Dar es Salaam — Commercial Bank of Africa (BOA) has said the slight drop in profits by 14.6 per cent in the cumulative year ending in December 2017 compared with the same period in 2016 was due to a decline in overall credit to the private sector.
Last year profit after tax decreased to Sh3.1 billion in 2017 from Sh3.6 billion recorded during the previous year ending December 2016. The slight drop in net profit was a result of reduced lending, as the banking industry was more sceptical over increasing nonperforming loans (NPLs).
"Profit declined due to a fall in overall credits, which also is seen in the industry, including the private sector," the bank's marketing manager Muganyizi Bisheko told The Citizen last week However, he noted that most issues had been resolved and pressure on NPLs was expected to ease this year, following a relaxed monetary policy.
"Our bank continues to be very cautious on issuing credit and we have been implementing robust credit management procedures in light of environmental challenges," he said.
While the bank suffered a high NPL rate in the first three quarters of last year, there has been some progress as profit doubled from Sh243 million during the fourth quarter of 2016 to Sh562 million last year.
A financial statement published last month showed that the bank also performed well in asset growth from Sh542.5 million in the 3rd quarter ended September, last year, to Sh557.1 million in the last quarter.
BOA joined other major banks in the country that were affected by non-performing loans, amid declining profits as the sector struggled with operational challenges.
Since 2010, BOA Group has been majority-owned by BMCE Bank, the second largest private bank in Morocco.
BMCE Bank brings strong strategic and operational support to BOA Group, as well as direct access to the international market as a result of its presence in Europe and Asia.