*Banking sector posted a balance sheet growth of 24% year on year reaching TZS 38.7 Trillion in total assets
BY SPECIAL REPORTER
THE past one year of President Samia Suluhu Hassan’s leadership is an epitome of strong leadership and positive macro-economic reforms, which has re-stirred economic reforms in Tanzania.
During the period, the banking sector in Tanzania has remained solid, sound, stable, and profitable greatly benefiting from the conducive macro-economic environment.The banking sector posted a balance sheet growth of 24% year on year reaching TZS 38.7 Trillion in total assets (A record sectoral balance sheet).
From the profitability perspective, following the strong revenue momentum and improved portfolio quality, the banking sector recorded a record profit before Tax (PBT) of TZS 1.04 Trillion.
Being the market leader, NMB Bank significantly benefited from the positive operating environment spearheaded by Her Excellency President Samia Suluhu’s administration.
The bank cemented its market leadership position by posting industry record PAT of TZS 289 Billion, which is a 40% growth YoY.
This performance has been attributed to favorable micro-economic fundamentals and NMB’s focus on delivering the best financial solutions to customers and community at large.
Reflecting on one year of Her Excellence president Samia Suluhu’s administration, the NMB Bank Chief Executive Officer Ms Ruth Zaipuna had this to say on how NMB Bank has benefited from President Samia’s administration.
Her Excellency President Samia Suluhu Hassan is clocking one year in office this month. In your honest opinion, how has NMB Bank Plc fared during the first year of Her Excellency President Samia Suluhu Hassan’s presidency?
The first year of H.E President Samia Suluhu Hassan’s presidency, is an embodiment of exemplary leadership, and renewed optimism following the Global Covid-19 outbreak.
The 6th phase government policy responses coupled with inherently strong macro-economic fundamentals have indeed cushioned the Tanzanian economy from adverse impact of Covid-19 in 2021.
As a result, compared to its peers within the region, in her first year in office, Tanzania experienced relatively stronger economic growth.
Being the leading bank in Tanzania, NMB Bank is closely linked to the Tanzanian economy.
The ongoing macro upswing is directly reflected in our balance sheet growth and structural tailwinds have provided a good backdrop for our growth momentum.
In turn during the first year of Her Excellence President Samia’s reign, the bank delivered industry record-breaking performance, delivering profit before tax of TZS 420 bln (2020: TZS 301 bln), up 41 percent YoY.The strong growth in profitability is on the back of solid operating income growth of 18 percent YoY – both from net-interest income growth of 19 percent YoY due to increase in loans and advances and increase in non-funded income by 15 percent YoY reflecting increased customer activities on the bank’s channels.
By and large, our strong performance in 2021, is attributed to the conducive operating environment in Tanzania, that fosters, private sector-credit growth, and hence providing requisite impetus for strong balance sheet and income momentum.
Containment of Covid-19 outbreak through adoption of necessary measures including rollout of vaccination program in Tanzania, has also sustained private side consumption, and therefore stimulating client activities, and personal loans growth-further boosting our total revenue growth momentum.
The market has also been liquid as the government continued to spend on the mega projects.
Our customer deposits grew by 25 percent YoY to TZS 6.4 trillion at the end of December 2021 compared to TZS 5.3 trillion in December 2020.
Therefore, the improving macro-economic landscape under Her Excellence President Samia, provides NMB Bank and the sector at large with a positive medium-term outlook. Indeed, these are exciting times for the NMB Bank and the sector at large.
Apart from execution of NMB Bank’s strategic plan, what are the major policy factors that may have contributed to such performance during the past one year?
In the past one year, NMB Bank and the Tanzanian Banking Sector at large remained sound and well capitalized.
During the period NMB Bank posted strong performance results and remained the market leader, with profitability market share of 40 percent.
The Banking sector also posted strong profitability results, with large banks sharing a record net profit of TZS 715 Bn.
The strong Industry performance was driven by solid income growth and a decline in impairment provisions. Digital banking services continue to expand driven by increasing financial inclusion and mobile penetration rate.
In the wake of the Covid-19 pandemic, BOT continued to take a series of policy measures to bolster the banking sector, including cutting down the discount rate, reducing the statutory minimum reserves (SMR) requirement, and eased loans restructuring to support the increase in market liquidity and to spur private sector credit growth.
Therefore, the resilience and growth of the sector can largely be attributed to have been supported by monetary policy, prudential and regulatory measures undertaken by the Bank of Tanzania towards improving the business environment and efficiency in financial services delivery.
As one of the aggressive market players in the banking sector, we leveraged-off some of these accommodative measures to ensure that we continue to support our customers during the pandemic.
NMB Bank and the sector at large, is expected to continue with the growth trajectory supported by the on-going implementation of accommodative policy measures which are aimed at sustaining long-term economic growth and increased credit to the private sector.
NMB Bank recently announced the issuance of loans to the agricultural sector at an interest rate not exceeding 10 percent. Is this in any way linked to the recent policy guideline?
In recognition of our responsibilities as a vehicle for sustainable social-economic prosperity in Tanzania, the bank has created a long-history of supporting growth of agriculture and agri-related sectors (being the mainstay of most Tanzanians) and continues to play a big role in supporting the development of the sectors through various products and services.
Our focus and contribution in the agriculture sector continued during the year, whereby in October 2021 we were the first bank to set aside a special agriculture fund of TZS 100 bln in loans at interest rates not exceeding 10 percent per annum to support players along different stages of the agri-value chain, including farmers, input providers, service providers, entrepreneurs, and small and medium processors.The bank has taken this initiative to further improve access to credit to bridge the financing gap, drive sustainable growth of the sectors, boost productivity along the agri-value chains, and stimulate job creation.
Since its inception in 1997, NMB Bank has played a significant role in the Country’s economic development agenda and continues to support the country’s growth aspirations.
It has been pivotal in supporting the country’s key economic sectors, as well as purposeful driving the financial inclusion agenda.
The bank remains committed to supporting the Government’s efforts geared towards driving growth of the agriculture sectors and the country’s overall social-economic development agenda by widening access to financing.
The TZS 100 billion agriculture fund reaffirms NMB Bank’s commitment to fulfill its goal of being at the forefront in the socio-economic development of Tanzania.
Should the current conducive environment be maintained, where do you see NMB Bank Plc in the coming five years?
Looking to the future, NMB Bank is optimistic about the journey that lays ahead and the bank will continue to focus on unlocking the market potential and utilizing its strong fundamentals to create more value and shared prosperity for its stakeholders.
NMB Bank Chief Executive Officer, Ms Ruth Zaipuna.
The execution of our Medium-Term Plan (MTP) is our key priority. We will also continue leveraging on our solid foundations, including a strong balance sheet, healthy capital levels, branch network and our digital capabilities to further sustain our business ambitions.
We will continue to drive financial inclusion agenda and provide first class financial solution to our customers.
We remain committed to delivering strong returns to our shareholders and we look forward to further serving our esteemed customers and supporting the communities we serve as we progress along the second half of the year 2022 and beyond.