NMB Bank’s digital push and diversification drive revenue surge
A financial services firm, IH Securities, believes that NMB Bank’s efforts to broaden its income sources will be beneficial. The bank is looking into new areas like technology solutions, microloans, and real estate development to reduce risk and grow profits.
NMB Bank is planning to construct more cluster houses, residential plots, and a shopping mall this year.
“Management is concentrating on using technology to successfully expand the business,” IH stated in a brief evaluation of NMB’s financial results for 2023. According to the report, more than 91% of the bank’s accounts are now opened digitally, without any human intervention.
On the other hand, the bank has been making strides to expand its loan portfolio and has been able to secure dependable credit lines, which has increased its lending capacity. After the end of the fiscal year, the group also got permission for a $15 million guarantee program from the African Development Bank, which will also support international trade financing.
“While income will likely be weighted towards non-interest income due to the digitalization push, we also expect an increase in interest income supported by credit lines,” IH said.
However, IH cautioned that the exchange rate’s ongoing decline will probably keep the cost of doing business high, forcing the company to concentrate on improving efficiencies to lessen the effects.
According to IH, the establishment of two new subsidiaries, XPlug Solutions Limited and NMB Properties Limited, as well as a MicroFinance Division within the banking subsidiary, demonstrates the group’s emphasis on diversification during the period under review.
The banking subsidiary, according to the report, has kept up its emphasis on digitalization, concentrating on both front-end and back-end operations. “During the evaluation period, the bank added seven new billers to its mobile banking platform, including significant service providers like universities and councils, doubling the total number of billers.
“As a result, non-funded income increased by 1,187 percent year over year (y/y) to $137.76 billion, accounting for 71% of revenue in FY23 compared to 49% in FY22,” IH stated.
In the time period being examined, the bank obtained two more credit lines to support its backing for the productive sector and collaborated with the government to finance the planting of 7,100 hectares of maize and soybeans, growing its Agribusiness Unit.
As a result, total loans and advances were 968 percent higher than the same period last year, at $494.54 billion, leading to a 412 percent growth in net interest income to $57.43 billion.
The group’s revenue for FY23 was $195.18 billion, a 786 percent increase over the $21.91 billion recorded in FY22.-ebusinessweekly
