NMB Bank Limited has announced plans to expand the group by establishing new subsidiaries that will complement its traditional banking activities.
This will cement the group’s diversification strategy that is aimed at unlocking value and building resilience on its current operating model where some operations outside banking are currently either units or sections within the bank.
In its interim results for the six months to June, the bank however could not give timelines as to when the restructure will begin.
“The Group has embarked on a new strategic thrust opening up new avenues for growth while strengthening the core business,” said the bank.
“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,”
“All the areas we intend to diversify into are currently either units or sections within the banking operations. The strategy is aimed at building resilience on our current model and allow us to take advantage of opportunities in other related sectors,” said the bank.
It further stated that the diversification strategy will be funded through organic capacity without going back to shareholders for a capital raise.
The bank has been forging ahead with digitalization initiatives which are expected to reduce costs while increasing efficiencies to its traditional banking activities.
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 2000 planned stands in Nkulumane as well as properties in Hopeville and a Riverside student accommodation facility.
To manage the impact of the volatility within the market, value preservation remains key for the group in terms of preserving capital.
“Our intention is to meet current and future capital requirements from internal sources. Our capital adequacy is already at 22.28% against a regulatory requirement of 12%.”
“We are focusing on key export sectors such as horticulture, agriculture, mining and manufacturing. On the 1st of June 2022, we signed a EUR12.5mln line from EIB which we are channeling to exporters,” said the bank.
The Group achieved operating income of ZW$10.4 billion, up from ZW$5.7 billion achieved in the comparative period driven by a significant increase in interest income and continued growth in fees and commission income.
Total assets increased by 8.01 percent to close the period at ZW$ 69.41 billion largely responding to inflation and movements in the exchange rate.
Loans and advances closed the period at ZW$ 22.83 billion, up 4.34 percent from December 2021 levels.
“The Group continues to take a measured approach to risk, as evidenced by the strong asset quality with an NPL ratio of 1.22% compared to 1.39% as at 31 December 2021. The net charge for expected credit losses was ZWL259 million for the period under review,” said the group.
Deposits and other liabilities grew by 4.47 percent from December 2021 levels. This was largely reflecting the impact of the exchange rate depreciation on USD deposits.
The main subsidiary, NMB Bank limited remains well capitalized with a Tier 1 capital adequacy ratio of 22.28 percent. Risk weighted assets stood at ZW$58.26 billion, up 10.15 percent from December 2021 levels.
The group said drawdowns have already started on the recently signed EIB EUR12.5 million line of credit.
Armed with a strong deal pipeline, the Group will continue to engage with providers of funding to raise more lines of the credit
