NMB to set up new subsidiaries
NMB Bank Limited has announced plans to expand the group by establishing new subsidiaries that will complement its traditional banking activities as part of their diversification strategy.
As part of the strategy, the group aims at unlocking value and building resilience on its current operating model where some operations outside banking are either units or sections within the bank.
In a statement accompanying the condensed reviewed results for the six months ended 30 June 2022, the bank could not however, give timelines as to when the restructuring exercise will begin.
“The Group has embarked on a new strategic thrust opening up new avenues for growth while strengthening the core business.
“We are in the process of broadening our group structure and this will include in due time, setting up new subsidiaries to complement our traditional banking activities,” said NMB.
The bank said all the areas they intend to diversify into are either units or sections within the banking operations as the strategy was aimed at building resilience on their current model and allow them to take advantage of opportunities in other related sectors.
NMB said the diversification strategy will be funded through organic capacity without going back to shareholders for a capital raise.
“The Group is continuing to forge ahead with digitisation initiatives which are expected to reduce costs while increasing efficiencies. We are building a Digital Bank which should be able to serve anyone within our borders.”
Under this diversification strategy, most notable is the bank’s property portfolio which has been strengthening during the past few years. Some of the properties include St Ives in Chinhoyi which has 137 fully serviced medium density stands, Brokedale in Bindura, 105 high density stands in Harare’s Amalinda to add to cluster homes in Marlborough and premium property in Borrowdale.
In Bulawayo there are 2 000 planned stands in Nkulumane as well as properties in Hopeville and a Riverside student accommodation facility.
In terms of support to corporates and Small to Medium Enterprises (SMEs), NMB said: “In the wake of current market developments, the Group is seized with arranging appropriate funding to meet the needs of our corporate and SME entities. Disbursements on the EUR12.5 million credit line from the European Investment Bank are underway. We are in discussions with potential funders for additional funding to support our exporting customers.”
To manage the impact of the volatility within the market, value preservation remains key for the group in terms of preserving capital.
“Our capital adequacy is already at 22.28 percent against a regulatory requirement of 12 percent. The focus for the bank has been on growing foreign currency denominated income both on interest and non-interest income. We are focusing on key export sectors such as horticulture, agriculture, mining and manufacturing.”
The group achieved operating income of ZW$10,4 billion up from ZW$5,7 billion achieved in the comparative period driven by a significant increase in interest income and continued growth in fees and commission income.