NMB.zw FY2013 results presentation

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NMB.zw FY2013 results presentation

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NMB.zw FY2013 results presentation

  1. 1. NMBZ HOLDINGS LIMITED Final Results Briefing For the 12 months ended 31 December 2013 Thursday, 27 March 2014 14:30hrs
  2. 2. 2013 Final Results Briefing Outline 1. Welcome 2. 2013 Overview: Group Chief Executive Officer 3. Summary Financial Review : 31 December 2013 – Chief Finance Officer 4. Questions & Answers 5. Refreshments
  3. 3. Group Chief Executive Officer’s 2013 Overview --------------------------------------- Mr James Mushore ----------------------------------------
  4. 4. Corporate & Product Developments Corporate & Product developments:  We have secured US$57.4 million credit lines since dollarisation.  Divested from African Century Leasing in May 2013 and we are now setting up a Leasing Department in the Bank.  New capital of US$14.8 million raised from 3 strategic foreign investors.  We launched the following in 2013:  Mobile Banking  Upgraded Internet Banking  Teller POS  Bancassurance  Aptra Promote – ATM idle time marketing  Ecocash Integration
  5. 5. Corporate & Product Developments (Cont’d) Products to be launched in 2014: Asset Finance (Leasing)  Divested from African Century Limited in May 2013.  Structures being put in place in the Bank. Mortgage Lending  Structures being put in place. Customer Relationship Management (CRM)  Project completed in February 2014. Chip & Pin cards  To be launched in April 2014.
  6. 6. Macro & Micro factors impacting earnings Factors impacting earnings & profitability in 2013: The Group recorded a loss of US$3.3 million for the year ended 31 December 2013.  GDP growth for 2013 estimated at 3.4%.  Year-on-year inflation of 0.33% for December 2013. The fears of deflation materialised in February 2014.  The MoU signed between the RBZ and Banks affected profitability adversely in 2013. The MoU was not renewed in December 2013 but remains in place for all intents & purposes as banks are required to apply to the RBZ for any increases from the 31 October 2013 charges/rates.  Slow economic growth as a result of constrained operating margins and tight liquidity and consequently increasing the level of NPLs.
  7. 7. Strategic Focus Areas Minimum capital requirements:  Our medium term strategic plans continue to be anchored on ensuring compliance with the new capital requirements.  We welcome the RBZ extension by 6 years for the compliance with the US$100 million minimum capital by 31 December 2020. Credit lines will allow the Bank to underwrite more reasonably priced lending business for our clients:  Despite the high country risk, we will continue to scout for more lines of credit as the international community becomes more receptive.  We secured a US$10 million line of credit from Proparco on 13 February 2014.
  8. 8. Strategic Focus Areas (Cntd)  Management of Non-Performing Loans (NPLs)  The market wide liquidity challenges and the increasingly difficult operating environment has resulted in an increase in the banking sector NPL ratio from 1.8% at 31 December 2009 to 15.92% at 31 December 2013.  Our NPLs amounted to US$41.9 million (NPL ratio - 22.8%) at 30 June 2013 and reduced to US$38.7 million (NPL ratio - 19.9%) at 31 December 2013 compared to US$24.0 million (NPL ratio – 15.7%) at 31 December 2012.  We have strengthened our Business Support and Recovery structures and this should see a drop in our NPL ratio to 15% by 31 December 2014.  We are implementing a Credit Management System which should be in place by 30 June 2014.
  9. 9. Strategic Focus Areas (Cntd)  Distribution of Our NPLs by Sector:  Manufacturing accounts for 36% of our NPLs, followed by Distribution at 21% and Services at 18%. Personal lending accounts for 9% of NPLs.  Government initiatives to address the various economic challenges will set industry and the banking sector on a growth path and stem the current NPL scourge. 8% 21% 36% 18% 9% 8% NPLs by Economic Sector - 31 December 2013 Agriculture Distribution Manufacturing Services Personal Other
  10. 10. Outlook & Strategy  Indications to date are that 2014 will be a difficult year:  The Ministry of Finance & Economic Development, however, expects the economy to grow by 6.1% in 2014 from an estimated 3.4% in 2013. The growth is expected to be driven largely by Agriculture, Mining, Construction and Real Estate.  We consider the projected GDP growth of 6.1% in 2014 to be optimistic in light of estimate of 3.4% for 2013 and the increasingly difficult operating environment.  We will be cautious on the lending side in 2014 and focus on opportunities in the growth sectors (mining, agriculture, distribution, construction, tourism and transport).  The Group will continue to lay a strong foundation to pursue opportunities in new market segments.
  11. 11. Outlook & Strategy (Contd)  Following the investment by the 3 strategic foreign investors, the Board was restructured effective 31 January 2014. The new Board members are:  Mr Ben Zwinkels – represents AfricInvest  Mr Cheikh Ndiaye – represents FMO  Mr Deepak Malik – represents Norfund  Ms Maureen Svova - Independent Non-Executive Director  Mr Benedict Chikwanha – Independent Non-Executive Director  With the measures we have put in place to manage NPLs, the Group should return to profitability in 2014.
  12. 12. Summary Financial Review For the 12 months ended 31 December 2013 --------------------------------- Mr Benson Ndachena Chief Finance Officer ----------------------------------
  13. 13. Financial Summary 31 Dec 2013 31 Dec 2012 % Change Attributable (loss)/profit (US$) (3 321 823) 7 570 502 (144%) Basic (loss)/earnings per share(US cent) (1.00) 2.70 (137%) Asset base (US$) 259 483 112 226 533 682 +15% Net asset value per share (US cents) 10.91 11.00 (1%) Gross loans and advances (US$) 189 990 724 152 417 375 +25% Total deposits (US$) 211 215 066 191 422 066 +10% Total shareholder’s funds (US$) 43 441 403 30 942 083 +40%
  14. 14. Key Financial Ratios 31 Dec 2013 31 Dec 2012 Cost/Income(excluding impairment losses) 67% 61% Capital adequacy 17.28% 15.50% Annualized Return on Average Equity (9%) 28% Loan to Total Funding 90% 80% Impairment Provisions/Loans and advances 6.0% 4.8% Gross NPL/Loans and advances 19.9% 15.7% Liquidity ratio 32.52% 42.00%
  15. 15. Consolidated statement of comprehensive income 31 Dec 2013 31 Dec 2012 % Change Net interest income 20 175 199 17 493 781 +15% Fee & commission income 14 673 834 13 016 115 +13% Net foreign exchange gains 1 502 044 1 902 337 (21%) Share of profit of associate 217 768 434 252 (50%) Non-interest income 777 720 2 593 515 (70%) Profit on disposal of associate 580 136 - +100% -------------- -------------- ------ Net operating income 37 926 701 35 440 000 +7% Operating expenditure (25 232 756) (21 452 714) +18% Impairment losses on loans (16 645 810) (3 985 062) +318% ------------- ------------- ------- (Loss)/profit before taxation (3 951 865) 10 002 224 (140%) Taxation 630 042 (2 431 722) (126%) ------------- ------------- ------- (Loss)/profit after taxation (3 321 823) 7 570 502 (144%) Other comprehensive income - - - -------------- ------------- -------- Total comprehensive (loss)/income (3 321 823) 7 570 502 (144%) ========= ========= =====
  16. 16. Composition of Total Revenue  The contribution from fee and commission income remained static at 40%.  Net foreign exchange gains contribution decreased by 2 percentage points with net interest income contribution up 2 percentage points.
  17. 17. The Bank’s Total Cost Structure 31 Dec 2013 % 31 Dec 2012 % Administration costs 11 496 337 27% 9 540 865 37% Staff costs 11 708 375 28% 10 307 124 40% Depreciation/Amort. 1 826 572 4% 1 430 956 6% Other 201 472 1% 173 769 1% --------------- ------ --------------- --------- Operating expenses 25 232 756 60% 21 452 714 84% Impairment loss on loans & advances 16 645 810 40% 3 985 062 16% --------------- ------- -------------- -------- Total Expenditure 41 878 566 100% 25 437 776 100% ========== ==== ========= ===== Impairment losses increased due to write offs of irrecoverable loans.
  18. 18. Operating Cost to Income Ratios: 2009 to 2013 Notable reduction since 2009 and our medium term target of 55% – 60% is in sight. Affected by Retrenchment exercise Adjusted = 71% Reduction due to significant fair value adjustments in 2012 Adjusted = 66%
  19. 19. Consolidated statement of financial position 31 Dec 2013 31 Dec 2012 % Change Total shareholders’ funds 43 441 403 30 942 083 40% Deposits 211 215 066 191 422 066 10% Other liabilities 4 826 643 4 169 533 16% ----------------- ---------------- -------- Total Equity & liabilities 259 483 112 226 533 682 15% ========== ========== ====== Cash and cash equivalents 48 871 983 58 171 045 (16%) Investment securities held to maturity 4 685 471 5 501 963 (15%) Loans and advances 189 990 724 152 417 375 25% Provisions for impairment (13 259 814) (8 469 178) 57% Non-current assets held for sale 2 303 300 2 225 300 4% Investment Properties 4 385 300 3 115 300 41% Property & equipment 9 037 312 8 187 459 10% Other assets 13 468 836 5 384 418 150% --------------- ---------------- -------- Total assets 259 483 112 226 533 682 15% =========== ========== =====
  20. 20. Deposit Sources and Mix  An even spread of deposits with Banks & other financial institutions contributed -11% (2012 – 8%), Individuals 13% (2012 - 15%), Lines of Credit -14% (2012–13%), Manufacturing – 13% (2012 – 12%), Municipalities & Parastatals – 5% (2012-10%) and Distribution – 10% (2012 - 9%).
  21. 21. Loans and Advances Spread  Material concentration of Loans & advances are on Distribution - 24% (2012 – 31%), Manufacturing – 17% (2012 – 19%), Individuals – 24% (2012 – 20%), Services – 23% (2012 - 20%) and Agriculture – 6% (2012 – 6%). 6% 3% 20% 1% 0% 20%19% 31% Sectoral Spread of Loans & Advances - 31/12/2012 Agriculture& horticulture Conglomerates Services Mining Food & beverages Individuals Manufacturing Distribution Sectoral Spread of Loans & Advances - 31/12/2013 6% 17% 24% 5% 23% 1% 0% 24% Agriculture & horticulture Conglomerates Services Mining Food & beverages Individuals Manufacturing Distribution
  22. 22. Questions and Answers Thank You Questions & Answers

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