BANKS PROFIT DIP IN 2017 AS CHALLENGES EXTEND

Big banks posted a net profit decline for 2017 underlining challenges in the banking sector mainly due to rising non-performing loans from liquidity problems facing clients.

CRDB Bank, the largest bank in terms of assets, made a profit of 64bn/- last year down from 68.2bn/- made in 2016, it said in financial statement published on Tuesday. In the fourth quarter last year the bank posted 12.58bn/- profit up from 8.5bn/- in the corresponding period in 2016.

The bank managed to reduce non-performing loans to total gross loans to 13.6 per cent last year down 14.5 per cent of 2016. NMB Bank, the largest in terms of profitability, posted 95bn/- profit after tax for 2017 which was down from 154bn/- of the previous year due to provision for credit losses reflecting setbacks that faced customers.

It said in its financial statement published on Monday that dismissal of civil servants with forged academic records of which a portion have unsecured personal facilities with NMB and inability of some corporate clients to honour their loan obligations are some of the challenging environments that affected bank's performance in the year under review.

NBC Bank which is among four largest bank in Tanzania made 15.4bn/- last year up from 13.8bn/- in 2016 Tanzania Agricultural Development Bank posted 2.0bn/- profit last year up from 1.6bn/- last year.

TIB Corporate Bank, stateowned fully fledged commercial bank, made 5.3bn/- loss last year from 12bn/- profit posted in 2016. TIB Corporate Bank entered into a strategic partnership with Tanzania Postal Bank (TPB) in 2016 in which TIB's corporate clients will be able to transact using the TPB network of 30 full-fledged and 30 mini branches.

The banking sector is facing challenges of high non-performing loans whose he ratio to total loans has increased markedly to 12.5 per cent by September last year, according to International Monetary Fund (IMF) report. The high nonperforming loans have prompted banks to curtail lending and private sector credit growth has continued to be very low even as the Bank of Tanzania has lowered minimum reserve requirements, its discount rate and stepped up liquidity injection operations.

The International Monetary Fund said last month Tanzania’s banking sector was well-capitalised, but some small and mid-sized banks faced a sizable reduction in capitalisation ratios.

Early this month, the Central Bank revoked the banking license of Covenant Bank, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank, and Meru Community Bank, on the basis of their undercapitalisation.

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