Major banks’ first half profits jump

Dar es Salaam. Major commercial banks registered a healthy increase in profits in the first half of 2019 during which lenders focused on the foreign exchange trade as an important source of income.

Traditionally, banks depend on interest as their main source of revenue, but many turned their attention to the foreign currency business when the government cracked down on bureaux de change last year.

Financial statements for the second quarter of 2019 show that the profits of Tanzania’s biggest banks increased significantly.

CRDB Bank more than doubled its group profits from Sh29.3 billion at the end of June 2018 to Sh61 billion in the first half of 2019.

The bank’s income from interest increased from Sh276.88 billion to Sh315.38 billion, and the lender also took efficiency measures that reduced interest expenses from Sh78.56 billion to Sh57.59 billion.

“The biggest contributors to the success are reductions in interest expenses coming in tandem with increased interest income. This may be interpreted as an indication that CRDB has become more efficient by accessing cheaper funding, while investing in high-return instruments,” brokerage firm Tanzania Securities said in its response to the results.

CRDB Bank’s earnings from foreign currency dealings increased from Sh14.5 billion to Sh21.3 billion during the same period.

However, NMB Bank’s profit decreased from Sh66 billion to Sh56.7 billion. The bank’s income from interest increased from Sh294.9 billion to Sh307.2 billion, but interest expenses rose from Sh53 billion to Sh63.7 billion.

The lender’s income from foreign currency dealings also increased from Sh11.1 billion to Sh14 billion during the period.

Despite the slide, NMB Bank is the largest bank in terms of assets, which are valued at Sh6.4 trillion followed by CRDB Bank on Sh6.3 trillion, according to their second quarter statements.

The National Bank of Commerce (NBC) registered an increase in profit from Sh7.9 billion to Sh14.2 billion, while its profit from foreign currency dealings jumped from Sh7.5 billion to Sh13.4 billion.

Standard Chartered Bank Tanzania’s net profit also increased from Sh12.5 billion to Sh20.9 billion. The bank’s profit from foreign currency transactions increased from Sh10.7 billion to Sh10.8 billion.

Stanbic Bank Tanzania’s profit grew from Sh6.3 billion to Sh10.9 billion, while income from foreign currency transactions rose from Sh14.3 billion to Sh16.3 billion.

Azania Bank, which acquired Bank M to join the group of tier-one banks, recorded a net profit of Sh3.5 billion compared with Sh3.6 billion in the first half of 2018.

Prof Honest Ngowi of Mzumbe University said yesterday that it was difficult to accurately project the performance of the banking industry this year since it depended to a large extent on the performance of the economy.

“We have seen the economy grow by 6.6 per cent in the first quarter against a target of seven per cent. At the same time, there are big projects such as Stiegler’s Gorge which are domestically funded and thus provide a business opportunity for banks. It’s thus not easy to accurately what the general performance will be this year,” he said in a telephone interview.