NMB’s diversification programmes pay dividends
Banking group, NMB Holdings, is expected to cash in from its diversification efforts which will help cushion the bank from adverse impacts of the El Nino induced drought on agriculture and general disposable incomes.
The bank increased its focus on diversifying revenue streams with ventures into technology solutions and expand property portfolio.
“This will likely aid in spreading risk as well as increasing revenue,” said IH Securities.
During the past financial year, FY23, NMB holdings intensified efforts towards a project pipeline, which includes development of more cluster houses, residential stands and a shopping center. These projects should be implemented this current financial year.
Management has indicated focus is on leveraging technology to effectively drive business growth. According to the bank, over 91 percent of its accounts are now being opened via its Digital Platforms with no human intervention.
The bank has been making strides to grow its loan book and has managed to secure stable credit lines, increasing lending capacity.
Post-year end, the group also received approval for a US$15 million guarantee facility from the African Development Bank, which will also aid in international trade financing.
“Whilst income will likely be weighted towards non-funded income due the digitalisation drive, we also expect an uptick in interest income bolstered by credit lines,” said IH Securities.
However, the continued deterioration of the exchange rate will likely keep the cost of doing business high, forcing the business to mitigate the effects by focusing on improved efficiencies.
During the past financial year, the group recorded a revenue of $195,18 billion representing a 786 percent increase from $21,91 billion recorded in the prior year.
However, fair value gains on investment properties recorded under “other income” were significant at $236,92 billion from $16,38 billion in the prior year, driving profit after tax for the year to $385,56 billion, an increase of 1,414 percent from the prior year.
Opex for the group grew by 852 percent year on year to $130,73 billion, with 51 percent of this being administration costs and staff costs coming in at a close second of 45 percent.
Despite the increase in expenditure, cost to income ratio eased to 35 percent from 45 percent in prior year.
The banking subsidiary’s capital adequacy ratio held steady at 35 percent, above the benchmark of 12 percent, which complied with the US$30 million minimum capital requirement.-ebusinessweekly
