FINANCIAL services group, NMBZ Holdings slumped to a $3,3 million loss after impairments and a bad loan book at its flagship commercial banking unit wiped out profits in the full-year to December 31 2013.
The group had an operating profit before impairment charge of $12,7 million, boosted by net interest income of $20,2 million. Attributable profit stood at $7,6 million in 2012.
But impairment losses on loans and advances shot to $16,6 million in the year under review compared to $4 million the year before.
Gross loans and advances increased by 25% to $190 million from $152,4 million in the prior year.
“The board . . . took a decision to write off loans and advances amounting to $12,2 million during the year under review after recovery efforts had not yielded the anticipated results,” chairman Tendayi Mundawarara said in a statement accompanying the results.
The bank’s liquidity ratio at 32,52% was above the statutory requirement of 30%.
Last month, the group took an unusual step of publishing a profit warning because of an acceleration in impairments on loans and advances, mirroring a trend in the industry. The central bank said average banking sector non-performing loans rose to 15,92% last year because of slow economic growth, primarily as a result of reduced operating margins and tight liquidity.
“Credit risk has become the critical area that banks and corporates have to deal with,” Mundawarara said.
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