INTRODUCTION

For the greater part of 2021, there was a growing sense of cautious optimism that finally the worst of the COVID-19 pandemic was behind us. However, towards the end of the year, our resilience was put to the test once more as the spread of new variants necessitated the reintroduction of various restrictions. That presented challenges to businesses emanating from a slowdown in the global economy and supply chain disruptions. Despite these factors, the Zimbabwean economy continued to show signs of resilience and recovery.

The various economic stabilization initiatives, including the foreign exchange auction system introduced in June 2020, resulted in a significant drop in inflation, with year-on-year inflation (Y.o.Y) dropping from a high of 837% recorded in July 2020, to 60.74% as of December 2021. Month-on-month inflation (M.o.M) averaged 4.05% during the year 2021.

During the period under review, the local currency depreciated by 32.9% from ZW$81.7866/US$ to ZW$108.666/US$. In 2021, total foreign currency receipts inflows into the economy increased by 53% to US$9.7 billion, a record high compared to US$6.3 billion in 2020. The performance was driven by increased commodity prices, increased capacity utilization across sectors, international remittances, and gold incentives put in place by the government.

Notwithstanding the economic headwinds, the economy achieved an economic growth rate of 7.8% on the back of the continuation of the tight monetary and fiscal consolidation, a good agricultural season and the stabilization effect brought by the auction system.

GROUP RESULTS

Financial Performance
Operating income increased from ZW$3.4 billion to ZW$6.98 billion for the year ended 31 December 2021, largely driven by growth in the transaction volumes and values during the period under review. Total comprehensive income for the period amounted to ZW$2.25 billion (Dec 2020 – ZW$1.66 billion). The Group achieved a basic earnings per share of 463 cents (Dec 2020 – 338 cents).

Operating expenses at ZW$3.5 billion, were 72% above the 2020 levels, reflecting the effects of inflation and exchange rate depreciation. The Bank continues to pay special focus on its digitization strategy which is expected to increase efficiencies resulting in cost reduction.

Financial position
Total assets closed the year at ZW$29.4 billion, up 67% from ZW$ 17.6 billion as at 31 December 2020, funded by strong growth in customer deposits as the banking subsidiary continues to grow its customer base. Customer deposits and other liabilities increased by 85% reflecting strong personal and commercial inflows following the easing of COVID-19 restrictions.

The Group’s investment property portfolio was valued at ZW$3.5 billion as at 31 December 2021 while property and equipment stood at ZW$4.1 billion.The revaluation gains largely reflect the changes in the macro economic environment.

Loans and advances and other assets stood at ZW$12.4 billion as at 31 December 2021, increasing by 93% from prior period levels. The banking subsidiary maintained a high-quality loan book, closing the year with an NPL ratio of 1.33%.

The Bank maintained a sound liquidity position with a liquidity ratio of 41% and this was above the statutory minimum of 30%.

Capital
The capital adequacy ratio of the banking subsidiary remained strong at 57.48% compared to a regulatory minimum of 12%. The subsidiary maintained adequate capital levels to cover all risks and was compliant with the minimum capital of the equivalent of USD30 million.

Dividend
The Board has resolved not to declare a dividend in order to fund the growth initiatives being pursued by the Group as well as buttress the regulatory capital position of the Group’s banking subsidiary.

Blocked Funds
The banking subsidiary owed USD13.4 million to various line of credit providers as at 31 December 2021 which have been registered as Blocked Funds with the Reserve Bank of Zimbabwe (RBZ) in line with regulatory directives. In 2021, the Government of Zimbabwe assumed the obligation to settle these Blocked Funds in terms of section 52 of the Finance Act no 7 of 2021. The Blocked funds are listed under Annex 1 of the Finance Act no 7 of 2021. In terms of section 52 of the Finance Act no 7 of 2021, outstanding blocked funds may be liquidated through the issuance of Government-backed zero coupon or noninterest-bearing foreign exchange savings bonds or such other debt instruments denominated in foreign currency. The timing of issuance of the Government-backed instruments is yet to be advised.

London Stock Exchange Listing
At the 2021 Annual General Meeting, the Company sought and obtained shareholder approval to delist from the London Stock Exchange following a determination that the regulatory compliance and administrative costs that the Company was incurring annually were high and outweighed any benefits derived or to be derived from the dual listing. Having obtained shareholder approval, the Company applied and obtained approval to delist from the London Stock Exchange with effect from 8 July 2021. The delisting did not adversely affect any of our shareholders as the company’s shares continue to be listed on the Zimbabwe Stock Exchange where the company has always maintained its primary listing. The number of shares held on the London Stock Exchange was 198 443 shares. The Company is in the process of winding up administrative processes related to the delisting.

DIRECTORATE

Mr. Benefit Washaya retired at the end of December 2021 after serving as the Bank’s Chief Executive Officer for fourteen years. He was replaced by Mr. Gerald Gore, formerly the Deputy Chief Executive Officer, who was appointed Chief Executive Officer with effect from 1 January 2022. Mr. Benson Ndachena also resigned from his post as Chief Finance Officer with effect from 1 October 2021 to pursue other interests. He was replaced by Mrs. Margret Chipunza who assumed the role of Chief Financial Officer with effect from 1 September 2021. I thank Mr. Washaya and Mr. Ndachena for their sterling contribution to the Group and I wish them well in their future endeavors. I am confident in the ability of the incoming Executive team to take NMB into our next growth phase.

OUTLOOK AND STRATEGY

The Bank will continue to accelerate the digitization strategy with the main aim being to provide seamless digital financial solutions to both corporate and individual clients. The Group will continue to fund and support the productive sectors of the economy as part of our drive to support the growth of the Zimbabwean economy. I will be coming back to the market with further developments on this front.

APPRECIATION

I thank our valued clients, depositors, shareholders, regulatory authorities and other key stakeholders for their continued support. To my fellow board members, management and staff, I extend my heartfelt gratitude for their continued diligence, dedication and relentless efforts which have culminated in the achievement of these commendable results.

MR. B. A. CHIKWANHA

CHAIRMAN

10 APRIL 2022

2021 Annual report.pdf

TRADING ENVIRONMENT

The first quarter was negatively impacted by the conflict between Russia and Ukraine which began in February 2022 resulting in global trade disruptions and inflation given that these two countries account for 25% of global trade. On the domestic front, month-on-month (M.o.M) inflation increased from 1.6% in 2021 to 7% by March 2022 while year-on-year (Y.o.Y) closed at 72%. The local currency depreciated by 13% during the first quarter.

CORPORATE DEVELOPMENTS

The Group’s banking subsidiary has, in the first quarter, focused its efforts on enhancing customer experience and ensuring a seamless and frictionfree customer journey. In the period under review, 3 enhancements were made to our channels, namely;
1. USSD Virtual Assistant was implemented on the *241# platform to enable customers to log their queries. This feature provides an additional touchpoint, through which our customers can access assistance on their queries.
2. Digital Card Issuance was implemented on the *241# platform. The solution will ensure that customers self initiate the application of debit cards and set their preferred PIN on the USSD platform without completing any forms.
3. In line with ongoing efforts to onboard more partners to the NMBConnect platform, additional billers were added to the platform to ensure ease of payment for our customers.

TRADING PERFORMANCE

CAPITALISATION AND GOING CONCERN

The Group and the Bank (regulated subsidiary) are well capitalised and the Directors will ensure that the capital levels remain adequate.

The Group, through its banking unit will continue to accelarate the digitisation strategy with the main aim being to provide seemless digital financial solutions to our clients.

By Order of the Board

Violet Mutandwa
Company Secretary
13 May 2022

INTRODUCTION

For the greater part of 2021, there was a growing sense of cautious optimism that finally the worst of the COVID-19 pandemic was behind us. However, towards the end of the year, our resilience was put to the test once more as the spread of new variants necessitated the reintroduction of various restrictions. That presented challenges to businesses emanating from a slowdown in the global economy and supply chain disruptions. Despite these factors, the Zimbabwean economy continued to show signs of resilience and recovery.

The various economic stabilization initiatives, including the foreign exchange auction system introduced in June 2020, resulted in a significant drop in inflation with, year-on-year inflation (Y.o.Y) dropping from a high of 837% recorded in July 2020, to 60.74% as of December 2021. Month-on-month inflation (M.o.M) averaged 4.05% during the year 2021.

During the period under review, the local currency depreciated by 32.9% from ZW$81.7866/US$ to ZW$108.666/US$. In 2021, total foreign currency receipts inflows into the economy increased by 53% to US$9.7 billion, a record high compared to US$6.3 billion in 2020. The performance was driven by increased commodity prices, increased capacity utilization across sectors, international remittances, and gold incentives put in place by the government.

Notwithstanding the economic headwinds, the economy achieved an economic growth rate of 7.8% on the back of the continuation of the tight monetary and fiscal consolidation, a good agricultural season and the stabilization effect brought by the auction system.

GROUP RESULTS

FINANCIAL PERFORMANCE

Operating income increased from ZW$3.4 billion to ZW$6.98 billion for the year ended 31 December 2021, largely driven by growth in transaction volumes and values during the period under review. Total comprehensive income for the period amounted to ZW$2.25 billion (Dec 2020 ZW$1.66 billion).The Group achieved a basic earnings per share of 463 cents (Dec 2020 – 338 cents).

Operating expenses at ZW$3.5 billion, were 72% above the 2020 levels, reflecting the effects of inflation and exchange rate depreciation. The Bank continues to pay special focus on its digitization strategy which is expected to increase efficiencies resulting in cost reduction.

FINANCIAL POSITION

Total assets closed the year at ZW$29.4 billion, up 67% from ZW$ 17.6 billion as at 31 December 2020, funded by strong growth in customer deposits as the banking subsidiary continues to grow its customer base. Customer deposits and other liabilities increased by 85% reflecting strong personal and commercial inflows following the easing of Covid-19 restrictions.

The Group’s investment property portfolio was valued at ZW$3.5 billion as at 31 December 2021 while property and equipment stood at ZW$4.1 billion. The revaluation gains largely reflect the changes in the macro economic environment.

Loans and advances and other assets stood at ZW$12.4 billion as at 31 December 2021, increasing by 93% from prior period levels. The banking subsidiary maintained a high-quality loan book, closing the year with an NPL ratio of 1.33%.

The Bank maintained a sound liquidity position with a liquidity ratio of 41% and this was above the statutory minimum of 30%.

CAPITAL

The capital adequacy ratio of the banking subsidiary remained strong at 57.48% compared to a regulatory minimum of 12%. The subsidiary maintained adequate capital levels to cover all risks and was compliant with the minimum capital of the equivalent of USD30 million.

DIVIDEND

The Board has resolved not to declare a dividend in order to fund the growth initiatives being pursued by the Group as well as buttress the regulatory capital position of the Group’s banking subsidiary.

BLOCKED FUNDS

The banking subsidiary owed USD13.4 million to various line of credit providers as at 31 December 2021 which have been registered as Blocked Funds with the Reserve Bank of Zimbabwe (RBZ) in line with regulatory directives. In 2021, the Government of Zimbabwe assumed the obligation to settle these Blocked Funds in terms of section 52 of the Finance Act no 7 of 2021. The Blocked funds are listed under Annex 1 of the Finance Act no 7 of 2021. In terms of section 52 of the Finance Act no 7 of 2021, outstanding blocked funds may be liquidated through the issuance of Government-backed zero coupon or non-interest-bearing foreign exchange savings bonds or such other debt instruments denominated in foreign currency. The timing of issuance of the Government-backed instruments is yet to be advised.

LONDON STOCK EXCHANGE LISTING

At the 2021 Annual General Meeting, the Company sought and obtained shareholder approval to delist from the London Stock Exchange following a determination that the regulatory compliance and administrative costs that the Company was incurring annually were high and outweighed any benefits derived or to be derived from the dual listing. Having obtained shareholder approval, the Company applied and obtained approval to delist from the London Stock Exchange with effect from 8 July 2021. The delisting did not adversely affect any of our shareholders as the company’s shares continue to be listed on the Zimbabwe Stock Exchange where the company has always maintained its primary listing. The number of shares held on the London Stock Exchange was 198 443 shares. The Company is in the process of winding up administrative processes related to the delisting.

DIRECTORATE

Mr. Benefit Washaya retired at the end of December 2021 after serving as the Bank’s Chief Executive Officer for fourteen years. He was replaced by Mr. Gerald Gore, formerly the Deputy Chief Executive Officer, who was appointed Chief Executive Officer with effect from 1 January 2022. Mr. Benson Ndachena also resigned from his post as Chief Finance Officer with effect from 1 October 2021 to pursue other interests. He was replaced by Mrs. Margret Chipunza who assumed the role of Chief Financial Officer with effect from 30 September 2021.

I thank Mr. Washaya and Mr. Ndachena for their sterling contribution to the Group and I wish them well in their future endeavors. I am confident in the ability of the incoming Executive team to take NMB into our next growth phase.

OUTLOOK AND STRATEGY

The Bank will continue to accelerate the digitization strategy with the main aim being to provide seamless digital financial solutions to both corporate and individual clients. The Group will continue to fund and support the productive sectors of the economy as part of our drive to support the growth of the Zimbabwean economy. I will be coming back to the market with further developments on this front.

APPRECIATION

I thank our valued clients, depositors, shareholders, regulatory authorities and other key stakeholders for their continued support. To my fellow board members, management and staff, I extend my heartfelt gratitude for their continued diligence, dedication and relentless efforts which have culminated in the achievement of these commendable results.

B. A. CHIKWANHA
CHAIRMAN

10 APRIL 2022

Download Full 2021 Abridged financial results

Gerald has over 18 years banking experience that spans over digital transformation, risk management, corporate banking, treasury and retail banking. Prior to his appointment, Gerald served as the Deputy CEO since September 2019 as well as Chief Operating Officer since 2015 supporting the CEO in strategy execution and responsible for the Bank’s digital transformation. He also served as Chief Risk Officer. Prior to joining NMB in 2008, he worked for a number of financial institutions in corporate banking, treasury & risk management.

Gerald holds a Master in Business Leadership (MBL) from Unisa, MSc in Finance & Investments from NUST, BComm Banking from NUST and an Executive Development Program from Wits Business School. He is also an Alumnus of the USA International Leadership Development Program (IVLP) under emerging African leaders.

The Board is confident in Gerald’s ability to drive the growth of the Bank on the back of a strong digital transformation agenda and wish him all the best as he takes on this new challenge.

B A Chikwanha
Board Chairman
01/12/2021

Benefit has been in the banking industry for 43 years having started his banking career with Barclays Bank. There, he rose through the ranks to the position of Business Centre Director. He joined NMB Bank in 1997 as Divisional Director Risk. He briefly left NMB Bank and he was CEO of MetBank in 2004. He later re-joined NMB Bank in 2008 as CEO, a position he held for the past 14 years. Throughout his tenure as CEO, he exhibited commitment to serving the best long-term interests of the Bank and leaves a more agile and resilient Bank.

On behalf of the Board, Management and Staff, we take this opportunity to thank him and to express our sincere gratitude for his immense contribution to the success of the Bank and wish him all the best on his retirement.

B A Chikwanha
Board Chairman
01/12/2021

TRADING ENVIRONMENT

The impact of Covid-19 related business restrictions was still being felt in the third quarter though most businesses have returned to normalcy. The US Dollar interbank foreign exchange rate has been relatively stable, depreciating slightly from 85.42 as at 30 June 2021 to 87.67 as at 30 September 2021.

Interest rates remained fairly stable during the third quarter, allowing the Banking unit to continue channelling credit facilities to the wider economy with a special focus on productive sectors.

Inflation stood at a year-on-year rate of 52% as at 30 September 2021. As always, we are hopeful that the Monetary Authorities will continue in their efforts to maintain the prevailing exchange rate stability, which largely underpins the country’s economic stability and provides the required impetus for economic growth.

CORPORATE DEVELOPMENTS

The Banking subsidiary has in the last quarter continued with its digitisation drive, largely focusing on the customer journey and ensuring that its processes and platforms make access to services as convenient and seamless as possible. In the period under review, three enhancements were made to our channels, namely;

FINANCIAL PERFORMANCE REVIEW

The Group recorded a 66% growth in operating income from ZWL2.3 billion for the six months ended 30 June 2021 to ZWL 3.9 billion for the nine-month period to 30 September 2021 in inflation adjusted terms. This was on the back of growth in non-funded income driven, by an increase in transaction volumes on the Bank’s digital platforms. The loan book grew by 39% to end the quarter at ZWL7.2 billion while customer deposits grew by 38% to ZWL9.1 billion. These key performance indicators are further highlighted below:

REGULATORY CAPITAL REQUIREMENTS

The Bank’s inflation adjusted regulatory capital as at 30 September 2021 was ZWL5.02 billion (historical cost – ZWL4.22 billion) and was above the minimum required regulatory capital of ZWL25 million. This translated to a Capital Adequacy Ratio of 27.14% as at 30 September 2021 which is significantly above the prescribed regulatory minimum ratio of 12%.

The Bank is focused on making sure that it remains compliant with the required minimum regulatory capital level for Tier 1 banks of US$30 million equivalent by the set deadline of 31 December 2021.

OUTLOOK

The recent firm commitments and pledges by the Government, the Reserve Bank of Zimbabwe and the business community to maintain sound macroeconomic fundamentals which support exchange rate stability are encouraging and will assist in cost management. To this end, the banking sector has seen tightening of money supply, upward review of the bank policy rate to curb speculative borrowings, refinement and streamlining of the foreign exchange auction system so that it continues to play its price discovery role among other commitments.

We are optimistic of a good 2021/2022 agricultural season based on the forecast good rains and the prospects in the mining industry on the back of positive commodity price outlook, improved capacity utilisation and anticipated increased output which will positively impact the country’s economic growth prospects.

By order of the Board
Violet Mutandwa

Company Secretary
12 November 2021

The Group’s interim results come at a time when our nation and the global economies are battling with the effects of the COVID-19 pandemic. The pandemic has, without a doubt, created a difficult operating environment due to the unprecedented and pervasive nature of this global crisis. I am however pleased to report that in spite of these challenges, the Group managed to achieve a satisfactory performance as a result of my team’s diligence and commitment to duty.

The Group’s core operating income, which excludes the effects of fair value gains on non-monetary assets, in inflation adjusted terms stood at ZW$1 968 206 698 for the six months ended 30 June 2021, indicating a 68% increase from the ZW$1 174 242 103 recorded during the same period ended 30 June 2020. During the period under review, the Group’s operating income largely arose out of the Banking subsidiary’ core operating activities, with core operating income (excluding fair value losses on trade investments) constituting slightly over 100% of total income. This is a significant improvement from the comparative period ended 30 June 2020 during which core operating income constituted 47% of the Group’s operating income. This was largely due to the Group’s strategic thrust to focus more on its core activities as opposed to focusing more on value preservation initiatives given the significant progress the Group had made towards meeting the revised regulatory capital thresholds at the close of the previous financial reporting period.

The Bank’s fee and commission income increased by 128% as a result of our enhanced digital platforms and increased digital touch points in line with the Bank’s digitalisation drive. Net interest income increased by 105% due to significant increases in the volumes of business recorded by the Group during the period under review. The increased business volumes also resulted in a rise in the Group’s operating costs of doing business, although there were some non-recurrent one off expenditure items incurred during the period under review.

The Group is currently running with four strategic pillars namely, Broadening the group structure, Building a digital bank, Customer Value and Enhanced Shareholder value and Employee value and I am pleased to advise that we have started seeing the benefits of our strategic initiatives as signalled by our satisfactory performance during the period under review.

DIGITAL INNOVATIONS AND ENHANCEMENTS

We have continued with the Banking subsidiary’s digitalisation drive which has resulted in the rolling out of more customer centric products, much to the delight of our valued customers. During the period under review, the Bank launched 5 disruptive digital products namely:

1. A Virtual Branch that allows customers to conduct cash transactions on their phone and simply walk into the branch to either drop or pick cash;

2. An automated loan application that allows customers to apply for personal loans on shortcode *241# and access near instant disbursements without the need to complete any paperwork;

3. Instant NMBLite account opening via shortcode *241#;

4. Digital account opening for the normal KYC accounts on NMBConnect allowing the customer to upload KYC documents without the need to visit the Bank; and

5. A Virtual Service Excellence Representative Assistant, named Sera.

Furthermore, the bank has completely digitized its internal operations, which has resulted in the complete elimination of paper in our internal processes. This also complemented our virtual branch, which has also completely removed the need for paper and form filling across our branch network. Notwithstanding the improved efficiencies, the elimination of paper and form filling has contributed immensely towards the fight against the spread of Covid 19 thereby safeguarding our customers and staff in the process. Through our Robotic Process Automation workstream, we have also been aggressively developing robots to perform back office functions including reconciliations. At reporting date, we had deployed approximately 22 functional robots.

As we build our digital platforms, we are also cognizant of the cyber related threats and we have been channeling significant investment towards our ICT Security systems, in particular Cyber Security to ensure our platforms and customers are protected. We have collaborated with some of the best global cyber security solution providers to ensure our systems are secured.

We have continued to transform NMB Bank Limited into a Digital Bank, without losing the excellent customer service we are known for.

We therefore continue to serve businesses, high net worth customers, SMEs and the broader market segments through digitally enabled products and platforms.

The Bank also managed to roll out the zero-rated mobile banking facility which enables our customers to access the Bank’s mobile banking platforms without using their own mobile data. We remain committed to continue pursuing more exciting initiatives to further enhance the Bank’s customer experience as well as continue to reduce the cost of transacting for our valued customers.

CORPORATE SOCIAL INVESTMENTS

During the period under review, the Group channelled its Corporate Social Investments towards the support of disadvantaged and vulnerable groups, promotion of the Arts as well as fostering financial education and inclusion amongst the youth. Donations were made to institutions which include but are not limited to KidzCan, for treatment of children living with cancer. On the promotion of Arts, the Group was a sponsor of the 2021 NAMA Legends Edition, whose main aim was to appreciate the role Arts and Music has played in our society spanning four decades. The Group also participated in Youth Financial Education during the Global Money Week, through sharing financial nuggets. The 2021 theme for the Global Money Week was ‘Take care of yourself, take care of your money’.

SUSTAINABILITY

The Group, through its Banking subsidiary remains committed to financing the education sector, agriculture, health, water, property and construction as well as supporting the Small and Medium Enterprises (SMEs), the youths, the disadvantaged, vulnerable groups in addition to supporting various environmental conservation initiatives.

With the prevailing Covid-19 pandemic, our foremost priority has been to safeguard the health and safety of our employees and customers.

Our collective ability to adapt to a new and unforeseen reality has also shown us what we can achieve when we all work together. We believe that this is an important lesson to draw upon as we set out to transform our business in the transition towards a more sustainable future.

The Covid-19 crisis led us to adapt and digitize a significant range of services. Despite the challenges, we managed to continue offering uninterrupted services to our customers across all sectors and geographical areas. Our employees were also adequately equipped to perform critical tasks remotely since the onset of the pandemic. I am grateful to all my colleagues, their commitment is proof of how we value our customers and the welfare of the communities we operate in.

GROUP RESULTS

HYPERINFLATIONARY REPORTING

On 11 October 2019, the Public Accountants and Auditors Board (PAAB) issued a pronouncement to the effect that the Zimbabwean economy had met all conditions necessary to be classified as a hyperinflationary economy. On that basis, the Directors have prepared the accompanying financial statements using the hyper-inflationary accounting basis to achieve fair presentation at the reporting date of 30 June 2021. The following results commentary is primarily on the Group’s hyperinflationary adjusted financial statements at the reporting date.

Financial performance

Profit before taxation was ZW$566 732 458 (30 June 2020 – ZW$1 745 617 359) during the period under review and this gave rise to total comprehensive income of ZW$423 625 929 (30 June 2020 – ZW$2 050 429 138). The Group did not record any revaluation gains on land and buildings and investment properties in inflation adjusted terms as we did not perform independent property valuations for the interim reporting purposes. The Group achieved a basic earnings per share of 60.71 ZW$ cents (June 2020 – 364.30 ZW$ cents) and this translated into the headline earnings per share of 61.07 ZW$ cents (30 June 2020 – 362.99 ZW$ cents).

Total income amounted to ZW$2 142 254 827 and this was 17% down from ZW$2 580 045 252 recorded during the six months ended 30 June 2020 mainly due to other income as a result of a significant reduction in fair value gains on investment properties due to the exchange rate stability during the period under review. Excluding revaluation gains, The Group’s core banking income increased by 71% from ZW$1250 899 080 recorded during the six months ended 30 June 2020 to ZW$2 144 077 300 for the period under review.

Operating expenses amounted to ZW$1 283 729 775 and these were up 89% from ZW$677 471 176 recorded during the six months ended 30 June 2021. The increased costs were a result of increased transactional volumes in line with the Bank’s digital drive as well as increased administration and operational costs.

The Group recorded an impairment credit charge on financial assets measured at amortised cost amounting to ZW$81 988 552 compared to a charge of ZW$52 115 542 during the six months ended 30 June 2020 due to growth in the banking subsidiary’s financial assets and a more conservative provisioning approach in light of the possible impact of Covid 19 on the operations of our borrowing customers.

The Bank’s non-performing loans (NPLs) remain very low, with the NPL ratio closing the period ended 30 June 2021 at 0.63% compared to the 0.44% recorded at 31 December 2020. The low NPL ratio is largely due to aggressive collections, stricter credit underwriting standards and growth in the loan book.

Financial position

The Group’s total assets increased by 15% from ZW$12 861 300 266 as at 31 December 2020 to ZW$14 772 257 956 as at 30 June 2021 mainly due to a 36% increase in loans and advances and other assets and a 14% increase in cash and cash equivalents.

Gross loans and advances increased by 67% from ZW$2 959 262 732 as at 31 December 2020 to ZW$4 942 714 327 as at 30 June 2021 mainly due to increased advances during the period under review in view of the Bank’s growth trajectory.

Total deposits increased by 22% from ZW$7 558 402 602 at 31 December 2020 to ZW$9 184 847 394 as at 30 June 2021 as a result of aggressive deposit mobilization and the positive impact of our digital platforms.

The Bank maintained a sound liquidity position with a liquidity ratio of 44.15% which was above the statutory minimum of 30%.

Capital

The banking subsidiary maintained adequate capital levels to cover all risks as reflected by a historical cost capital adequacy ratio of 29.41% as at 30 June 2021 (31 December 2020 – 43.78%). The ratio was well above the regulatory minimum of 12%.

The Group’s shareholders’ funds and shareholders’ liabilities increased by 5% from ZW$4 700 135 150 as at 31 December 2020 to ZW$4 930 563 116 as at 30 June 2021 as a result of the current period’s total comprehensive income.

The Bank’s regulatory capital as at 30 June 2021 was ZW$2 721 948 855 in historical cost terms and was above the minimum regulatory capital of ZW$25 million. The Bank submitted its updated capitalisation plan to the RBZ in terms of the requirements for a Tier 1 bank to have a minimum Zimbabwe dollar equivalent of USD30 million by 31 December 2021. As at 30 June 2021, the Banking subsidiary’s regulatory capital had exceeded the minimum of USD30 million required by 31 December 2021 on the back of the Bank’s strong financial performance in the period under review.

LEGACY DEBTS

The banking subsidiary owed USD13 840 412 to various lines of credit providers as at 30 June 2021. The Bank registered these foreign debts with the Reserve Bank of Zimbabwe (RBZ) as required by the regulatory directives. During the financial period ended 31 December 2019, the Bank transferred to the RBZ the ZW$ equivalent of the foreign debts at a rate of USD/ZW$1:1. The RBZ has indicated that they will be issuing a USD denominated instrument for these debts and consequently these debts and the RBZ deposits have been accounted for at the closing exchange rate of USD/ZW$ 1:85.4234 at 30 June 2021. This effectively values the original credit lines at a rate of 1:1 on a netted off basis. The RBZ approved the line of credit balances amounting to USD13 840 412.

APPRECIATION

I wish to express my heartfelt gratitude to all our valued clients for continuing to believe in us and entrusting us with their business during these difficult times. I also wish to extend my gratitude to my fellow board members, our shareholders, regulatory authorities, management and staff for their unrelenting support.

B. P. WASHAYA
CHIEF EXECUTIVE OFFICER

Related Download

NMBZ Holdings 2021 Interim Financial Results.pdf

We are pleased to announce the appointment of Violet Mutandwa as Head Legal and Company Secretary effective 01 August 2021.

Violet has 18 years’ experience as a legal practitioner with extensive experience in Banking having worked for the Reserve Bank, NMB Bank and First Capital Bank. Violet’s passion for corporate governance will add value to the bank.

She is a holder of a LLBS Honours in Law, Masters in Commercial Law, M.Phil. Development Finance and is a candidate for a Doctorate in Law.

AGM Resolutions

Trading Update

The NMBZ Holdings Limited Trading Update for the quarter ended 31 March 2021 has been published in the local press, the Company’s website and the Zimbabwe Stock Exchange Portal.

Trading environment

The quarter under review commenced with the country experiencing a second and more intense wave of the COVID-19 infections largely arising out of the relaxation of COVID-19 restrictions during the December 2020 festive period. The incessant rise in infections and fatalities experienced at the start of the quarter resulted in the Government enforcing more stringent lockdown conditions which came into effect on 5 January 2021 and this inevitably brought most businesses to a standstill, leading to a slowdown in economic activity. However, the restrictions were relaxed at the end of February 2021 following the containment of local transmissions and significant reductions in the COVID-19 induced fatalities. During the quarter under review, the Government of Zimbabwe started rolling out the COVID-19 vaccination programme. The roll-out of vaccination programmes both locally and internationally remains a key milestone towards the containment of the COVID-19 pandemic.

The economy has remained relatively stable following the stability of the exchange rate in the second half of 2020 after the introduction of the RBZ administered Foreign Exchange Auction system on 23 June 2020. The exchange rate stability has largely resulted in the significant easing of the country’s inflation, which stood at a year-on-year rate of 240.6% in March 2021 from a peak of 837.5% recorded in July 2020. We are hopeful that the Monetary Authorities will continue in their efforts to maintain the prevailing exchange rate stability which largely underpins the country’s economic stability and provides the required impetus for economic growth.

Corporate developments

The Banking subsidiary has continued with its digitalisation drive which has resulted in the rolling out of more customer centric products. During the quarter under review, the Bank launched 5 disruptive digital products namely:

1. A Virtual Branch that allows customers to conduct cash transactions on their phone and simply walk into the branch to either drop or pick cash;
2. An automated loan application that allows customers to apply for personal loans on shortcode *241# and access near instant disbursements without the need to complete any paperwork;
3. Instant NMBLite account opening via shortcode *241#;
4. Digital account opening for the normal KYC accounts on NMBConnect allowing the customer to upload KYC documents without the need to visit the Bank; and
5. A Virtual Service Excellence Representative Assistant, named Sera.

We have continued to transform NMB Bank Limited into a Digital Bank, without losing the excellent customer service we are known for. We therefore continue to serve businesses, high net worth customers, SMEs and the broader market segments through digitally enabled products and platforms.

The Bank is at an advanced stage to rolling out the zero-rated mobile banking facility which will enable our customers to access the Bank’s mobile banking platforms without using their own mobile data. This, together with other initiatives being pursued by the Bank, will further enhance the Bank’s customer experience as well as continue to reduce the cost of transacting for our valued customers.

Q1 2021 Trading Performance

The Group recorded a 42% growth in inflation adjusted total income for the 3 months ended 31 March 2021 compared to the corresponding period in 2020.

The major inflation adjusted financial performance highlights for the Group are as depicted below:

Regulatory capital requirements

The Bank’s inflation adjusted regulatory capital as at 31 March 2021 was ZW$4.1 billion (Historical cost – ZW$2.5 billion) and is above the minimum required regulatory capital of ZW$25 million. This translated to a Capital Adequacy Ratio of 31.59% as at 31 March 2021 (31 December 2020 – 39.51%) and this was significantly above the prescribed regulatory minimum ratio of 12%.

All things being equal, the Bank is confident that it will achieve the required minimum regulatory capital level for Tier 1 banks of USD30 million equivalent by the set deadline of 31 December 2021.

Outlook

The Group is confident that the COVID-19 containment measures adopted by the Government of Zimbabwe will result in the curbing of the COVID-19 pandemic. We are encouraged by the commendable progress made by the global economies, including Zimbabwe, to secure some COVID-19 vaccines that are currently being rolled out and remain hopeful that these will achieve the desired results. As a Group, we are optimistic that no adverse effects will significantly impact the Group’s performance on account of the COVID-19 pandemic.

We are hopeful that the exchange rate stability achieved so far will continue to prevail in order to create a conducive operating environment for businesses and the attraction of local and international capital in order to propel the much needed economic growth for the country.

We are optimistic that the projected good 2020/2021 agricultural season will positively impact the country’s economic growth prospects.

The Group’s banking subsidiary will continue to strategically focus on the enhancement of its digital channels in order to further improve the customer experience as well as contribute to the financial inclusion agenda.

The Group will publish its half year-end results for the six months ending 30 June 2021 by 30 September 2021 as required by the ZSE Regulations.

By Order of the Board

Shumirai Pashapa
Company Secretary
13 May 2021