RESEARCHERS at Inter Horizon Securities (IH) have projected that listed financial services group NMB Bank will remain in a profitable position during the financial year (FY) 2023 with a net income of $47,52 billion.
For the FY2022, the group reported revenue of $43,90 billion, up 439% year-on-year.
“NMB has also launched a microfinance division which is primed to offer competitive rates in the market and cater to the specialised sub-segment. In our view, these are encouraging developments from management to grow the company’s topline in a highly regulated industry,” IH said in their analysis of the bank’s financial results for the year 2022.
“On this basis, we forecast a total income of $91,12 billion weighted towards non-funded income. Despite a fluid policy environment, we anticipate the group to remain in a profitable position to FY23 with net income of $47,52 billion, signifying a growth of 87% relative to 2022.
During the first half of 2022, the macro-economic environment was characterised by increasing inflation and a deteriorating exchange rate.
These were, however, reigned in after the authorities put in place a raft of measures to contain money supply and curb speculative behaviour in the economy.
In the year under review, the bank’s subsidiary continued to make inroads into new markets and cement existing relationships.
The bank entered an agency banking relationship with Zimpost to complement the 13 existing branches, thereby increasing its geographical reach to a total of 119 branches and agencies.
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NMB grew its loan book by 382% year-on-year to $46,29 billion.
The agriculture sector composed 26% of NMB’s loan book whilst exposure to individuals decreased from 29% in 2021 to 18% in the year under review.
The bank appears to have maintained a high-quality loan book with non-performing loans ratio decreasing from 1,39% as at FY21 to 1,09% in the current period.
The banking subsidiary had two new offshore funding agreements during the year — a European Investment Bank facility of EUR12,5 million and a Trade and Development Bank line of US$10 million.
These balances were mainly deployed to export facing businesses as a credit risk strategy.
Fee and commission income came in at $10,71 billion driven by digital banking fees, an area in which the bank has built key competencies.
The mobile banking platform saw 216% growth in volumes to 14,7 million transactions.
Fair value gains on investment properties recorded under “other income” were a significant $17,94 billion; this drove bottom line profit after tax earnings to $25,47 billion in FY22, up 766% from prior similar period.
Operating expenditures came in at $13,73 billion for the period with circa 50% of that cost attributable to staffing expenses.
The bank remains compliant with the US$30 million minimum capital requirement and has capital adequacy levels of 25% versus a minimum requirement of 12%.
The bank closed the year with deposits of $53,21 billion, with 60% being in foreign currency.
“The macro environment has seen some positive developments with notable dissipation of inflationary pressures as a result of fiscal discipline, the tight monetary policy, and enhanced monitoring and enforcement of market discipline in financial markets,” researchers noted.
In line with receding inflation, the Reserve Bank of Zimbabwe has reduced the policy rate from 200% at the beginning of the year to 140% per annum improving borrowing terms for local currency loans.
Researchers said NMB’s thrust towards growing US$ assets has resulted in the loan book now being 70% dollarised improving hard currency earnings for the group.
“A key strategy for NMB is to diversify operations out of the core banking function. Steps made so far include the launch of a property development company using initial internal funding of US$3 million alongside a technology services division which will act as a consultancy to regional banks increasing upside for foreign currency earnings,” IH said.
