NIC Bank Tanzania will benefit from 8.5bn/- additional capital from its shareholders to the bank's lending capacity targeted to corporate and Small Medium Enterprises (SMEs).
The funds will be disseminated in two tranches of 5.8bn/- with the injection of additional capital from NIC Bank Kenya in December 2013, with the 2.7bn/- balance from the other local shareholders of NIC Bank Tanzania expected within a period of six months but not later than June 2014.
"A growing financial need in this market has required that NIC Bank Tanzania further grow its competitive position. The capital will be used to fund the Bank's business plan in the coming year with the aim of growing our market share with a focus on corporate and SME lending," said Mr Pankaj Kansara, NIC Bank Tanzania Managing Director.
NIC Tanzania is banking on the emerging opportunities in asset finance, trade finance and infrastructure project financing to increase its market share, driven by an improved business framework that has helped attract foreign direct investments and spur SME growth.
"The capital-injection scheme is an appropriate, necessary and proportionate means of stabilising the institution and will also enable us increase lending to the Tanzanian market across the corporate and SME segments", added Mr Kansara.
"This additional capital will partly finance the growth of the anticipated loan book for 2014 and is expected to cushion the bank's undertaking in respect to its Non-Performing Loan book", explained Mr Kansara. NIC Bank Tanzania has grown its balance sheet from 30bn/- in 2009 to 180bn/- in 2013, representing an annualized growth of 43 per cent.
"Looking at the success of our parent company, we hope to leverage on these strengths and replicate the product offering in the Tanzania market where applicable, while exploiting the available resources at the Group level to develop even more targeted products to grow our presence," said Mr Kansara.
"We are pleased by the demonstration of confidence by the bank's shareholders through their decision to inject additional capital," added Mr Kansara. "The shareholders remain committed to the bank's operations in Tanzania and see growth opportunities arising from the integration of the East African Community. This capital injection will support our operations, taking into provision the bank's Non-Performing Loan book," concluded Mr Kansara.
In 2013, NIC Bank Tanzania undertook a very successful rights issue of 8.5bn/- with the parent company increasing its shareholding to 68.97per cent. The Bank operates on a fully integrated system, offering a seamless cross border platform and in support of corporates operating within the East African Community block.