Tanzania's bank profits jump by Sh400 billion

The analysis, which involved 12 of the 13 first-tier banks and eight more in the middle ranks, indicates that banks registered over Sh1.5 trillion in net profits last year compared to about Sh1.1 trillion in 2022.

The money came mostly from the funded (interest) income stream even as rapid advancement and deployment of banking technologies have also seen a commendable growth in the non-funded income stream, mostly, fees and commissions.

NMB Bank and CRDB Bank alone account for more than half of the combined assets, customer deposits and loans in Tanzania’s banking sector.

Also involved in the analysis were other first-tier lenders, namely National Bank of Commerce (NBC), Standard Chartered Bank, Stanbic Bank, Citibank, Absa Bank, KCB Bank, Diamond Trust Bank (DTB), Tanzania Commercial Bank (TCB), Exim Bank and Azania Bank.

The financial statements for the People’s Bank of Zanzibar could not be easily accessed until Tuesday.

The analysis also involved Equity Bank, I&M Bank, Ecobank, NCBA Bank, Maendeleo Bank, Bank of Africa, Tanzania Agricultural Development Bank and Amana Bank.

In the first-tier category, NMB Bank’s net profit rose to Sh542 billion in 2023 from Sh431.7 billion in 2022 while that of CRDB Bank increased to Sh423.7 billion in 2023 from Sh351.4 billion in 2022.

Similarly, the profit after tax for Standard Chartered Bank rose to Sh91.2 billion in 2023 from 73.04 billion in 2022, NBC rose to Sh85.646 billion from Sh57.278 billion, while that of Stanbic Bank increased to Sh85.1 billion in 2023 from only Sh25.97 billion in 2022

Citibank’s rose to Sh56.3 billion from Sh17.43 billion during the comparable periods.

Exim Bank’s net profit increased to Sh55.205 billion in 2023 from Sh44.09 billion in 2022 while Absa registered Sh75.158 billion in net profit in 2023 compared with Sh32.375 billion in 2022 while net profit for KCB rose to Sh37 billion in 2023 from Sh28.228 billion in 2022.

Azania Bank’s profit after tax rose to Sh29.089 billion from Sh18.883 billion in 2022. DTB's profit after tax increased to Sh18.86 billion in 2023 from  Sh17.95 billion in 2022.

On the other hand, TCB registered a loss of Sh37.7 billion in 2023 from a profit after tax of Sh3.15 billion in 2022.

In the middle-tier lenders, of particular interest could be Equity, Ecobank, NCBA, Bank of Africa and I&M which saw their bottom lines more than doubling in 2023 compared to 2022.

Equity saw its profit after tax increasing four-fold to Sh9.264 billion in 2023 from Sh2.264 billion in 2022 while that of Ecobank rose over six-fold to Sh8.74 billion in 2023 from Sh1.4 billion in 2022.

NCBA shareholders must be extremely happy because the lender managed to jump from a 2022 loss of Sh32.4 billion to register a staggering Sh18.28 billion in profit after tax in 2023. Like NCBA, I&M registered a Sh9.9 billion loss in 2022 but it returned to its profitable zone in 2023 with a profit after tax of Sh3.74 billion.

The profit after tax of the Bank of Africa more than doubled to Sh11.033 billion in 2023 from Sh5.3 billion in 2022 while Maendeleo Bank registered Sh2.09 billion in profit after tax, up from Sh1.41 billion.

Most lenders also managed to contain their levels of Non-Performing Loans (NPLs) to below five percent in line with the regulatory benchmark while the amount in loans and customers’ deposits were also in the upward swing in 2023.

NBC managing director who doubles as the current chairman for Tanzania Bankers Association (TBA), Mr Theobald Sabi, said the performance was testament to an improving business climate, perpetuated President Samia Suluhu Hassan’s administration.

“I attribute this positive performance to the improving business environment due to efforts by President Samia Suluhu Hassan’s administration….The government has built a conducive business environment and a strong economy that is encouraging for a functioning and inclusive financial services industry,” said Mr Sabi.

The operating environment, regulated by the Bank of Tanzania (BoT) he said, has been supportive for banks and financial institutions to reach a broader customer base.

“We remain optimistic about the potential for sustained growth in the banking sector, and the sector’s ability to support economic and social activities as the country looks forward,” he said.

In his remarks, the managing director for KCB Bank Tanzania, Mr Cosmas Kimario, echoed similar sentiments, saying the banking sector has experienced growth due to what he termed as ‘a very friendly policy environment’, which has boosted business activities and flourished financial markets.

"We have witnessed a rapid pace of business growth during President Samia Suluhu Hassan’s tenure. The banking sector now has clients who deposit and withdraw money, as well as borrow and repay,” said Mr Kimario.

He also mentioned an increase in customer-focused initiatives, specifically for KCB Bank, complemented by investments in human resources. These resources are tasked with creating solutions needed by the customers.

"For the year 2024, we expect more growth, supported further by favourable regulatory frameworks and policies. For example, the new monetary policy framework by the Bank of Tanzania (BoT) which we anticipate will stimulate business and financial activities in the country,” Mr Kimario added.

Speaking about her bank’s performance, the NMB Bank CEO, Ms Ruth Zaipuna said the historic performance results have surpassed the lender’s Strategic Medium-Term Plan for 2021-2025 which was prepared in 2020.

In 2020, NMB’s total income stood at Sh842 billion while the profit before tax was Sh206 billion. However, the two parameters rose to Sh1.4 trillion and Sh775 billion respectively in 2023.

Ms Zaipuna attributed the performance to exponential loan book growth and surge in customer deposits, saying the 2023 monumental achievements also resulted from solid portfolio quality and significant efficiency gains.

NMB Bank managed to register over 1.2 million new customer accounts, bringing the total number of the lender’s customers to over 7.1 million.

Total assets stood at Sh12.2 trillion as of end of 2023, representing an increase of 19 percent year on year, courtesy of a growing deposit base and loan book which grew by 12 percent and 28 percent respectively, Ms Zaipuna said.

She said the efficiency gains made during the year came from improvement of the cost-to-income ratio that reached an impressive 39 percent from 50 percent whereas better lending management led to the non-performing loan ratio being bettered to 3.2 percent from 3.5 percent.

The parameters remain below the regulatory thresholds of 55 percent and five per cent respectively.

Her CRDB Bank counterpart, Mr Abdulmajid Nsekela attributed his bank’s massive improvement in profit, customer deposits, total assets, net loans and further improvement in the level of NPLs to what he termed as a ‘seamless execution of the bank’s new medium-term strategy (2023 – 2027)’.

“The execution of our strategic initiatives has propelled exceptional growth, evidenced by a remarkable 35 percent expansion in loans to MSMEs, and notable advancements in inclusive financing across diverse sectors and segments such as youth, women, agriculture, and sustainability financing,” he said.

The bank’s strategic investments in digital transformation, said Mr Nsekela, were yielding significant returns as shown by an 11 percent growth in Non-Funded Income (NFI), driven by increased usage of digital channels and innovative insurance offerings.

And, according to the CRDB Bank’s chief finance officer, Mr Fredrick Nshekanabo, the performance was testament to the lender’s focus on maintaining a well-diversified and high-quality loan portfolio which saw NPLs contained to only 2.8 percent of total gross loans.

The Bank also managed to contain Cost to Income ratio to 49.5 percent amid escalating operating costs occasioned by deteriorations in the global macro-economic environment.

In the past year, CRDB Bank extended its reach into new territories, such as the Democratic Republic of Congo (DRC) and venturing into the insurance sector with the establishment of CRDB Insurance Company.

These, according to Mr Nshekanabo, were further strengthening the bank’s foothold not only in Tanzania but also across the broader East African region.