TANZANIA BANKING INDUSTRY: IMPRESSIVE GROWTH FOR NEW ENTRANTS - BOT

Newly established financial institutions recorded fast growth in 2013, pointing to an absorption capacity that is still significant.

New products and the targeting of niche markets saw the upstarts grow impressively in terms of assets and deposits, according to the latest Banking Supervision Report.

Covenant Bank for Women, Meru Community Bank, Tanzania Mortgage Refinance Company, Community Bank Tanzania Limited and United Bank for Africa Tanzania were among the fastest growing institutions.

Covenant Bank assets rose from Sh3 billion to Sh11 billion (282.18 per cent), while deposits rose from Sh2.1 billion to Sh10.5 billion, a whopping 403.72 per cent growth.

The assets of Meru Community Bank rose from Sh587 million to Sh1.47 billion, a jump of 151.23 per cent, while its deposits rose by 235.51 per cent, from Sh386 million to Sh1.29 billion in the year under review.

United Bank for Africa Tanzania Limited’s assets grew 164.30 per cent to jump from Sh64.2 billion to Sh169.7 billion, while deposits grew minimally from Sh45.1 billion Sh63.9 billion.

Tanzania Mortgage Refinance Company assets grew from Sh14 billion to Sh30 billion.

Equity Bank Tanzania Limited recorded a growth of 94.9 per cent to see its assets jump from Sh76.2 billion to Sh148.5 billion in the year.

Meanwhile, there was improvement in the quality of the banking sector’s assets.

The average ratio of non-performing loans (NPLs) to gross loans at the end of December 2013 decreased to 6.43 per cent from 8.01 per cent recorded in the previous year, indicating an improvement in the quality of the banking sector’s assets.

“The improvement in asset quality was a result of a number of factors including charge off of bad debts and disbursement of new loans,” says the report signed by BoT governor Benno Ndulu.

Likewise, the ratio of NPLs net of provisions to total capital improved to 14.26 per cent from 22.41 per cent recorded in 2012 indicating that should all NPLs deteriorate to loss, the banking sector’s capital will be eroded only to a maximum of 14.26 per cent.

Other banks whose assets and deposits grew significantly in 2013 include Access Bank, Advans Bank, Amana Bank Ltd, Ecobank, EFC Tanzania M.F.C Ltd, Equity Bank, and Mkombozi Commercial Bank.

Source: The Citizen