Dar es Salaam. The rate of non-performing loans (NPLs) for
most of the small and medium-size banks in Tanzania increased in the third
quarter of this year, compared to the same quarter last year, according to the
banks’ unaudited quarterly financial statements.
A review of some of 19 financial statements published this
week by the banks indicated that NPL rates during the third quarter of this
year ranged between 4 and 51 per cent, while the industry benchmark is capped
at five per cent.
In terms of profit, the statements showed ups and downs in
the profit-after-income-tax stakes. While some banks suffered shrinking
profits, others saw their profits in the immediate past turn into losses. Yet
other banks saw increased profits.
Banks which recorded an upward trend in profits were Azania
Bank, People’s Bank of Zanzibar, Mufindi Community Bank and Equity Bank.
On the other hand, Yetu Microfinance, I&M Bank, BOA and
Vision Fund saw their profits shrinking during the third quarter this year,
compared with the same quarter last year.
BankABC, Access Bank Tanzania, Akiba Commercial Bank,
International Commercial Bank, Finca Microfinance Bank and Letshego all made
losses during the quarter under review -- unlike the profits they recorded
during the same quarter last year.
Speaking to The Citizen yesterday, the managing director of
the People’s Bank of Zanzibar (PBZ), Mr Juma Hafidhi, said the third quarter
was a very challenging period for the banking sector, as the market was tight.
“Banks were skeptical when it came to granting loans to
everyone coming to borrow.
Banking business was not particularly encouraging
due to the tight economic policies, which caused loans issuance to be done
after very tight vetting procedures,” Mr Hafidhi said. During the period under
review, the banking industry also faced regulatory changes targeting to reduce
the industry’s operational risks, as well as boost the capital adequacy ratio.
“Many banks were also skeptical about issuing more loans as
they were doing self-assessments of their books of accounts in the light of the
newly-adopted International Financial Reporting Standards (IFRS-9) by the first
of January next year,” he added.
Yetu Microfinance managing director Altemius Milinga said
the increased NPLs among banks was largely caused by the new provisions that
applied during the quarter – but mainly in July.
However, he noted that the third quarter is traditionally
low-season for small banks, including Yetu, as farmers – who are the bank’s
main customers – do not have sufficient liquidity at that time.
However, the
small banks’ D-Day is really the fourth quarter of the year. Mr Milinga also
said that most of the banks recorded an increase in NPLs and shrinking profits
because many of them are in the process of adjusting their portfolios in line
with the changing business environment in Tanzania.
Indeed, the statement shows that Yetu Microfinance’s profit
shrunk to Sh319 million, down from the Sh469 million recorded during Q3 of last
year. Also, its NPLs slightly increased by one per cent – rising from six to
seven per cent – which Mr Milinga said is a normal difference.
Going by individual bank statements, Tanzania Women’s Bank
(TWB) had a 51 per cent rate of non-performing loans during the third quarter
of this year – the highest rate of all the statements reviewed by The Citizen.
In the third quarter of last year, the bank’s NPLs accounted
for 53 per cent of the gross loans.
The statement also shows that the Women’s Bank’s losses grew
by almost 3,000 per cent – shooting from a relatively ‘minor’ loss of Sh20
million in the third quarter of last year to a whopping Sh610 million this
third quarter!
Another reviewed bank with the highest NPLs rate was the TIB
Development Bank, whose NPLs rate grew to 46 per cent in quarter three of this
year – rising from 39 per cent during the similar period last year.
However, TIB Development Bank managed to reduce its losses
during the period under review from Sh4.3 billion to Sh2.7 billion.
The Citizen
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