Dar es Salaam — Shareholders of commercial banks must be putting on broad smiles as the banking sector is set to register a record profit this year.
An analysis of 13 out of the 14 most profitable commercial banks in Tanzania shows that they cumulatively registered a total of Sh471 billion in net profits during the period between January and September 2021.
The amount – which was characterised by declining levels of Non-Performing Loans (NPLs) by most lenders – is 35.7 percent higher than the Sh347.2 billion that the 13 entities went home with during a similar period last year.
The highest amount in profits to be registered by commercial banks in Tanzania’s recent history, was Sh438 billion that was recorded in 2015.
Since then, the amount kept going down, reaching Sh423 billion and Sh286 billion in 2016 and 2017.
This means that the Sh471 billion that was registered during the first nine months of the current calendar year is also 7.53 billion higher than the net profit for the entire 2015 calendar year.
As it has always been, the two largest lenders (NMB Bank and CRDB Bank) got the lion’s share of the sector’s net profit, accounting for close to 80 percent (Sh379 billion) of the Sh471 billion.
CRDB Bank’s net profit tax rose significantly by 39.2 percent to Sh168 billion during the first nine months of the current calendar year from Sh120 billion recorded during a similar period last year.
Similarly, that of NMB Bank rose by 43 percent Sh206 billion.
Top executives of the lenders attribute the rise in profits to a number of factors, including the stability of Tanzania’s economic conditions and accommodative monetary policy measures as adopted by the Bank of Tanzania (BoT). They also attribute the performance to individual bank’s initiatives in aspects such as optimizing costs and prudent approach to risk management among others.
"… .reflects continued stability in economic conditions and accommodative monetary policy measures adopted by the BoT. Our strategy execution remains on track, with our continued market share gains translating into higher profits. We continue to maintain a relentless customer focus and have seen strong lending and deposits growth momentum throughout the period," said NMB Bank chief executive officer, Ms Ruth Zaipuna.For CRDB Bank, the rise in profits was largely due to prudent approach to risk management and the efficacy of the bank’s digital-first customer-centric business strategy which, according to CEO Abdulamajid Nsekela, helped keep loan growth steady while […]
