NMB navigates challenging environment to deliver s...

NMB navigates challenging environment to deliver strong financial performance

Nyashadzashe Ndoro

NMB Bank Limited, a Zimbabwean commercial bank, has reported a strong financial performance for the year ended December 31, 2023, despite a challenging operating environment.

The bank’s profit after tax grew by 378% to ZWL$275.6 billion, driven by a significant increase in fees and commission income.

The local operating environment was characterised by exchange rate volatility, high inflation, and the effects of El Nino, as well as softening commodity prices. The bank policy rate was initially reduced from 200% to 130% to align with inflation, but later had to be adjusted again due to a surge in inflation.

NMB Bank highlights its strength in digitisation and automation as a key factor in maintaining cost-effectiveness amidst rising inflation. The bank also managed to secure a line of credit from the Trade and Development Bank, which contributed to an increase in its borrowing capacity.

“Lending to the productive sectors including individuals was also reviewed from 100% to 70% per annum. However, in June 2023, month-on-month blended inflation peaked to a high of 74.5% compared to 0.1% in January largely on account of a huge preference for United States dollars, an increase in money supply growth and market indiscipline.

“In response to the adverse movements in the exchange rate and inflation, the authorities announced a cocktail of measures namely scrapping of import duty on basic commodities, removal of the 15% foreign currency surrender requirement on domestic sales, interest review to curb speculative borrowing and the foreign auction market fine-tuning.

“Despite the signs of resilience and recovery, the economy remained vulnerable to exchange rate pressures due to the softening of commodity prices,” the bank noted.

Despite the challenges, NMB Bank’s capital adequacy ratio remained strong at 35%, exceeding the regulatory minimum of 12%. The bank also maintained a sound liquidity position throughout the year.

Looking ahead, the bank’s focus will be on disciplined execution of its strategy, leveraging technology, and supporting the growth of the Zimbabwean economy.