NMBZ soars despite economic turbulence, operating ...

NMBZ soars despite economic turbulence, operating income up 203%

Nyashadzashe Ndoro

CHIEF REPORTER

NMBZ Holdings Limited released a positive trading update for the first quarter ended March 31, 2024 (Q1 2024), highlighting a 203% increase in operating income compared to the same period last year.

This growth was achieved despite a challenging economic environment marked by high inflation and a depreciating local currency.

The Zimbabwe Stock Exchange-listed financial services group attributed the strong performance to increased transaction volumes, a diversified product offering, and a robust balance sheet with significant holdings in USD-denominated assets.

NMBZ’s banking subsidiary, NMB Bank, also successfully migrated to a new core banking system in April 2024, signifying a major step forward in its digital transformation journey.

The trading update acknowledged the initial difficulties encountered in Q1 2024. Zimbabwe grappled with elevated inflation, reaching 6.6% in January before declining to 4.9% in March. The local currency also experienced rapid depreciation. In response, the Reserve Bank of Zimbabwe introduced a new monetary policy framework in April 2024.

The central bank’s measures included the introduction of a new Zimbabwe Gold currency, pegged to a basket of foreign currencies and precious metals. Additionally, the RBZ reduced the bank policy rate from 130% (ZWL era) to 20% (ZiG) to combat inflation.

NMBZ highlighted several key corporate developments in Q1 2024. The group’s banking subsidiary secured a US$15 million Trade Finance Transaction Guarantee Facility from the African Development Bank. This initiative aims to unlock trade finance opportunities for small and medium-sized enterprises involved in agriculture and trade.

Financial performance remained robust. NMBZ generated operating income of ZWL$1.3 trillion in Q1 2024, a significant increase from ZWL$429 billion in the previous year. Loan and deposit figures also reflected a strong preference for USD-denominated holdings. Loans and advances amounted to ZWL$1.7 trillion, with 92% denominated in USD. Deposits stood at ZWL$1.4 trillion, with 87% held in USD.

The bank maintained a conservative lending approach, prioritising quality assets. This strategy resulted in a low Non-Performing Loan ratio of 0.73%, demonstrating effective risk management. NMBZ’s capital adequacy ratio also remained healthy at 28.17%, exceeding the regulatory minimum of 12%.

The trading update expressed optimism regarding the economic outlook under the new monetary framework. The ZiG currency is expected to stabilize the local economy and foster predictability in financial affairs. Inflation is projected to fall within a range of 2% to 5% annually, with key sectors such as mining and tourism anticipated to drive economic growth in 2024.

Looking ahead, NMBZ pledges to maintain its focus on core business activities while expanding its footprint in promising sectors of the Zimbabwean economy.