NMB in process of draw­ing down $20m line of credit

Chronicle (Zimbabwe) - - Business - Bianca Mlilo Busi­ness Re­porter

NMBZ Hold­ings, the par­ent com­pany of NMB Bank is in the process of draw­ing down a $20 mil­lion line of credit and has ap­plied for an ad­di­tional $15 mil­lion fa­cil­ity from offshore.

The group’s pub­lic re­la­tions con­sul­tancy in­di­cated that NMBZ chair­man, Mr Bene­dict Chik­wanha, in a state­ment ac­com­pa­ny­ing the firm’s unau­dited ac­counts for the hal­fyear ended June 30, 2016 said:

“The bank­ing sub­sidiary con­tin­ued to make in­roads into the broader mar­ket seg­ments, thereby lay­ing a foun­da­tion for a strate­gic shift to­wards small to medium-sized en­ter­prises.

“He said the group con­tin­ued to source more in­ter­na­tional lines of credit and was in the process of draw­ing down a $20 mil­lion line of credit and fi­nal­is­ing the le­gal doc­u­men­ta­tion for an ap­proved fur­ther $15 mil­lion fa­cil­ity.”

The con­sul­tancy said Mr Chik­wanha pointed out that the de­ci­sion by two of NMBZ’s share­hold­ers, FMO of the Nether­lands and Nor­fund of Nor­way, to join forces with Rabobank of the Nether­lands to pool in­vest­ments in fi­nan­cial in­sti­tu­tions across Africa through a new in­vest­ment ve­hi­cle, Arise, would en­able NMBZ to ben­e­fit from a wide net­work of other African banks that are part of the new part­ner­ship.

It is be­lieved this would as­sist NMBZ in its quest for the much-needed lines of credit to serve small and medium en­ter­prises, the ru­ral sec­tor and clients who pre­vi­ously did not have ac­cess to fi­nan­cial ser­vices.

Arise will have a pres­ence in 20 African coun­tries. It would al­lo­cate cap­i­tal, Mr Chik­wanha said, to sup­port cur­rent in­vestee com­pa­nies, as well as new mi­nor­ity in­vest­ments in the mar­ket.

Mr Chik­wanha said the bank’s Tier One cap­i­tal was $44,3 mil­lion as at June 30, 2016.

“We’ll con­tinue to put strate­gies in place to work to­wards meet­ing the re­quired min­i­mum reg­u­la­tory cap­i­tal of $100 mil­lion for a Tier One bank by 31 De­cem­ber 2020, sub­ject to im­prove­ments in the op­er­at­ing en­vi­ron­ment as fore­cast in our cap­i­tal­i­sa­tion plan sub­mit­ted to and ap­proved by the cen­tral bank,” he was quoted as say­ing.

Dur­ing the pe­riod un­der re­view, the group posted a $3,6 mil­lion profit be­fore tax re­sult­ing in an at­trib­ut­able profit of $2, 6 mil­lion.

The at­trib­ut­able profit was, how­ever, 17 per­cent less than that for the same pe­riod last year, which was $3,1 mil­lion, a re­flec­tion of the dif­fi­cult op­er­at­ing en­vi­ron­ment.

To­tal in­come for the pe­riod de­creased by nine per­cent to $26 mil­lion com­pared to $28, 8 mil­lion in the first six months of 2015.

“The drop in in­come was par­tially cush­ioned by a drop in op­er­at­ing ex­penses at $13,5 mil­lion, down by four per­cent com­pared to $14 mil­lion the pre­vi­ous year, as a re­sult of cost ra­tio­nal­i­sa­tion and con­tain­ment mea­sures.

“In­ter­est in­come was al­most flat, at $17,5 mil­lion com­pared to the $17,6 mil­lion in 2015. A big­ger drop was recorded on the fee and com­mis­sion in­come, down from $10,6 mil­lion in 2015 to $7,6 mil­lion,” said the con­sul­tancy.

It said the drop was a com­bi­na­tion of the con­trols on bank charges and a drop in trans­ac­tional vol­umes due to the cash and nos­tro chal­lenges be­sieg­ing the bank­ing sec­tor.

The bank has also been on a drive to mi­grate cus­tomers to the less ex­pen­sive elec­tronic de­liv­ery chan­nels.

Net for­eign ex­change gains, which in the first six months of 2015 had amounted to $609 218, came to $353 209.

Share­holder funds in­creased by five per­cent from $50,5 mil­lion as at De­cem­ber 31, 2015 to $53,2 mil­lion, as a re­sult of the at­trib­ut­able profit recorded for the half-year.

The bank’s cap­i­tal ad­e­quacy ra­tio at 20,8 per­cent was sub­stan­tially higher than the Re­serve Bank of Zim­babwe’s min­i­mum re­quire­ment of 12 per­cent, while its liq­uid­ity ra­tio, at 32,5 per­cent, was again above the Re­serve Bank’s min­i­mum re­quire­ment of 30 per­cent.-@Bian­caMlilo

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