Listed financial services provider NMB says it expects its US$13.8 million legacy debt to be resolved through a facility that will issued by the Reserve Bank of Zimbabwe (RBZ).
The firm’s legacy debt was accrued by its banking arm, NMB Bank.
“The banking subsidiary owed US$13. 8 million to various lines of credit providers as at 30 June 2020. The Bank registered these foreign debts with the Reserve Bank of Zimbabwe (RBZ) as required by the regulatory directives.
“During the previous financial period, the Bank transferred to the RBZ the ZWL equivalent of the foreign debts at a rate of USD/ZWL1:1.
“The RBZ has indicated that they will be issuing a US dollar denominated instrument for these debts and consequently these debts and the RBZ deposits have been accounted for at the closing exchange rate of USD/ZWL 1:63.74 at 30 June 2020,” said chairman Benedict Chikwanha in a statement last week.
“This effectively values the original credit lines at a rate of 1:1 on a netted off basis. The RBZ approved the line of credit balances amounting to US$13 840 412.”
In the six months period to June 2020, NMB’s financial performance was depressed.
Total income for the period amounted to ZW$1.24 billion, down 3% from ZW$1.29 billion recorded during the six months ended 30 June 2019 “mainly due to a reduction in net interest income due to sub-optimal market interest rates,” said management.
Operating expenses amounted to ZW$327.8 billion and these were down 4% from ZW$341.1 billion recorded during the six months ended 30 June 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,” said NMB.
“The Group recorded an impairment credit loss on financial assets measured at amortised cost amounting to ZW$25.2 million compared to an expected credit loss reversal of ZW$7.8 million during the six months ended 30 June 2019 due to growth in the banking subsidiary’s financial assets.
Profit before taxation was ZW$844.7 million (June 2019 – ZWL852.2 million during the period under review and this gave rise to total comprehensive income of ZWL992.2 million (June 2019 – ZW$703.1 million.
NMB achieved a basic earnings per share of 170.53 cents (June 2019 – 174.77 cents) and this translated into the 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,” said the chairman.
Meanwhile NMB Bank has continued with its drive to reduce non-performing loans (NPLs) and this saw the NPL ratio reduce from 1.37% as at 31 December 2019 to 0.81% as at 30 June 2020.
Management explained that the drop in the NPL ratio is largely due to aggressive collections and stricter credit underwriting standards.
NMB’s total assets increased by 27% from ZW$5.4 billion as at 31 December 2019 to ZW$6.9 billion as at 30 June 2020 mainly due to a 47% increase in property and equipment, a 126% increase in investment properties and a 6% increase in cash and cash equivalents.
Total deposits increased by 12% from ZW$3.2 billion at 31 December 2019 to ZW$3.4 billion as at 30 June 2020 as a result of deposit mobilization strategies and the translation of foreign denominated deposits to the local currency.
The bank has maintained a sound liquidity position with a liquidity ratio of 73.90% which was significantly above the statutory minimum of 30%.