Dar es Salaam — Shareholders in some large banks will be keeping their fingers crossed in anticipation that their dividends will increase further if the lenders’ second quarter performance is maintained.
Recently released financial statements show that a number of large banks reported improvements in profits and a further reduction in non-performing loans (NPLs) as the sector braves the Covid-19 pandemic to remain strong.
NMB Bank Plc, CRDB Bank Plc, National Bank of Commerce (NBC) and Standard Chartered Bank are some of the largest banks that registered improvements in profitability during the second quarter of the current calendar year.
The list also has Citibank, KCB Bank and Peoples’ Bank of Zanzibar among others.
The seven lenders registered a total of Sh143.052 billion in net profits during the second quarter of 2021. This is a 46 percent improvement compared to a combined net profit of Sh98.075 billion the banks posted in the second quarter of last year (2020).
Despite maintaining a low NPLs to total gross loans ratio of 4.3 percent during the second quarter of the year, NMB Bank Plc’s cumulative net profit jumped by 43 percent to reach Sh134 billion at the end of June 2021 while its cost to income ratio (CIR) was also quoted at 47 percent.
In January, the Bank of Tanzania (BoT) issued a circular that requires commercial banks and financial institutions to effectively manage NPLs and their operating expenses. This would ultimately bring down borrowing costs as well as yield more returns to shareholders. According to the circular, NPLs are to be maintained at a level that is not more than five percent of total gross loans while cost-to-income ratios are to be maintained at a ceiling of 55 percent.
The bank says its performance was a reflection of relationship management and increased customer activity, disciplined cost optimization, and overall credit portfolio quality improvement.
"We are extremely pleased with our financial results for the first half of 2021 as we continue to build momentum on the strong performance we registered in Q1 2021 and leveraging off the stance, monetary measures undertaken by the Bank of Tanzania," said the NMB Bank Plc’s chief executive, Ms Ruth Zaipuna.
She said efforts would be directed towards making good strides in the execution of its strategic initiatives while keeping a keen eye on the opportunities that lay ahead as the global economy continues to recover from the adverse impacts of the Covid-19 pandemic.
"We remain committed to […]