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NMB Bank Limited is targeting a non-performing loan ratio of 10 percent by December 2015, dropping from 17,7 percent last year. Acting chief executive Mr Benefit Washaya told an analyst briefing last week that the bank made significant debt recoveries in 2014 and will continue to intensify its recovery efforts in 2015 in a bid to reduce the non-performing loans.

“We are targeting an NPL ratio of 15 percent by 30 June 2015 and 10 percent by 31 December 2015. Our automated end-to-end Credit Management System is now in place and this has improved the quality of credit appraisals,” he said.

Mr Washaya said the deteriorating economic environment and liquidity challenges continued to adversely affect the borrowers’ ability to service loan obligations hence the bank will be cautious in its lending strategy.

He said the group changed its strategic focus in September 2014 and has moved to focusing on the broader market segment with key differentiators that will include service excellence, technology leadership, agility and quick response time which will be supported by strong human capital.

In the period under review, the group recorded an attributable profit of $1,6 million compared to a loss position of $3,3 million in the prior year.

Financial director Mr Benson Ndachena said the improvement was underpinned by current efforts to contain non-performing loans, implementation of new credit system and the repositioning of the bank in the financial services sector. He added that in 2013 there was significant write-off which impacted the loan book and in 2014 $5,9 million was written off and the loan book has since been adjusted to cover for that provision.

Total income was 4 percent down on prior year at $48,07 million from $50,1 million which comprised of interest income at $18,4 million which is down 52 percent from prior year’s interest income of $20,1 million.

In the period under review, fee and commission income was $15,8 million while non-interest income was realised at $62,025.

According to Mr Ndachena, total deposits grew 11 percent to $235,3 million compared to $211,2 million in 2013 largely as a result of an increase in current and deposit accounts from customers.

In terms of the deposit mix, banks and other financial institutions contributed 13 percent up from the 2013 level of 11 percent, individuals were at 13 percent being flat on last year, lines of credit declined to 12 percent from 14 percent in 2013.

Manufacturing was 12 percent, municipalities and parastatals 4 percent, services 16 percent and distribution at 9 percent.

On loans and advances, individuals constituted 27 percent up from 24 percent in 2013, followed by distribution at 26 percent, services made 19 percent of the loan book while manufacturing was down to 13 percent from 19 percent and agriculture was 8 percent.

The bank’s liquidity ratio closed the year at 32,38 percent and was above the statutory requirement of 30 percent.

On capitalisation, Mr Washaya said the plan was to achieve tier 1 status with a core capital of $100 million by December 31 2020.

“We continue to look for reasonably priced credit lines which will allow the bank to underwrite more good quality loans,” he said.

He said the bank currently has negotiated for a $71 million line of credit and is presently in the process of negotiating with other potential funders to raise an additional $20 million that will bring the total of credit lines to $91 million.

Mr Washaya said in terms of branch expansion, the banking group will open a branch in Kwekwe next month while two more branches are penned to be opened in Q4 2015. — Wires.