Top banks cash in on forex trade

Dar es Salaam. The closure of bureaux de change operations across the country was a blessing in disguise to commercial banks as they came in swiftly to fill the void, sending their profits from foreign exchange dealings up by about 70 per cent during the first quarter of 2019.

Recently released financial statements show a massive increase in profits earned from foreign exchange operations during the first quarter of 2019 compared to a similar period in 2018.

Calculations by The Citizen show that commercial banks earned almost Sh60 billion from foreign exchange dealings during the first quarter of 2019, up from about Sh40 billion during a similar period in 2018.

Almost all first-tier banks, with the exception of Barclays Bank Tanzania (BBT), registered increases in earnings from foreign exchange dealings, figures show.

CRDB Bank Plc, NMB Bank Plc, NBC Bank, Standard Chartered Bank, Exim Bank and Diamond Trust Bank (DTB) are some of the financial entities whose earnings from foreign exchange dealings rose significantly during the first quarter of 2019, according to the recently published financial statements.

Late in February 2019, the Bank of Tanzania (BoT) conducted an inspection into undertakings of about 80 bureaux de change in Dar es Salaam and established that almost all of them were flouting the law, regulations and procedures associated with the money changing business, giving commercial banks a chance to come in and grab the business opportunity.

The inspection in Dar es Salaam came about four months after a similar exercise resulted in the closure of all money shops in Arusha in November 2018.

Commercial banks swiftly stepped in and embarked on aggressive marketing of their foreign exchange services.

NMB Bank Plc, CRDB Bank Plc and TPB Bank Plc are some of the banks that have stopped at nothing to take money changing services closer to customers, including establishing a presence at Julius Nyerere International Airport (JNIA).

“We now ensure that all our branches have a unit for this… at the airports, we have come up with a quick intervention of mobile vehicles that provide the service there,” NMB Bank Plc head of communications and corporate affairs Joseline Kamuhanda told The Citizen last month.

TPB Bank Plc chief executive Sabasaba Moshingi said the lender was the first to start providing the service at the country’s airports, including JNIA, adding that all commercial banks had been tasked with providing bureaux de change services.

Financial results show that CRDB Bank’s profit from foreign exchange dealings rose to Sh12.363 billion during the first quarter of 2019 from Sh7.156 billion during a similar period in 2018.

NMB’s profit from foreign exchange operations rose from Sh5.859 billion in first quarter of 2018 to Sh7.504 billion in a similar period this year. As for NBC, the profit more than doubled to Sh7.548 billion between January and March 2019 from Sh3.623 billion during a similar period in 2018.

Standard Chartered Bank’s earnings from foreign exchange dealings rose to Sh7.481 billion during first quarter of 2019 from Sh5.6 billion during comparative quarter in 2018.

Exim Bank Group’s profit from foreign exchange operations reached Sh4.8 billion in first quarter of 2019 from Sh2.7 billion while DTB’s profit from foreign exchange operations rose to Sh4.7 billion in 2019 Q1 from Sh1.9 billion in 2018 Q1.

KCB Bank Tanzania’s saw its non-interest earnings rising to Sh5.34 billion during the first quarter of 2019, with foreign exchange transactions almost doubling to Sh2.7 billion, up from Sh1.433 billion.

BBT’s profit from foreign exchange operations declined to Sh7.371 billion in 2019 Q1 from Sh8.691 billion in 2018 Q1.

Even the newly established China Dasheng Bank Limited saw its earnings from foreign exchange transaction rising from zero during the first quarter of 2018 to Sh1.7 billion during the first quarter of 2019.

Finance and Planning minister Philip Mpango told journalists in Dodoma last month that investigations into operations of bureaux de change had revealed that money shops were being used as agents for money laundering and capital flight.

The shops, he said, were also receiving deposits from some businesspeople, contrary to what is required of them under their business licences, thereby contributing to the depreciation of the Tanzanian shilling.

“For instance, we found out that money shops spent a lot of Tanzania shillings in purchasing foreign currencies, but they were not found in possession of the bought monies (foreign currencies). They had no documents to show how the bought foreign currencies had been spent or traded,” he said.