DURING the quarter ended in December 2019, CRDB Bank recorded an 11% increase in its net interest income to 136.45 billion / – against 123.23 billion / – in the previous comparative quarter which ended in December 2018.
This increase was contributed by the increase in interest income from 9.17 billion / – to 163.70 billion / – and a simultaneous decrease in interest charges from 4.04 billion / – to 27.2 billion / – against 31.2 billion / -.
Non-interest income jumped 22% to 65.2 billion / – from 53.6 billion / – recorded in the previous quarter, mainly due to an increase in fee and commission income to 54.87 billion / – against 42.78 billion / -.
Non-interest expenditure increased by 13.6 billion / – to 135.15 billion / – against 121.53 billion / -, driven by wages and benefits to 69.81 billion / – against 55.41 billion / – in the comparable quarter 2018. Net income increased 136 percent to 28 billion / – from 11.8 billion / – in the fourth quarter of 2018.
Cumulatively, the bank recorded an 87% increase in net profit to 120.17 billion / -, compared to 64.13 billion / – for the cumulative one-year period that ended in December 2018.
The balance sheet rose 6.45 percent supported by the bank’s investments in government securities which rose 11 percent over the period to 1.41tri / – from 1.27tri / -, while loans and overdrafts increased slightly by 3.1 percent to 3.38tri / – from 3.26tri / – as of Q 3- 2019.
Customer deposits increased 7% to 5.15tri / – in the fourth quarter, compared to 4.81tri / – in the third quarter of 2019.
Gross loans and advances on total deposits decreased to 68.2% from 71.7%, while loans and advances on total assets decreased to 51.2% from 52.3% in the previous comparative quarter , indicating that the bank’s funding base has strengthened over the period.
Non-performing loans relative to total gross loans fell to 5.5% from 7.5% in the third quarter of 2019, indicating improvement in loan management.
Commentary on the results At the end of 2019, the bank again posted improved results with an increase in net profit after tax for the cumulative period which ended in December 2019 at 120 billion / – against 64.13 billion / -, which represents a percentage of 87%. to augment.
On a quarterly basis, the group recorded a 135 percent increase in net profit. These results support the vision of CRDB Bank’s new management team headed by Chief Executive Officer Abdulmajid Nsekela who joined the bank in October 2018.
Among the changes that are evident since his arrival is the reduction in the number of branches from 255 in 2017 to 234 at the end of 2018 (although the number has grown to 240 since), a reduction in the ratio of non-performing loans. from 12.6% in 2017 to 5.5% at the end of 2019, control of depreciation charges on loans and advances which had recorded a compound annual growth rate (CAGR) of 49% between 2013 and 2017 (reaching 153 billion / – ), entrenching innovations through digital channels by developing financial delivery via digital payment platforms close to places of residence, the diversification of income sources with fees and commissions making an increasing contribution and therefore improved returns.
Gross profit margin increased from 15% to 26%, while net profit margin doubled to around 17%, from 8% in the previous corresponding quarter of 2018. Return on equity (ROE) increased from 6% at 17%. while return on assets (ROA) increased to 2.7% from 1.5% in the previous quarter.
NPLs fell to 5.5 percent from 7.5 percent three months earlier. On the exchange, CRDB Bank continues to trade as the most liquid share, with its price increasing to close at 130 / – on February 4, 2020 from 95 / – at the start of 2020.
The stock finally traded at 130 / – around May 2019 and since then it has declined to the double digit of 95 / – at the end of 2019. These exceptional results released in the last week of January could see the bank seek higher demand. and, ultimately, pushing the price up even more with the expectation of sustained performance.
With the cumulative increase in profits of 87% to 120 billion / -, there is a possibility that the bank will increase its dividend for 2019. Regardless of the dividend decision, we always recommend a PURCHASE for the stock as these results safeguard the dividends. fundamentals of the company whose share value is higher than the current market price.
This financial statement has been prepared by Tanzania Securities Limited, based in Dar es Salaam, which can be contacted at info @ @ tanzaniasecurities.co.tz