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NMB Earnings Double Despite Costly Expansion Projects

National Merchant Bank of Zimbabwe Holdings (NMBZ) profits for full year 2018 jumped 112 percent to US$ 21.3 million from US$ 10 million recorded in 2017 mainly from interest income and transactional earnings from increased deposits despite headwinds in fourth quarter 2018 slowing down operations.

The Group’s board managed to declare a dividend of 0.96 cents per share to its shareholders up from 0.36 cents declared in 2017.

The Group’s banking subsidiary NMB Limited total’s deposits increased by 25 percent from US$ 348 956 385 as at end of year 2017 to US$ 434 957 949 by close of year 2018 as the bank’s deposit mobilization strategies paid off buoyed by a generally improved market liquidity.

Although the bank liquidity ratio faltered to 41.62 percent from 47.53 percent in 2017, it remained safely afloat as per the statutory requirement of 30 percent.

“In view of the significantly improved financial performance recorded by the Group in the year under review and the sound capital ratio, the Board proposes to declare a final scrip dividend alternative to the cash dividend of 0.96 RTGS cents per share,” NMB Chairman, Benedict Chikwanha told analysts at the  company results briefing.

However, operating expenses amounted to US$ 34 720 428 and these were up 26 percent from the previous year amount of US$ 27 578 347 as the company embarked on an infrastructural expansion drive.

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‘’The increase in operating expenses was due to increased transaction processing and operational costs arising from the Bank’s digital drive, expansion into the broader market segments and general inflationary pressures largely driven by foreign currency shortages,” added Chikwanha.

In March and December 2018, the bank opened two service centers in Bindura and Chitungwiza, respectively while it also undertook the construction of a new Head Office along Borrowdale road in April 2018.

With IT systems offering banking solution going forward, the bank spent resources in the deployment of Point-Of-Sale machines.

The group total assets firmed by 25 percent from US$ 422 564 352 in 2017 to US $ 527 067 596 by close of 2018 mainly due to a 27 percent increase in investment securities, 21 percent increase in loans, advances and other assets, 10 percent increase investment properties and a 143 percent increase in property and equipment.

However there are concerns by analysts over the assumption of government guarantees in form of Treasury Bills by most banks as these have a lengthy maturity period given huge stocks of TBs have a negative bearing on banks capacity to lend the market.

“Banks will now need to go back to their core business as we can predict normalcy on the market in the short term, hence its (TBs) not an area we would like to pursue,” NMB chief executive officer Benefit Washaya weighed in.

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The group Treasury Bills and Bonds portfolio increased 27 percent from US$ 92 245 425 in 2017 to US$ 117 249 434 as at 31 December 2018.

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