NMB Bank remains resilient amidst currency change

NMB Bank posted resilient financial results for the half-year ending June 2024, despite a period marked by currency transitions and economic adjustments.

The introduction of the Zimbabwe Gold (ZiG) currency on April 5, 2024, replacing the hyperinflationary Zimbabwe dollar (ZWL), had a significant impact on the group’s financials.

Pearson Gowero, the board chairman, presented the results, emphasising both the challenges and prospects for the bank under the new currency regime.

For the period under review, NMB’s operating income stood at ZiG 688 million, a decrease from ZiG 1,14 billion for the same period last year.

The decline in income was primarily driven by a reduction in net interest income, which fell from ZiG 126 million to ZiG 74 million.

According to Gowero; “The reduction in interest income largely reflects the recalibration of the local currency loan book to the new ZiG currency and attendant interest rates.”

Fees and commission income remained flat, while the volatile environment in the first quarter hampered some of the bank’s activities. Despite these challenges, the bank managed to raise new funding, including USD 10 million from British International Investments.

Gowero was optimistic about the second half of the year, stating; “This new funding will propel growth in the second half of the year.”

NMB’s total assets as of June 30, 2024, were valued at ZiG 3,5 billion, down from ZiG 3,9 billion in the comparative period. The decline was attributed to a reduction in the value of some investment properties.

Additionally, loans and advances fell to ZiG 1,1 billion from ZiG 1,2 billion as at December 2023.

Gowero explained; “The reduction in loans and advances was partly due to the recalibration of the local currency book following the currency change and exchange rate deterioration in the first quarter.”

However, NMB’s non-performing loans (NPL) ratio remained stable, recording a slight increase from 1,1 percent in December 2023 to 1,2 percent in June 2024.

Gowero emphasised the bank’s commitment to prudent risk management, noting, “The Bank continues to exercise prudent loan underwriting and rigorous monitoring to ensure risk is effectively managed.”

Despite the macroeconomic challenges, NMB maintained a strong liquidity position throughout the period, consistently exceeding the statutory minimum liquidity requirement of 30 percent.

The bank’s capital adequacy ratio stood at a robust 34,45 percent, well above the regulatory minimum of 12 percent, with capital anchored on USD-denominated assets.

“The banking subsidiary remained adequately capitalised to cover all risks and was compliant with the minimum capital requirement of USD30 million,” Gowero added, highlighting the bank’s resilience amidst an evolving financial landscape.

Looking ahead, Gowero remained cautiously optimistic about the bank’s performance in the second half of 2024. He emphasised that the new funding and stable currency environment would support growth, while the bank continues to navigate the broader economic challenges in Zimbabwe.