NMB buoyant as interest rate stability drives credit facilities

Financial services provider, NMB Holdings, says interest rate stability has allowed its banking unit to channel more credit facilities to the economy’s productive sectors.

This comes as the Reserve Bank of Zimbabwe (RBZ) raised its overnight lending rate to 60 percent from 40 percent during a monetary policy meeting held on 28 October 2021arguing this would result in positive real interest rates that are necessary to drive money market savings.

The central bank also increased the rate on the Medium Term Bank Accommodation rate, a fund designed to provide low cost financing to industry from 30 percent to 40 percent.

“Interest rates remained fairly stable during the third quarter, allowing the banking unit to continue channeling credit facilities to the wider economy with a special focus on productive sectors,” Violet Mutandwa, the company’s secretary, said in a trading statement for the period ended 30 September 2021.

She said during the period under review, the bank’s loan book grew 39 percent to $7,2 billion while customer deposits grew 38 percent to $9,1 billion.

As at 30 September 2021, year-on-year inflation rate stood at 52 percent. Mutandwa said the group is hopeful that the monetary authorities will continue in their efforts to maintain the prevailing exchange rate stability, which largely underpins the country’s economic stability and provides the required impetus for economic growth.

In terms of financial performance, the group recorded a 66 percent growth in operating income from $2,3 billion for the six months ended 30 June 2021 to $3,9 billion for the nine-month period to 30 September 2021 in inflation adjusted terms.

“This was on the back of growth in non-funded income driven by an increase in transaction volumes on the bank’s digital platforms,” she said.

Mutandwa indicated that the bank’s inflation adjusted regulatory capital as at 30 September 2021 was $5,02 billion and was above the minimum required regulatory capital of $25 million.

She said this translated to a Capital Adequacy Ratio (CAR) of 27,14 percent as at 30 September 2021 which is significantly above the prescribed regulatory minimum ratio of 12 percent.

“The Bank is focused on making sure that it remains compliant with the required minimum regulatory capital level for Tier 1 banks of US$30 million equivalent by the set deadline of 31 December 2021,” she said.

According to Mutandwa, the Banking subsidiary has in the last quarter continued with its digitisation drive, largely focusing on the customer journey and ensuring that its processes and platforms make access to services as convenient and seamless as possible.

She said in the period under review, three enhancements were made to the group’s channels, namely, Econet customers can now access NMB Connect, NMB Bank’s Digital Branch, free of data costs.

“This ensures access to data or airtime will not be a barrier to safe and convenient banking. Similar arrangements with other telecommunication partners are underway,” she said.

Other developments are the new Visa Card with a fresh look and robust system from which these cards are run, to ensure convenience to customers. In one Card, customers can deposit four currencies namely USD, ZAR, GBP and Euro, allowing payment of obligations in the preferred currency.

“The Bank also implemented a Connect App Security Enhancement in order to enhance platform security,” Mutandwa said.

She highlighted that the recent firm commitments and pledges by the Government, the RBZ and the business community to maintain sound macroeconomic fundamentals which support exchange rate stability are encouraging and will assist in cost management.

“To this end, the banking sector has seen tightening of money supply, upward review of the bank policy rate to curb speculative borrowings, refinement and streamlining of the foreign exchange auction system so that it continues to play its price discovery role among other commitments,” said Mutandwa.

She added that the sector is optimistic of a good 2021/2022 agricultural season based on the forecast of good rains and the prospects in the mining industry on the back of positive commodity price outlook, improved capacity utilisation and anticipated increased output which will positively impact the country’s economic growth prospects.-eBusiness Weekly