NMBZ Holdings Limited board has resolved not to declare a dividend for the year ended 31 December 2020 as the group is focusing on achieving the minimum regulatory capital requirement of the ZWL equivalent of USD30 million for a Tier 1 bank by 31 December 2021 for its banking subsidiary.
In a chairman’s statement accompanying financial results for the period, NMBZ said:
“The Board has resolved not to declare a dividend as the Group is focusing on achieving the minimum regulatory capital requirement of the ZWL equivalent of USD30 million for a Tier 1 bank by 31 December 2021 for its banking subsidiary.”
The registered commercial bank, NMB capital adequacy ratio stood at 52,56 percent as at 31 December 2020 compared to 48,46 percent in December 2019. This was above the statutory minimum of 12 percent.
“Our capitalisation level is adequate to cover all risks and supports the underwriting of new business. The group’s shareholders’ funds and shareholders’ liabilities have increased by 31 percent from $3,2 billion restated as at 31 December 2019 to $4,2 billion as at 31 December 2020, largely as a result of the current year’s total comprehensive income,” read the statement.
The bank’s regulatory capital as at 31 December 2020 was $2,186 billion and is above the minimum required regulatory capital of US$25 million.
The statement added: “NMBZ remains confident that its plan to meet the revised minimum capital of the ZWL$ equivalent of US$30 million for a Tier 1 bank by December 31, 2021 was achievable. The group’s total assets increased by 17 percent from $9,4 billion as at December 2019 to $10,9 billion as at December last year mainly due to a 125 percent increase in investment securities, a 60 percent increase in investment properties and an increase of 25 percent in property and equipment.”
NMBZ also noted that the increases were partly offset by a 32 percent decrease in intangible assets and an 11 percent decrease in cash and cash equivalents.
Furthermore, the company’s investment properties increased from ZWL$1,031 billion as at 31 December 2019 to ZWL$1,653 billion as at 31 December 2020 due to additions and improvements made on the bank’s property portfolio in line with the value preservation strategies adopted by the group to curtail the devastating effects of the prevailing hyper-inflationary environment.
“Investment securities (Treasury Bills and Bonds) increased from ZWL$4,8 billion as at December 2019 to $1,081 billion last year mainly due to the acquisition of Treasury bills and bonds,” added the investment firm.
Part of the statement read that focusing on the local economy, the first half of the year under review was characterised by hyper-inflation and incessant economic instability emanating from the deterioration of the country’s foreign exchange rate.
“However, the introduction of the RBZ administered Foreign Exchange Auction System on 23 June 2020 appears to have significantly contained the rapid oscillations that were characterising the country’s foreign exchange rate. Significant trades have been recorded on this platform from its inception and there has been notable stability in the foreign exchange regime ever since the auction system was introduced,” said NMBZ.
The group also highlighted that culminated in economic stability largely prevailing in the second half of the year with the annual inflation rate closing the year at 348.6 percent down from a peak of 837.5 percent recorded in July 2020.
“Our hopes remain pinned on the sustainability of this stability which will certainly foster economic growth into the foreseeable future,” said NMBZ.
The bank has also set maximum limits for investment securities in order to ensure most of the funds are channelled towards the productive sectors of the economy and its total deposits increased by 17 percent from $5,3 billion restated as at 31 December 2019 to $6,3 billion as at 31 December 2020 as a result of the bank’s aggressive deposit mobilisation efforts in pursuit of the broadening of the bank’s target market segments.
NMBZ added: “The bank’s liquidity ratio closed the period at 67,68 percent (2019 – 60,72 percent) and this was above the statutory requirement of a minimum of 30 percent. As at the end of last year, NMB owed US$13 840 412 to various lines of credit providers. The bank registered these foreign debts with the Reserve Bank of Zimbabwe as required by the regulatory directives. During the previous financial period, the bank transferred to the RBZ the ZWL$ equivalent of the foreign debts at a rate of US$/ZWL$1:1.”
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