Tanzania's mid-sized banks to watch
Dar es Salaam. Tanzania’s four mid-sized banks have shown resilience by growing fast while a majority of their industry peers are still struggling to recover.
A random review of audited financial statements of 13 banks with assets ranging between Sh100 billion and Sh600 billion indicated that the four banks had recorded double-digit growth from 2017 to 2019 in at least three out of five key indicators.
The indicators used by The Citizen include asset size, profit/loss accounts, customer deposits, level of non-performing loans (NPLs) and individual bank’s loans, advances and overdrafts.
The most resilient banks in the group (between Sh100 billion and Sh600 billion in assets) included United Bank for Africa (UBA), Amana Bank, I&M Bank Tanzania and the state-run TIB Corporate Bank.
Success stories
UBA could arguably be the best performer in the list after it consecutively improved its performance in all the five indicators in the last three years.
The bank increased its assets from Sh122.9 billion in 2017 to Sh226.6 billion in 2019 - nearly 84 percent improvement, according to the bank’s financial statements.
UBA moved out of the loss-making zone in 2019 by recording Sh1.6 billion. Consecutively, it reduced its losses from Sh11.1 billion in 2016 to Sh5.8 billion in 2017 - and to Sh3 billion in 2018.
UBA said it aligned its banking strategy with key growth sectors of the economy - including construction, energy, infrastructures, trade (import and export), transport and logistics - whereby it managed to grow its assets and deposits base.
Last year, UBA partnered with CRDB Bank Plc to provide a $737.5 million (Sh1.7 trillion) guarantee to a joint venture of Arab Contractors and Elsewedy Electric of Egypt in execution of the $3.95 billion Nyerere Hydroeletric Power Project on Rufiji River.
“With the current performance trend, UBA eyes to become a systematic important bank (SIB) in the near future in terms of our share of total assets, deposits, profitability and customer base of the industry through our digital channels while sustaining our low NPL ratio,” the UBA managing director, Mr Usman Isiaka told The Citizen.
The bank also benefited from the size and wide experience of its parent company, UBA Group, a Pan-African Bank with a presence in 20 African countries and operations in the three global financial centres of New York, London and Paris. “This enables us to execute some ‘big-ticket’ transactions that have significant positive impact on our performance,” said Mr Isiaka.
While deposits increased from Sh31.5 billion in 2017 to Sh111.1 billion in 2019, NPLs dropped from 5.7 percent to the lowest level of 0.4 percent during the period under review.
As some other commercial banks dipped their performance in the last three years, Amana Bank - Tanzania’s first fully Sharia-compliant bank - improved its assets, deposits and loans consecutively in the last three years while maintaining profitability.
While assets improved by 16.67 percent - from Sh204 billion in 2017 to Sh238 billion in 2019 - deposits increased by 18.26 percent (to Sh190.4 billion), as financing increased by 22.5 percent to Sh162.6 billion. However, Amana’s NPLs deteriorated from 5.7 to 11.5 percent in the period reviewed. The Citizen’s effort in the past two weeks to get comments from the bank’s management proved futile.
I&M is another bank which showed significant growth in three indicators. The bank increased profitability by 25 percent: from Sh4.8 billion in 2017 to Sh6 billion in 2019, according to the bank’s statements.
Assets increased by 15 percent - rising from Sh443.46 billion in 2017 to Sh510.3 billion in 2019 - while loans issued also increased by 10 percent, from Sh312.3 billion in 2017 to Sh345.3 billion in 2019.
However, challenges were in NPLs levels - which deteriorated from 8.47 percent to 11.6 percent - and in customer deposits, which also fell by 3.4 percent, from Sh319.6 billion to Sh308.5 billion. However, efforts to get views from the management bore no fruits.
The TIB Corporate Bank is another bank which recorded positive trends in some aspects despite the fact that it had consecutive losses in the three years since 2017.
In 2019, the bank recorded a Sh6.6 billion loss, while assets rose from Sh301.3 billion in 2017 to Sh400.6 billion in 2018 - and then fell to Sh335.96 billion last year.
Deposits also increased from Sh203.8 billion in 2017 to Sh297.6 billion in 2018 before slowing to Sh236.9 billion in 2019.
However, another challenge - apart from loss making - was the level of NPLs which deteriorated from six percent in 2017 to 27 percent in 2018... and to 37 percent last year.
