Tanzania banks rake in Sh1.16 trillion net profit in record display

Dar es Salaam. Commercial banks’ net profits rose by about Sh400 billion last year to surpass the Sh1 trillion-mark for the first time in Tanzania’s banking history, thanks to the government’s pro-business policies.

An analysis of financial statements of commercial banks that have released their 2022 financial statements as of yesterday shows that over Sh1.164 trillion was garnered in net profits last year, a massive leap from slightly over Sh760 billion that was registered in 2021.

The analysis focused on first-tier lenders which together account for over 95 percent of the banking sector’s profitability. They included NMB Bank Plc, CRDB Bank Plc, Standard Chartered Bank, NBC Bank, Exim Bank and Absa.

The list of first-tier lenders involved in the analysis also include KCB Bank, Stanbic Bank, Peoples’ Bank of Zanzibar, Citibank, Azania Bank and DTB. The 12, along with Tanzania Commercial Bank which registered a net profit of Sh3.152 billion in 2022, complete the list of 13 first-tier lenders in the country.

Other profitable banks that were randomly picked to complete the list of 17 lenders on The Citizen’s analysis, were Equity Bank (which jumped from a loss in 2021 to record a net profit of Sh9.54 billion in 2022), Tanzania Agricultural Development Bank (Tadb), Bank of Africa (BOA), Maendeleo Bank and Mkombozi Bank among others.

The massive rise in profitability - coupled with a reduction in levels of Non-Performing Loans (NPLs) and an increase in both customers’ deposits and loans and advances among other performance parameters – comes as a massive improvement from what the sector experienced between 2016 and 2017 when it [the sector] grappled with a squeezed liquidity in the market. As a result, in 2017, the entire sector registered a combined net profit of Sh286 billion.

The 17 lenders and the amounts in net profits they registered in 2022 in brackets include: NMB Bank (Sh429 billion), CRDB Bank (Sh353 billion), Standard Chartered Bank (Sh81 billion), NBC Bank (Sh57.776 billion), Exim (Sh49.29 billion), Absa (Sh29.667 billion), KCB (Sh28.223 billion), Stanbic (Sh26.445 billion), PBZ (Sh24.15 billion), Citibank (Sh18.511 billion), Azania (Sh18.367 billion) and DTB (Sh17.557 billion).

Tadb registered Sh11 billion in net profit while BOA, Mkombozi and Maendeleo Bank went home with Sh9.057 billion, Sh4.79 billion and Sh1.311 billion respectively.

Further analysis of the figures show that the rate of revenue growth was higher in the non-funded income stream for a number of lenders than it was for the funded (interest income) stream. Apparently, this explains that Tanzanians were increasingly finding it easy to access banking services through alternative channels like through agency banking, Automated Teller Machines (ATM), internet banking and mobile banking among others.

Lenders say the growth in profits symbolises that the government’s pro-business agenda was yielding positive results.

“It is a reflection of good improvement in the business environment which is supported by good government policies, especially geared on the support for private sector growth,” said the KCB managing director, Mr Cosmas Kimario.

He said KCB continued with its investment in digital channels which, he said, was key for the better serving of clients.

And, his NBC Bank counterpart, Mr Theobald Sabi said the rise in the lender’s bottom line was a reflection of a continued growth of its customer base.

“The strong financial performance by NBC Bank for the year 2022 reflects the growth we are seeing across all our customer segments....Our loans and advances, deposits, and transactional volumes have grown…We have seen a healthy rebound within the SME portfolio,” he said.

Mr Sabi, who doubles as the chairman for Tanzania Bankers Association (TBA), said the success has been achieved on the back of deliberate actions by the government, which, he said, have resulted in an increasingly conducive business environment.

NMB Bank’s chief executive officer Ruth Zaipuna said its annual net profit growth of 46.8 percent was the outcome of several factors, including a business-friendly environment that is supported by government’s policies.

She said the 2022 financial outturn also reflects the strong performance momentum NMB has had in the last four years and the impact of its service excellence and corporate giving agenda on people’s lives and productive activities.

“Strong client activity, investments in digital solutions, meticulous execution of our strategy, and high- staff morale and productivity, have driven the Bank’s strong performance,” said Ms Zaipuna.

As for the CRDB Bank managing director, Mr Abdulmajid Nsekela, the increase in profit to Sh353 billion in 2022, from Sh268 billion in 2021 was a result of concerted efforts to grow the non-funded income stream, fueled by growth in increased transaction volumes mainly from digital channels.

“We have been pushing digital channels for banking throughout the pandemic and post-pandemic, and that has contributed to the growth of the business,” he said, adding that the lender has also witnessed a growth in usage of SimBanking, Internet banking, cards and agency throughout the year.

According to the chief executive officer for Standard Chartered Bank Tanzania, Mr Herman Kasekende, the registered improvement for the sector – coupled by a 20 percent growth in credit extended to the private from only 10 percent in 2021 - was a reflection of the improving economic activity and positive sentiments by the private sector.

As for StanChart, he said the growth was a result of what he termed as a ‘disciplined strategy execution’.

“With the economy continuing to recover from Covid-19 challenges, our income grew significantly backed up by growth of customer assets and strong client activities mainly through our digital solutions,” he said.

He said the bank’s focus was on helping Tanzanian businesses become more sustainable and competitive beyond our borders while ensuring accessibility of financial services.

“While driving efficiency in line with our strategic priorities, we achieved a cost to income ratio of 35 percent compared to the regulatory requirement of 55 percent. Loan impairment had a remarkable performance with a positive swing year-on-year on account of sound portfolio management and robust execution of recovery measures,” he said.

The efforts, he said, resulted in year-on-year growth of 117 percent of the bank’s Profit Before Tax whilst keeping the balance sheet well capitalised and liquid.