZ approved our plan. We are targeting to be a Tier 1 bank with a capital level of $100 million by 2020.
Our total loans and advances in the 4 months to 30 April 2015 went up by 11% and total deposits have gone up by 10%.
Our net interest income and non-interest income for the 4 months to 30 April 2015 have increased by 29% and 26% respectively compared to the same period last year. As a result, our operating income for the 4 months to 30 April 2015 at US$13.9 million has increased by 28% when compared to the same period last year. The growth in income has largely been driven by our strategic shift into the broader market segments.
Operating expenses for the 4 months increased by 2% mainly due to the expansion in capacity as we broadened our market catchment profile.
The cost to income ratio for the 4 months ended 30 April 2015 was 65% compared to 79% recorded in the 12 months ended 31 December 2014.
The NPL ratio has reduced to 16.5% at 30 April 2015 from 17.7% at 31 December 2014 due to aggressive collections and the growth in the loan and advances book and we are confident that we will achieve our target of 15% by 30 June 2015 and 10% by 31 December 2015.
Barring a significant deterioration in the economy, we expect a good performance in 2015.
I THANK YOU.