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Mr Mushore

Conrad Mwanawashe Business Reporter
NMBZ Holdings says it has put in place measures to manage non-performing loans which affected its bank’s performance, resulting in a record a loss of $3,3 million for the year to December 31, 2013.
Group chief executive officer Mr James Mushore said non-performing loans that rose to 15,92 percent last year had weighed down the bank.
He said the Memorandum of Understanding which provided limits on bank charges and interest rates also had an effect on the group’s profits.

The distribution of the non-performing loans shows that the manufacturing sector accounted for 36 percent followed by distribution at 21 percent, services at 18 percent while personal lending accounted for 9 percent.
“We have put a stop to that rot. We have strengthened business support and recovery.

“We will be cautious on the lending side this year and focus on sectors such as mining, agriculture, distribution and construction.
“With the measures we have put in place to manage NPLs, we are very confident that we should return to profitability in 2014,” said Mr Mushore.
The bank is implementing a credit management system as a measure to control non-performing loans.

The banking group said that a return to profitability will also be premised on mortgage lending and bancassurance.
Structures for the mortgage lending business, which will target low cost housing are being set up and Mr Mushore said bancassurance will help the bank exceed market expectations.

Bancassurance is the partnership between a bank and an insurance company, whereby the insurance company uses the bank sales channel in order to sell insurance products.

Banks can earn additional revenue by selling the insurance products, while insurance companies are able to expand their customer base without having to expand their sales forces or pay commissions to insurance agents or brokers.

Mortgage lending enjoys tax breaks and NMBZ holds a sizeable security of land which the bank intends to develop into low cost residential properties.

NMBZ recorded a loss of $3,3 million in 2013 from a profit $7,6 million the previous year.
Total income for the period increased by 11 percent to $50 million from a prior year of $45,1 million.

Total income for year is split into interest income of $33,2 million, fee and commission income of $15 million, net foreign exchange gains of $1,5 million and non-interest income of about $800 000.

Operating expenses went up 18 percent up on prior year to $25 million and comprise largely of administration expenses, depreciation and staff-related expenditure.

Mr Mushore said that the requirement for banks to seek permission before hiking bank charges and interests presented the same conditions as those that prevailed last year when the MoU capped charges.

The MoU had an effect on the bank’s profitability as the risk has not been reduced in line with the controlled returns.
“Let the market determine the prices,” said Mr Mushore.