Tanzania lenders returned good results in 2021 with more than five banks recording increased profits. NMB Bank made $125.05 million profit after tax, from $90.99 million a year before followed by CRDB Bank Plc at $115.93 million last year.
Standard Chartered Bank Tanzania, NBC and Exim Bank posted net profits of $15.97 million, $17.33 million and $11.74 million respectively.
However, only NMB and CRDB’s ratios of non-interest expenses to gross income fell below the Bank of Tanzania’s maximum threshold of 55 percent.
CRDB’s cost-to-income ratio dropped to 48.6 percent from 64.1 percent recorded in 2020, while NMB’s ratio fell to 47 percent from 50 percent 12 months earlier.
But the lenders recorded mixed results in their NPL volumes as some small and medium-sized banks posted decreases against total gross loans while others experienced.
According to fourth-quarter 2021 financial statements, banks still suffer from increasing NPL risks as lending remains the main source of bank returns in the country. While NMB's NPL ratio dropped to 3.2 percent from 3.8 percent, NBC's ratio climbed from three percent in 2020 to 4.1 percent during the final quarter of 2021.
Likewise, CRDB's NPLs ratio was down to 3.2 percent compared to 3.5 percent in the final quarter of 2020. Other lenders, particularly in the medium-sized category, continued to struggle with NPL ratios above the BoT threshhold of 5 percent.
For example, Exim Bank’s NPL ratio shot up to 13.4 percent from its 2020 ratio of 10.3 percent.
“The non-performing debts settled at $39.73 million, which is 23.2 percent less compared to $51.73 million of the previous quarter, September 2021,” Exim said. I&M bank, which also operates in Kenya, Mauritius and Rwanda, showed a slight decrease of NPLs to 9.2 percent from 9.7 percent reported in 2020.
Equity Bank managed to reduce its NPLs ratio to 23 percent from 25.6 percent experienced in the quarter ending September 2021.
According to the central bank, measures aimed at reversing the trend of high NPL ratios are still in progress. Some of the measures the central bank is taking to keep in check NPL ratios are making use of credit reports mandatory during loan appraisal processes from financial institutions and directing all banks and financial institutions to develop and implement strategies that strengthen credit application processing and credit management.