NMB Reports Resilient Half-Year Financial Results Amid Economic Transition

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NMB Bank has announced resilient financial results for the half-year ending June 2024, navigating a challenging landscape marked by currency transitions and economic adjustments. The introduction of the new Zimbabwe Gold (ZiG) currency on April 5, 2024, which replaced the hyperinflationary Zimbabwe dollar, significantly influenced the bank’s financial performance.

Board chairman Pearson Gowero presented the results, highlighting both the obstacles and opportunities under the new currency regime. For the period under review, NMB’s operating income stood at ZiG 688 million, a decline from ZiG 1.14 billion in the same period last year. This decrease was primarily due to a reduction in net interest income, which fell from ZiG 126 million to ZiG 74 million.

“The reduction in interest income largely reflects the recalibration of the local currency loan book to the new ZiG currency and the associated interest rates,” Gowero explained. Fees and commission income remained steady, although the volatile economic environment in the first quarter hampered some of the bank’s activities. Despite these challenges, NMB successfully secured new funding, including USD 10 million from British International Investments.

Looking forward, Gowero expressed optimism for the second half of the year, stating, “This new funding will propel growth moving forward.” As of June 30, 2024, NMB’s total assets were valued at ZiG 3.5 billion, down from ZiG 3.9 billion in the previous year, primarily due to a decrease in the value of some investment properties.

Loans and advances also fell to ZiG 1.1 billion from ZiG 1.2 billion as of December 2023. Gowero noted that this reduction was partly a result of recalibrating the local currency book following the currency change and exchange rate fluctuations in the first quarter. However, the bank’s non-performing loans (NPL) ratio remained stable, increasing slightly from 1.1 percent in December 2023 to 1.2 percent in June 2024.

Emphasizing the bank’s commitment to prudent risk management, Gowero stated, “The Bank continues to exercise prudent loan underwriting and rigorous monitoring to ensure risk is effectively managed.”

Throughout this period, NMB maintained a robust liquidity position, consistently exceeding the statutory minimum liquidity requirement of 30 percent. The bank’s capital adequacy ratio stood at a strong 34.45 percent, well above the regulatory minimum of 12 percent, supported by USD-denominated assets.

“The banking subsidiary remains adequately capitalized to cover all risks and complies with the minimum capital requirement of USD 30 million,” Gowero highlighted, underscoring the bank’s resilience in a rapidly changing financial environment.

As NMB looks ahead, Gowero remains cautiously optimistic about the bank’s prospects in the second half of 2024, emphasizing that the new funding and stable currency environment will facilitate growth as the bank navigates the broader economic challenges in Zimbabwe.

Source: Business Weekly