Dar es Salaam — Tanzania Investment Bank (TIB) envisages a profit before of tax of Sh5.2 billion this year as it transforms itself into a Development Financial Institution (DFI), managing director, Mr Peter Noni said on Tuesday.
Last year, the bank recorded a profit before tax of Sh3.2 billion while in 2008, it recorded Sh4.5 billion in profits before tax.
"The decrease is attributed to the global financial cum economic crisis but still, we have been doing fine....our aim is to record a profit before tax of Sh5.2 billion by the end of this year....until October, we had already made Sh4.9 billion in profits before tax," Mr Noni said at a ceremony to transform the bank into a DFI.
President Jakaya Kikwete graced the ceremony on Tuesday evening that was also attended by the Bank of Tanzania (BoT) governor, Prof Benno Ndulu, cabinet ministers and chief executive officers of DFIs in Africa among others.
TIB has been transformed as a DFI after almost 25 years of operating as a mere commercial bank.
The development should come as relief to investors who have, for decades, lacked a financial institution to finance them with long term development loans.
TIB was established by an Act of Parliament in year 1970 as an FDI, following the government's recognition for the need for such an institution to supplement the financing activities of commercial banking institutions.
As a DFI, TIB's main responsibility was providing medium and long term loans to investors in commercial agriculture, manufacturing, processing, construction, transport, tourism and mining sectors.
However, the bank only operated as a DFI for a few years before it was negatively impacted by the economic crisis during the period between 1997 and 2003.
With the economic crisis, fueled by sharp currency devaluations, the bank's loan obligations ballooned. Loans became unserviceable.
"Non performing loans increased - necessitating the restructuring of TIB's operations and diversification of its products from medium and long term loans (development financing) to short term loans," Mr Noni said.
According to Mr Noni, the bank then underwent a number of internal restructurings and prepared its strategic development plans which won the heart of the government.
And President Kikwete said his government will keep capitalizing TIB to help it give long term development loans to investors.
The government has capitalized TIB to bring the capital to about Sh93billion this year from just about Sh7.6 billion five years ago.
"Our aim is to bring the capital to Sh400 billion and we will not relent on this...we are ready to slash budgets from other areas because we understand TIB loans will have huge impacts on our country's development," said President Kikwete amid ululation from the crowd that thronged Mlimani City Conference Centre.
He promised his government's commitment to improve TIB's balance of payment, a vital step towards making the bank credit worthy and attractive to foreign investors.
"We have already okayed a proposal to allow foreign investors to occupy up to 40 per cent of TIB shares....discussions to that goal are already underway between the Bank of Tanzania (BoT) governor and some international development institutions," he said.