16 November 2012

Tanzania: NBC Embarks on Profitability Drive

NATIONAL Bank of Commerce (NBC) has embarked on a number of initiatives to turn back the bank on its profitability path following a bad start in the first half of this year.

The bank, with 45 years of operational experience in the country, said some of the initiative and projects include streamlining operations, improving risk management and controlling environment to give it a sustainable growth.

These changes, according to the bank's Managing Director, Lawrence Mafuru, include customer service delivery and cost effectiveness. "It is of the view that, the year end cumulative position will be even better," Mr Mafuru said yesterday in a statement issued to paint the future outlook of the bank after a bad first six months of this year.

Nevertheless, NBC continued to maintain a strong balance sheet quarter on the thirds quarter despite a number of challenges at the local and international arenas. The bank, which in the second quarter of this year suffered a shocking loss since its inception 12 years ago, said the sheet remained resilient quarterly with good growth recorded in debt securities and investment portfolios.

The MD said the two portfolios are compensating the shrinkage in lending book due to a tight stance taken in private credit expansion to allow for its balance sheet cleaning. "(The bank) remained resilient in its performance turning around after a difficult first half of the year to deliver," he said.

"Our third quarter profit after tax stands at 4.2bn/- reducing our nine months cumulative loss to 10.6bn/-," he said adding "this is mainly attributed to improved interest and non-interest income streams."

The main contributor for this positive outlook comes from impairments line that has gone down quite substantially following aggressive measures taken by the bank to remediate its non-performing assets".

This year NBC's profitability has been negatively impacted by very high levels of Non Performing Loans resulting from the famous 2008 global financial crisis which affected both its corporate and retail loans thus forcing the bank to apply very prudent and stringent impairment policies.

The reported losses during the first half of the year were mainly driven by unusually large impairments items from specific big borrowers, some provisions raised for cost and prior year under accruals related to IT costs and technical assistance provided by the parent company, ABSA group in South Africa.

"These are one-off items and have since been normalised," Mr Mafuru said. The bank has well networked distribution channels including 52 branches, a fully fledged contact centre, 300 Visa and MasterCard enabled ATMs and 264 Point of Sale devices strategically located throughout the country. The bank has employed 1,356 staff members at the end of September.

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