10 February 2014

Zimbabwe: NMBZ Warns of Loss

NMBZ Bank Limited has warned investors it will report a loss for the year December to 2013 after writing down more loans and advances owing to an increase in non-performing loans

"In view of the difficulties being faced by some of our borrowing clients, our banking subsidiary, NMB Bank Limited, has reviewed its loans and advances portfolio and this has resulted in a significant impairment loss on loans and advances," NMBZ said in a profit warning statement last Friday.

Group chief executive Mr James Mushore said the market wide liquidity challenges have resulted in an increase in the banking sector's level of NPLs, from an average of 1,8 percent on December 31 2009 to an average of 15,92 percent as at December 31 2013. "We believe that the aggressive position we have taken on loan loss provisions and the various initiatives by Government to address the various economic challenges facing the country will set the bank on a solid growth path," Mr Mushore said.

"As a bank, our first port of call is to explore strategies to assist our customers to restructure their businesses before any attempts are made to liquidate collateral."

Mushore added that notwithstanding the conservative provisioning, the bank's capital position remains above the regulatory minimum of US$25 million.

In addition, the capital adequacy and liquidity ratios remain above statutory minimums of 12 and 30 percent, respectively.

The financial institution raised US$10,28 million in 2010 through a rights issue which was underwritten by African Century Financial Services Investments LLP (a UK based partnership). A further US$14,83 million was raised in June 2013 through a private placement of 26,97 percent of shares with three strategic foreign investors: FMO, a Dutch development bank, Norfund, a Norwegian development financial institution and AfricInvest Financial Sector Fund (AfricInvest), a member of the Group AfricInvest.

This has seen a significant change in the shareholder profile with Old Mutual, African Century Financial Services Investments LLP and the three strategic foreign investors controlling slightly over 60 percent of the bank's issued share capital.

The bank said it continued to access additional lines of credit.

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