No end in sight for CRDB’s, NMB’s woes as Q1 profits dwindle

Dar es Salaam. The challenges that commercial banks went through last year may not be over yet as some of the country’s largest lenders registered dwindling profits during the first quarter of 2018.

In the past two years, the sector traversed through a bumpy road that stemmed from a squeezed liquidity, resulting into reduced lending to the private sector as commercial banks grappled with illiquid clients.

With a tight liquidity in the economy, borrowers failed to honour their obligations, resulting into an accumulation of high Non-Performing Loans (NPLs) levels.

Until the end of December 2016, the NPL to total gross loans ratio had risen to an average of 9.5 per cent from an average of 6.4 per cent in 2015 and against an accepted threshold of five per cent.

But amid expectations that agriculture and massive public investments in infrastructure development would drive Tanzania’s 7.2 per cent economic growth in 2018, financial statements - released on Monday, 30 April 2018 - show that some large banks are still struggling.

Both NMB Plc and CRDB Bank Plc reported dropping profit levels in their financial statements for the first quarter of 2018.

CRDB reported a net profit of Sh13.6 billion during the first quarter of 2018, down from Sh26.188 billion during the first quarter of last year (2017).

Similarly, NMB Plc’s net profit dropped from Sh40.9 billion during the first quarter of 2017 to Sh31.687 billion during the first quarter of the current calendar year.