NMB in US$13,8 million legacy debt

By Oliver Kazunga

Financial services group, NMBZ Holdings Limited says its banking subsidiary, NMB Bank is saddled with a legacy debt of US$13,8 million in credit lines owed to various lenders as at June 30, 2020.

The bank has registered the legacy debt with the Reserve Bank of Zimbabwe (RBZ) as required by law, according to a statement accompanying reviewed financial results for the half-year period under review.

“The banking subsidiary owed US$13 840 412 to various lines of credit providers as at 30 June 2020. During the previous financial period, the bank transferred to the RBZ the Zimbabwe dollar equivalent of the foreign debts at a rate of US$1: ZW$1,” said the group.

“The RBZ has indicated that they will be issuing a US$ denominated instrument for these debts and consequently these debts and the RBZ deposits have been accounted for at the closing exchange rate of US$1: ZWL$63.74 at June 30, 2020.”

The group said this effectively values the original credit lines at a rate of 1:1 on a netted off basis. Meanwhile, profit before taxation was ZWL$844,7 million during the period under review, giving total comprehensive income of ZWL$992,3 million.

In the comparable period last year profit before taxation stood at ZWL$852,3 million while total comprehensive income was at ZWL$703,1 million.

The banking group achieved a basic earnings per share of 170,53 cents compared to the 174,77 cents and this translated into headline losses per share of 1,28 cents (June 2019 – earnings per share of 35,82 cents).

“The significant differential between the basic and headline losses per share is largely due to investment properties fair value adjustments and gains arising from the translation of foreign currency balances due to the depreciation of the Zimbabwe dollar against the US dollar and other major currencies,” it said.

During the period, total income amounted to ZWL$1,249 billion and this was down three percent from ZWL$1,291 billion recorded during the six months ended 30 June 2019 mainly as a result of a reduction in net interest income due to sub-optimal market interest rates.

Operating expenses amounted to ZWL$327,8 million and these were down four percent from ZWL$341,1 million recorded during the six months ended June 30, 2019.

“The reduced costs were a result of cost containment measures adopted by the group in addition to improved efficiencies arising out of the group’s digital drive,” it said.

The group recorded an impairment credit loss on financial assets measured at amortised cost amounting to ZWL$25,2 million compared to an expected credit loss reversal of ZWL$7,9 million during the six months ended June 30, 2019 due to growth in the banking subsidiary’s financial assets.

The bank has continued with its drive to reduce non-performing loans (NPLs) and this saw the NPL ratio reduce from 1,37 percent as at December 31, 2019 to 0,81 percent as at June 30, 2020.

“The drop in the NPL ratio is largely due to aggressive collections and stricter credit underwriting standards,” said the group.

Its total assets increased by 27 percent from ZWL$5,5 billion as at December 31, 2019 to ZWL$6,9 billion as at June 30 2020.

This was mainly due to a 47 percent increase in property and equipment, a 126 percent increase in investment properties and a six percent increase in cash and cash equivalents. The Chronicle