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.
The group has secured lines of credit amounting to $57 million since dollarisation, enabling it to under more ending business.
– The Source