The net profit for Tanzania’s two largest banks rose by a staggering Sh182.6 billion in 2023 to close at nearly Sh1 trillion for the first time in the country’s history.
The two lenders registered Sh965.7 billion against Sh783.1 billion recorded in 2022.
An analysis of the financial statements of commercial banks that have released their 2023 financial performance as of Tuesday, January 30, 2024, shows that the two banks’ assets also rose significantly in 2023.
Combined assets and deposits for CRDB and NMB account for more than half of the total value of [assets and deposits] in Tanzania’s banking sector.
NMB Bank recorded Sh775 billion in pre-tax profit compared to Sh615.1 billion registered in the corresponding period last year.
On the other hand, CRDB Bank recorded Sh599 billion in 2023, up from Sh498 billion in 2022.
As such, NMB Bank’s net profit crossed the half-trillion mark, rising to Sh542 billion in 2023 from Sh431.7 billion in 2022.
Likewise, CRDB Bank’s net profit rose to Sh423.7 billion from Sh351.4 billion in 2022.
During the period, the banks sustained strong revenue performance, with their funded income (interest income) rising by double digits.
For instance, the funded income for CRDB Bank Plc rose from Sh846 billion in 2023 to Sh708 billion in the preceding year. On the other hand, NMB Bank Plc saw its funded income stream rise to Sh938.6 billion in 2023 from Sh789 billion in 2022.
The two lenders also demonstrated improved loan portfolio quality, with non-performing loans consistently maintained at 3.2 percent and 2.8 percent for NMB and CRDB, respectively.
This is within the regulatory benchmark of five percent.
NMB Bank’s customer deposits increased to Sh8.4 trillion in 2023, while CRDB Bank’s rose to Sh8.9 trillion.
Loans, advances, and overdrafts for NMB and CRDB grew by 28 and 23 percent, respectively, to reach Sh7.7 trillion and Sh8.5 trillion for the respective banks.
CRDB Bank’s assets rose by 14 percent to reach Sh13.2 trillion in 2023, while NMB Bank’s increased by 19 percent to Sh12.2 trillion.
Higher profits can translate into increased lending capacity and more money for shareholders through dividends.
However, some financial analysts believe that the two-horse race in Tanzania’s financial sector is not healthy for the economy. “We need to limit this dominance to have healthy competition and regulatory oversight,” shared a Dar es Salaam-based analyst.
He proposed close monitoring by authorities to reduce risks and promote financial inclusion initiatives. He also proposed boosting innovation and technology uptake.
The analyst proposed joint bank initiatives that will help promote a balanced and thriving financial sector.
On a sectoral level, the net profit of Tanzania’s two largest banks alone is more than four times higher than the cumulative sector net profit recorded five years ago.
During the previous administration, the financial sector posted dismal numbers, with the total profits of all banks ranging from Sh200 billion to Sh250 billion. However, fortunes have changed for most of the banks, which are now recording stellar performances.