NMBZ mass market strategy paying off

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NMBZ Holdings’ (NMBZ) strategy to broaden its target market to the masses is paying off after the financial institution recorded a $9 million after-tax profit in the half year to June 30, 2018 from $3,5 million during the same period last year.
The company used to cater for high-end clients, but changed tact following informalisation of the economy.
Benedict Chikwanha, the dual-listed firm’s chairman, yesterday said: “The group will continue to broaden its target market by widening its catchment area to include segments of the mass market previously not catered for.”
In the six months to June, NMBZ’s operating expenses jumped 23 percent to $16,8 million from $13,6 million recorded last year.
“This was due to increased transaction processing and operational costs arising from the bank’s digital drive and continued expansion in the broader market segments,” he said.
Impairment losses on loans and advances amounted to $1,4 million from $878 304 mainly due to the adoption of the International Financial Reporting Standard 9 (IFRS 9) in January this year.
The bank has continued with its drive to reduce non-performing loans, which have declined from 10,7 percent last year to 6,12 percent as at June 30 this year.
“This is largely due to aggressive collections and stricter credit underwriting standards,” said Chikwanha.
The group’s total assets increased by four percent from $422,6 million to $441,6 million mainly due to a 33 percent increase in property and equipment together with an eight percent increase in both investment securities and loans, advances and other accounts.
“These increases were partly offset by a decrease in cash and cash equivalents of 10 percent,” he said.
Gross loans and advances increased 12 percent to $236,3 million from $211 million mainly due to higher uptake of the bank’s mortgage facilities, corporates and individual loans.
Gross investment securities (Treasury Bills and bonds) increased from $92,2 million to $100,1 million in line with the bank’s exposure limits and risk appetite.
Total deposits increased by four percent from $348,9 million to $364,5 million as a result of increased current account balances due to the broadening of market segments.
“The bank maintained a sound liquidity position with a liquidity ratio of 42 percent and this was above the statutory minimum of 30 percent.” Chikwanha said.
The group’s shareholders’ funds and liabilities increased by three percent from $65,6 million to $67,6 million as a results of the current period’s total comprehensive income which was partly offset by the increase in IFRS 9 provisions adjusted through equity in January this year.
The board resolved not to declare an interim dividend to fund the growth initiatives being pursued by the group as well as to strengthen the regulatory capital position of the banking subsidiary.
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