RBZ approves NMB Bank top-tier status plan

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THE Reserve Bank of Zimbabwe (RBZ) has approved a plan by NMB Bank that will see it attaining top-tier status of $100 million minimum equity capital by 2020, its parent company said yesterday.

BY TARISAI MANDIZHA

In his maiden monetary policy statement last year, RBZ governor John Mangudya announced a three-tier status for banks in complying with the minimum capital threshold saying the current operating environment had presented challenges in banks’ ability to grow capital organically or raise from investors.

“We submitted our capitalisation plan to RBZ and I am happy to advise that the RBZ approved our plan. We are targeting to be a tier 1 bank with a capital level of $100 million by 2020,” NMB Holdings CEO Benefit Washaya told shareholders at the group’s annual general meeting yesterday.

A tier 1 banking institution will have a minimum capital of $100 million and would undertake core banking activities plus other services such as mortgage lending, leasing and hire purchase. A tier 2 bank will do only core banking activities with capital of $25 million.

Tier 3 institutions should have minimum capital of $7,5 million which would allow them to be deposit-taking microfinance institutions.

Only CBZ has surpassed the $100 million threshold.

Washaya said NMB was currently in negotiations with four potential providers of credit lines which will mainly be channelled towards the small and medium enterprises.

Washaya said the bank had approved lines of credit of$66,5 million. It accessed lines of credit of $5 million and was hoping to get $7 million in the next two months.

“Leveraging on our strong shareholder base, we are actively sourcing for credit lines to support the productive sectors of the economy. We are also in discussion with four potential providers of credit lines with a bias towards SMEs and we hope to access additional funding before the end of the year,” Washaya said.

He said the tough economic conditions continue to present the biggest challenge to their business.

The bank’s total loans and advances in the four months to April 30 2015 went up by 11% while total deposits grew by 10%.

Net interest income and non-interest income for the four months to April 30 2015 increased by 29% and 26% respectively compared to the same period last year.

Operating income for the four months to April 30 2015 firmed by 28% to $13,9 million.

“The growth in income has largely been driven by our strategic shift into the broader market segments,” Washaya said.

The non-performing loan ratio went down to 16,5% at April 30 2015 from 17,7% at December 31 2014 due to aggressive collections and the growth in the loan and advances book.

Washaya said the bank was confident of meeting its 15% target by June 30 2015 and 10% by December 31 2015.

Washaya said the group would open new branches including a centre of excellence to cater for the bank’s high net worth customers.

“On top of retaining our traditional markets, we have now fully transitioned into other broader market segments and the transition has gone on well.

“We have seen an increase in branch traffic and accounts opened and resultantly our non-funded income is on the increase driven by transaction volumes.

“Our transition into the broader market segments will require a physical presence in some of the major cities and towns,” he said.

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