TIDMNMB
RNS Number : 1772Q
NMBZ Holdings Ld
28 August 2014
NMBZ HOLDINGS LIMITED
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2014
HIGHLIGHTS
Restated
--------------------------------- -------------- ------------- ------------------------
30 June 2014 30 June 2013 31 December 2013
--------------------------------- -------------- ------------- ------------------------
Unaudited Reviewed Audited
--------------------------------- -------------- ------------- ------------------------
Total income (US$) 23 303 115 25 118 143 50 135 302
--------------------------------- -------------- ------------- ------------------------
Attributable profit/(loss)(US$) 1 386 233 2 672 911 (3 321 823)
--------------------------------- -------------- ------------- ------------------------
Basic earnings/(loss)
per share
(US cents) 0.36 0.95 (1.00)
--------------------------------- -------------- ------------- ------------------------
Total deposits (US$) 213 795 232 209 273 789 211 215 066
--------------------------------- -------------- ------------- ------------------------
Loans and advances (US$) 193 620 036 183 454 912 194 777 798
--------------------------------- -------------- ------------- ------------------------
Total shareholders' funds
(US$) 44 834 220 49 350 247 43 441 403
--------------------------------- -------------- ------------- ------------------------
Enquiries:
NMBZ HOLDINGS LIMITED Telephone: +263-4-759 651/9
James A Mushore, Group Chief Executive Officer, NMBZ Holdings
Limited jamesm@nmbz.co.zw
Francis Zimuto, Deputy Group Chief Executive Officer, NMBZ
Holdings Limited francisz@nmbz.co.zw
Benefit P Washaya, Managing Director, NMB Bank Limited
benefitw@nmbz.co.zw
Benson Ndachena, Chief Finance Officer, NMBZ Holdings Limited
bensonn@nmbz.co.zw
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
CHAIRMAN'S STATEMENT
INTRODUCTION
The Group recorded an attributable profit of US$1 386 233 for
the period under review which was a significant improvement on the
attributable loss of US$3 321 823 for the year ended 31 December
2013. This was largely attributed to the efforts made in containing
non-performing loans in an increasingly difficult operating
environment. These results were achieved under a deteriorating
economic and operating environment which was characterised by an
illiquid market and a general tightening in the economy.
GROUP RESULTS
Compliance with International Financial Reporting Standards,
Companies Act, Banking Act and ZSE Listing Rules and Disclosure
Requirements.
The condensed consolidated interim financial statements have
been prepared in accordance with International Financial Reporting
Standards (IFRS). The condensed consolidated interim financial
statements are in compliance with the provisions of the Companies
Act (Chapter 24:03), the Banking Act (Chapter 24:20) and ZSE
Listing Rules and Disclosure Requirements.
Assessment of the economic environment
The slowdown in economic growth, which was prevalent in the last
quarter of 2013, persisted into the first half of 2014. This was
largely driven by an illiquid market and very tight operating
margins as a result of the deflationary pressures.
Commentary on operating results
The profit before taxation was US$1 867 035 during the period
under review and this gave rise to an attributable profit of US$1
386 233. Total income for the period decreased by 7.23% from a
prior period of US$25 118 143 to US$23 303 115 which is split into
interest income of US$15 033 660 (2013 - US$16 099 196), fee and
commission income of US$6 814 567 (2013 -US$7 590 765), net foreign
exchange gains of US$945 309 (2013 - US$866 453) and non-interest
income of US$509 579 (2013 - US$561 729).
Operating expenses increased by 2.5% to US$13 352 244, and these
were driven largely by staff costs, depreciation of property and
equipment and amortisation of intangible assets.
Impairment losses on loans, advances and debentures amounted to
US$1 581 045 for the current period from a prior period amount of
US$1 887 537 and the decrease was mainly due to increased security
obtained on exposures.
Commentary on the statement of financial position
The Group's total assets grew by 1.74% from US$259 483 112 as at
31 December 2013 to US$264 002 814 as at 30 June 2014. The assets
comprised mainly loans, advances and other accounts US$179 128 700
(2013 - US$181 316 271), non-current assets held for sale US$2 264
300 (2013 - US$2 303 300), investment securities held to maturity
US$4 763 896 (2013 -US$4 685 471), investment in debentures US$4
117 756 (2013 - US$3 984 723), cash and short term funds US$56 122
895 (2013 -US$48 871 983), investment properties US$4 395 500 (2013
- US$4 385 300) and property and equipment US$7 044 532 (2013 -
US$7 372 943).
Gross loans and advances decreased by 0.59% from US$194 777 798
as at 31 December 2013 to US$193 620 036 as at 30 June 2014 mainly
due to conservative lending in line with the worsening default risk
in the economy. Total deposits increased by 1.22% from US$211 215
066 as at 31 December 2013 to US$213 795 232 as at 30 June
2014.
The Bank's liquidity ratio closed the period at 35.56% (31
December 2013 -32.52%) and this was above the statutory requirement
of 30%.
Capital
The banking subsidiary's capital adequacy ratio at 30 June 2014
calculated in accordance with the guidelines of the Reserve Bank of
Zimbabwe (RBZ) was 17.44% (31 December 2013 - 17.28%). The minimum
required by the RBZ is 12%.
The Group's shareholder funds increased by 3.21% from US$43 441
403 as at 31 December 2013 to US$44 834 220 as at 30 June 2014 as a
result of an increase in retained earnings.
DIVIDEND
In view of the need to retain cash in the business and to
strengthen the statutory capital requirements for the banking
subsidiary, the Board has proposed not to declare a dividend.
CORPORATE SOCIAL INVESTMENTS
The Group actively participates in serving the communities it
operates in. During the period under review, the Group's investment
in the community was channeled into protection of the environment,
the arts, sporting disciplines and education.
CORPORATE DEVELOPMENTS
In pursuit our mission of providing premium financial services
to our customer, we launched a Customer Relationship Management
System (CRM) which will be instrumental in identifying
opportunities to serve our valued clients better. We also upgraded
our Automated Teller Machines (ATMs) to accept Chip & Pin cards
and this will drastically improve security on our cards and curb
fraud risk on the use of cards.
OUTLOOK AND STRATEGY
The Group has continued to scout for more international lines of
credit and explore growth opportunities in other market
segments.
DIRECTORATE
Mr B Zwinkels, Ms M Svova, Mr B Chikwanha, Mr C Ndiaye and Mr D
Malik were appointed to both the NMBZ and NMB Bank Boards with
effect from 31 January 2014. I would like to extend a warm welcome
to the new board members and wish them a successful tenure on the
Board.
APPRECIATION
I would like to pay tribute to our valued clients, shareholders
and regulatory authorities for their continued support in the
period under review. I would also like to thank my fellow board
members, management and staff for their profound commitment and
dedication which has made the achievement of these results possible
in the face of a deteriorating economic environment.
T N MUNDAWARARA
CHAIRMAN
20 August 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2014
Note 30 June 2014 30 June 2013
--------------------------- ----- ----------------- ----------------
US$ US$
--------------------------- ----- ----------------- ----------------
Unaudited Reviewed
--------------------------- ----- ----------------- ----------------
Interest income 4 15 033 660 16 099 196
--------------------------- ----- ----------------- ----------------
Interest expense (6 502 791) (6 610 573)
--------------------------- ----- ----------------- ----------------
-------------- ---------------
--------------------------- ----- ----------------- ----------------
Net interest income 8 530 869 9 488 623
--------------------------- ----- ----------------- ----------------
Net foreign exchange
gains 945 309 866 453
--------------------------- ----- ----------------- ----------------
Fee and commission income 5.1 6 814 567 7 590 765
--------------------------- ----- ----------------- ----------------
-------------- ---------------
--------------------------- ----- ----------------- ----------------
Revenue 16 290 745 17 945 841
--------------------------- ----- ----------------- ----------------
Non-interest income 5.2 509 579 561 729
--------------------------- ----- ----------------- ----------------
Operating expenditure 6 (13 352 244) (13 025 587)
--------------------------- ----- ----------------- ----------------
Impairment losses on
loans,
advances and debentures (1 581 045) (1 887 537)
--------------------------- ----- ----------------- ----------------
Share of profits of
associate - 217 768
--------------------------- ----- ----------------- ----------------
---------------- ---------------
--------------------------- ----- ----------------- ----------------
Profit before taxation 1 867 035 3 812 214
--------------------------- ----- ----------------- ----------------
Taxation 7 (480 802) (1 139 303)
--------------------------- ----- ----------------- ----------------
--------------- ---------------
--------------------------- ----- ----------------- ----------------
Profit for the period 1 386 233 2 672 911
--------------------------- ----- ----------------- ----------------
Other comprehensive
income, - -
net of tax
--------------------------- ----- ----------------- ----------------
--------------- ---------------
--------------------------- ----- ----------------- ----------------
Total comprehensive
income
for the period 1 386 233 2 672 911
--------------------------- ----- ----------------- ----------------
========= =========
--------------------------- ----- ----------------- ----------------
Attributable to:
--------------------------- ----- ----------------- ----------------
-Owners of the parent 1 386 233 2 672 911
--------------------------- ----- ----------------- ----------------
-Non - controlling - -
interest
--------------------------- ----- ----------------- ----------------
------------- ---------------
--------------------------- ----- ----------------- ----------------
1 386 233 2 672 911
--------------------------- ----- ----------------- ----------------
======== =========
--------------------------- ----- ----------------- ----------------
Earnings per share (US
cents)
--------------------------- ----- ----------------- ----------------
- Basic 9.3 0.36 0.95
--------------------------- ----- ----------------- ----------------
- Diluted basic 9.3 0.34 0.69
--------------------------- ----- ----------------- ----------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2014
Restated
------------------------------ ------ --------------------- --------------------- -------------------
30 June 2014 31 December 2013 30 June 2013
------------------------------ ------ --------------------- --------------------- -------------------
Not e US$ US$ US$
------------------------------ ------ --------------------- --------------------- -------------------
Unaudited Audited Reviewed
------------------------------ ------ --------------------- --------------------- -------------------
EQUITY
------------------------------ ------ --------------------- --------------------- -------------------
Share capital* 10 78 598 78 598 78 598
------------------------------ ------ --------------------- --------------------- -------------------
Capital reserves* 20 038 633 17 937 471 20 198 908
------------------------------ ------ --------------------- --------------------- -------------------
Retained earnings 8 895 720 9 604 191 13 337 488
------------------------------ ------ --------------------- --------------------- -------------------
-------------- -------------- ---------------
------------------------------ ------ --------------------- --------------------- -------------------
Total equity 29 012 951 27 620 260 33 614 994
------------------------------ ------ --------------------- --------------------- -------------------
Redeemable ordinary
shares* 11 14 335 253 14 335 253 14 335 253
------------------------------ ------ --------------------- --------------------- -------------------
Subordinated loan** 12 1 486 016 1 485 890 1 400 000
------------------------------ ------ --------------------- --------------------- -------------------
-------------- ---------- --------------
------------------------------ ------ --------------------- --------------------- -------------------
Total shareholders'
funds 44 834 220 43 441 403 49 350 247
------------------------------ ------ --------------------- --------------------- -------------------
LIABILITIES
------------------------------ ------ --------------------- --------------------- -------------------
Deposits and other
accounts** 13 219 168 594 216 041 709 215 109 737
------------------------------ ------ --------------------- --------------------- -------------------
Current tax liabilities - - 324 423
------------------------------ ------ --------------------- --------------------- -------------------
--------------- -------------- --------------
------------------------------ ------ --------------------- --------------------- -------------------
Total liabilities 219 168 594 216 041 709 215 434 160
------------------------------ ------ --------------------- --------------------- -------------------
--------------- --------------- ---------------
------------------------------ ------ --------------------- --------------------- -------------------
Total equity and liabilities 264 002 814 259 483 112 264 784 407
------------------------------ ------ --------------------- --------------------- -------------------
========== ========= ==========
------------------------------ ------ --------------------- --------------------- -------------------
ASSETS
------------------------------ ------ --------------------- --------------------- -------------------
Cash and cash equivalents 15 56 122 895 48 871 983 61 029 068
------------------------------ ------ --------------------- --------------------- -------------------
Current tax assets 635 593 1 739 210 -
------------------------------ ------ --------------------- --------------------- -------------------
Investment securities
held to
maturity 14 4 763 896 4 685 471 5 578 070
------------------------------ ------ --------------------- --------------------- -------------------
Investment in debentures 16 4 117 756 3 984 723 3 984 723
------------------------------ ------ --------------------- --------------------- -------------------
Loans, advances and
other
accounts 17 179 128 700 181 316 271 177 740 224
------------------------------ ------ --------------------- --------------------- -------------------
Non - current assets
held for sale 2 264 300 2 303 300 2 216 500
------------------------------ ------ --------------------- --------------------- -------------------
Quoted and other investments 214 679 335 998 363 599
------------------------------ ------ --------------------- --------------------- -------------------
Deferred tax assets 3 540 549 2 823 544 2 367 960
------------------------------ ------ --------------------- --------------------- -------------------
Investment in associate 18 - - -
------------------------------ ------ --------------------- --------------------- -------------------
Investment properties 4 395 500 4 385 300 3 020 300
------------------------------ ------ --------------------- --------------------- -------------------
Intangible assets 19 1 774 414 1 664 369 -
------------------------------ ------ --------------------- --------------------- -------------------
Property and equipment 20 7 044 532 7 372 943 8 483 963
------------------------------ ------ --------------------- --------------------- -------------------
--------------- --------------- --------------
------------------------------ ------ --------------------- --------------------- -------------------
Total assets 264 002 814 259 483 112 264 784 407
------------------------------ ------ --------------------- --------------------- -------------------
========== ========== ==========
------------------------------ ------ --------------------- --------------------- -------------------
*The amount was restated following the reclassification of
shares issued to three strategic foreign investors from ordinary
share capital to redeemable ordinary shares (refer to note 11).
**The amount was restated following a reclassification of the
subordinated term loan from deposits and other accounts to
shareholders' funds (refer to note 12).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2014
Capital Reserves
---------------- ----------------------- --------------------------------------------------------------------- ---------------------- -----------------
Share Capital Share Premium Share Option Reserve Regulatory Reserve Retained Earnings Total
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
US$ US$ US$ US$ US$ US$
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Balances at 1
January 2013 78 598 15 737 548 45 671 2 301 683 12 778 583 30 942 083
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Total
comprehensive
income
for the six
months - - - - 2 672 911 2 672 911
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Impairment
allowance for
loans and
advances - - - 2 114 006 (2 114 006) -
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Shares
issued-private
placement 29 040 14 802 105 - - - 14 831 145
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Share issue
expenses - (495 892) - - - (495 892)
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
--------- ------------- ------------ ------------ --------------- ----------------
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Balances as
previously
reported
at 30
June 2013 107 638 30 043 761 45 671 4 415 689 13 337 488 47 950 247
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
(14 335
Restatement* (29 040) (14 306 213) - - - 253)
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
--------- ------------- ------------- ----------- -------------- --------------
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Restated
balances at 30
June 2013 78 598 15 737 548 45 671 4 415 689 13 337 488 33 614 994
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Total
comprehensive
income
for the six
months - - - - (5 994 734) (5 994 734)
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Impairment
allowance for
loans and
advances - - - (2 261 437) 2 261 437 -
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
---------- -------------- -------------- ------------- -------------- --------------
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Balances at 31
December
2013 78 598 15 737 548 45 671 2 154 252 9 604 191 27 620 260
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Total
comprehensive
income
for the six
months - - - - 1 386 233 1 386 233
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Impairment
allowance for
loans and
advances - - - 2 094 704 (2 094 704) -
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Share based
payments -
share
options
issued - - 6 458 - - 6 458
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
---------- -------------- ---------- ------------- ------------- -------------
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
Balances at 30
June 2014 78 598 15 737 548 52 129 4 248 956 8 895 720 29 012 951
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
====== ======== ======== ======== ======= ========
---------------- ----------------------- --------------- ---------------------------- ---------------------- ---------------------- -----------------
*The amounts were restated following the reclassification of
shares issued to three strategic investors from ordinary share
capital to redeemable ordinary share capital (refer to Note 10.2.2
and 11).
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2014
Restated
-------------------------------------------------- ----------------- ------------------
30 June 2014 30 June 2013
-------------------------------------------------- ----------------- ------------------
US$ US$
-------------------------------------------------- ----------------- ------------------
Unaudited Reviewed
-------------------------------------------------- ----------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
-------------------------------------------------- ----------------- ------------------
Profit before taxation 1 867 035 3 812 214
-------------------------------------------------- ----------------- ------------------
Non-cash items:
-------------------------------------------------- ----------------- ------------------
-Amortisation of intangible assets 161 435 46 373
-------------------------------------------------- ----------------- ------------------
-Depreciation 945 146 818 851
-------------------------------------------------- ----------------- ------------------
-Impairment losses on loans, advances and
debentures 1 581 045 1 887 537
-------------------------------------------------- ----------------- ------------------
-Profit on disposal of unquoted investments (21 055) -
-------------------------------------------------- ----------------- ------------------
-Non - current assets held for sale fair
value adjustment - 75 300
-------------------------------------------------- ----------------- ------------------
-Quoted and other investments fair value
adjustment 7 374 (37 494)
-------------------------------------------------- ----------------- ------------------
-Profit on disposal of associate - (580 137)
-------------------------------------------------- ----------------- ------------------
-Profit on disposal of property and equipment (5 365) -
-------------------------------------------------- ----------------- ------------------
-share based payment - remuneration expense 6 458 -
-------------------------------------------------- ----------------- ------------------
-Share of associate profit - (217 768)
-------------------------------------------------- ----------------- ------------------
-------------- ---------------
-------------------------------------------------- ----------------- ------------------
Operating cash flows before changes in operating
assets and
liabilities 4 542 073 5 804 876
-------------------------------------------------- ----------------- ------------------
Changes in operating assets and liabilities
-------------------------------------------------- ----------------- ------------------
Deposits and other accounts* 3 126 885 20 107 104
-------------------------------------------------- ----------------- ------------------
Loans, advances and other accounts 741 528 (33 027 768)
-------------------------------------------------- ----------------- ------------------
Investment in debentures (133 033) (3 984 723)
-------------------------------------------------- ----------------- ------------------
--------------- -----------------
-------------------------------------------------- ----------------- ------------------
8 277 453 (11 100 511)
-------------------------------------------------- ----------------- ------------------
--------------- -----------------
-------------------------------------------------- ----------------- ------------------
Taxation
-------------------------------------------------- ----------------- ------------------
Capital gains tax paid (1 750) (264 024)
-------------------------------------------------- ----------------- ------------------
Corporate tax paid (92 442) (2 127 185)
-------------------------------------------------- ----------------- ------------------
---------------- ----------------
-------------------------------------------------- ----------------- ------------------
Net cash inflow/(outflow) from operating
activities 8 183 261 (13 491 720)
-------------------------------------------------- ----------------- ------------------
---------------- ----------------
-------------------------------------------------- ----------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
-------------------------------------------------- ----------------- ------------------
Acquisition of intangible assets (271 480) -
-------------------------------------------------- ----------------- ------------------
Acquisition of investment property (10 200) -
-------------------------------------------------- ----------------- ------------------
Purchase of property and equipment (616 736) (1 161 728)
-------------------------------------------------- ----------------- ------------------
Proceeds on disposal of property and equipment 5 365 -
-------------------------------------------------- ----------------- ------------------
Proceeds on disposal of non - current assets
held for sale 39 000 28 500
-------------------------------------------------- ----------------- ------------------
Proceeds on disposal of associate - 1 850 000
-------------------------------------------------- ----------------- ------------------
Expenses on disposal of associate - (26 175)
-------------------------------------------------- ----------------- ------------------
Investment securities held to maturity (78 424) (76 107)
-------------------------------------------------- ----------------- ------------------
---------------- ---------------
-------------------------------------------------- ----------------- ------------------
Net cash (outflow)/inflow from investing
activities (932 475) 614 490
-------------------------------------------------- ----------------- ------------------
---------------- ---------------
-------------------------------------------------- ----------------- ------------------
Net cash inflow/(outflow) before financing
activities 7 250 786 (12 877 230)
-------------------------------------------------- ----------------- ------------------
---------------- ---------------
-------------------------------------------------- ----------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
-------------------------------------------------- ----------------- ------------------
Proceeds from subordinated term loan* - 1 400 000
-------------------------------------------------- ----------------- ------------------
Repayments of interest on subordinated term (85 890) -
loan
-------------------------------------------------- ----------------- ------------------
Interest capitalised on subordinated term 86 016 -
loan
-------------------------------------------------- ----------------- ------------------
Proceeds from issue of shares - 14 831 145
-------------------------------------------------- ----------------- ------------------
Share issue expenses - (495 892)
-------------------------------------------------- ----------------- ------------------
---------------- ---------------
-------------------------------------------------- ----------------- ------------------
Net cash inflow from financing activities 126 15 735 253
-------------------------------------------------- ----------------- ------------------
-------------- ---------------
-------------------------------------------------- ----------------- ------------------
Net increase in cash and cash equivalents 7 250 912 2 858 023
-------------------------------------------------- ----------------- ------------------
Cash and cash equivalents at the beginning
of the period 48 871 983 58 171 045
-------------------------------------------------- ----------------- ------------------
---------------- ----------------
-------------------------------------------------- ----------------- ------------------
Cash and cash equivalents at the end of the
period 56 122 895 61 029 068
-------------------------------------------------- ----------------- ------------------
========= =========
-------------------------------------------------- ----------------- ------------------
*The amount was restated following a reclassification of the
subordinated term loan from deposits and other accounts to
shareholders' funds (refer to note 12).
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2014
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe
and is an investment holding company. Its registered office is 64
Kwame Nkrumah Avenue, Harare. Its principal operating subsidiary is
engaged in banking and other companies hold investments.
2. ACCOUNTING CONVENTION
Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34, Interim Financial
Reporting. Selected explanatory notes are included to explain
events and transactions that are significant to an understanding of
the changes in financial position of the Group since the last
annual consolidated financial statements as at and for the year
ended 31 December 2013. These condensed consolidated interim
financial statements do not include all the information required
for the full annual financial statements prepared in accordance
with International Financial Reporting Standards.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 20 August 2014.
2.1 Basis of preparation
The condensed consolidated interim financial statements have
been prepared under the historical cost convention except for
quoted and other investments, investment properties and financial
instruments which are carried at fair value and land and buildings
which are stated at revalued amount. These condensed consolidated
interim financial statements are reported in United States of
America dollars and rounded to the nearest dollar.
2.2 Basis of consolidation
The Group financial results incorporate the financial results of
the Company, its subsidiaries and associate company. Subsidiaries
are investees controlled by the Group. The Group controls an
investee if it is exposed to, or has rights to, variable returns
from its involvement with the investee. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date on which control commences until the date when
control ceases. The financial results of the subsidiaries are
prepared for the same reporting period as the parent company, using
consistent accounting policies. All intra-group balances,
transactions, income and expenses; profits and losses resulting
from intra-group transactions that are recognised in assets and
liabilities are eliminated in full. When the Group loses control
over a subsidiary, it derecognises the assets and liabilities of
the subsidiary, and any related non-controlling interest and other
components of equity. Any resulting gain or loss is recognised in
profit or loss. Any interest retained in the former subsidiary is
measured at fair value when control is lost.
An associate is an entity over which the Group has significant
influence, as evidenced by the Group holding directly or indirectly
20% or more of the voting power of the investee, representation on
the Board and direct involvement with the policy making processes
of the investee. The investment in Associate is accounted for using
the equity method.
2.3 Comparative financial information
The interim financial statements comprise consolidated
statements of financial position, comprehensive income, changes in
equity and cash flows. The comparative consolidated statements of
comprehensive income, changes in equity and cash flows are for six
months.
2.4 Use of estimates and judgements
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
The significant judgements made by management in applying the
Group's accounting policies and key sources of estimation and
uncertainity were the same as those applied to the consolidated
financial statements as at and for the year ended 31 December
2013.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
In the process of applying the Group's accounting policies,
management has made the following judgements which have the most
significant effect on the amounts recognised in the consolidated
financial statements:
2.4.1 Deferred tax
Provision for deferred taxation is made using the liability
method in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Temporary differences
arising out of the initial recognition of assets or liabilities and
temporary differences on initial recognition of business
combinations that affect neither accounting nor taxable profit are
not recognised. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date. Deferred income tax assets and
liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the reporting date.
In determining the amounts used for taxation purposes the
directors referred to applicable effective exchange rates at the
date of acquisition of assets or incurring of liabilities. The
Zimbabwe Revenue Authority (ZIMRA), announced methods to account
for the deferred tax arising on assets purchased in ZWD. These
methods require the preparer to first estimate the equivalent USD
value of those assets at the time of purchase. Since the
measurement of transactions in Zimbabwe dollars in the prior
periods is affected by several economic variables such as mode of
payment and hyperinflation, this is an area where the directors
have had to apply their judgement and acknowledge there could be
significant variations in the results achieved depending on
assumptions made.
2.4.2 Land and buildings
The properties were valued by directors. The determined fair
value of land and buildings is most sensitive to the estimated
yield as well as the long term vacancy rate. In addition, the
property market is currently not stable due to liquidity
constraints and hence comparable values are also not stable.
2.4.3 Investment properties
Investment properties were valued by directors. The directors
considered comparable market evidence of recent sale transactions
and those transactions where firm offers had been made but awaiting
acceptance. In addition, the property market is currently not
stable due to liquidity constraints and hence comparable values are
also not stable.
The directors exercised their judgment in determining the
residual values of the other property and equipment which have been
determined as nil.
2.4.4 Investment securities held to maturity
This relates to the RBZ Bond that was valued at amortised cost
as there is currently no market information to facilitate the
application of fair value principles, refer to Note 14.1.
2.4.5 Impairment losses on loan and advances
The Group reviews all loans and advances at each reporting date
to assess whether an impairment loss should be recorded in profit
or loss. In particular, judgement by management is required in the
estimation of the amount and timing of future cash flows when
determining the impairment loss. In estimating these cash flows,
the Group makes judgements about the borrower's financial situation
and the net realisable value of collateral. These estimates are
based on assumptions about a number of factors and actual results
may differ, resulting in future changes to the allowance. Loans and
advances that have been assessed individually and found not to be
impaired and all individually insignificant loans and advances are
then assessed collectively, in groups of assets with similar risk
characteristics, to determine whether provision should be made due
to incurred loss events for which there is objective evidence but
whose effects are not yet evident. The collective assessment takes
account of data from the loan portfolio (such as credit quality,
levels of arrears, credit utilisation, loan to collateral ratios
etc.), concentrations of risks and economic data.
The impairment loss on loans and advances is disclosed in more
detail under note 8 and note 17.3 below.
2.4.6 Going concern
The Directors have assessed the ability of the Group to continue
operating as a going concern and believe that the preparation of
these consolidated financial statements on a going concern basis is
still appropriate.
2.4.7 Non-current assets held for sale
Non-current assets or disposal group are held for sale if its
carrying amount will be recovered principally through a sale
transaction rather than through continuing use. These are measured
at the lower of carrying amount and fair value less costs to sell
and they are not depreciated.
Non-current assets were valued by the directors who considered
comparable market evidence of recent sale transactions and those
transactions where firm offers had been made but waiting
acceptance.
3. ACCOUNTING POLICIES
The selected principal accounting policies applied in the
preparation of these condensed financial statements are set out
below. These policies have been consistently applied unless
otherwise stated.
3.1 Financial instruments
3.1.1 Classification
Financial assets and liabilities at fair value through profit
and loss include financial assets and liabilities held for trading
i.e. those that the Group principally holds for the purpose of
short-term profit taking as well as those that were, upon initial
recognition, designated by the entity as financial assets or
liabilities at fair value through profit and loss.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market other than those classified as held-for-trading and the
Group upon initial recognition designates as at fair value through
profit or loss and those the Group upon initial recognition
designates as available-for-sale.
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturity that the
Group has the positive intention and ability to hold to
maturity.
Financial assets available-for-sale are non-derivative financial
assets that are designated as available-for- sale or are not
classified as loans and receivables, held-to-maturity investments
or financial assets at fair value through profit or loss.
3.1.2 Recognition
The Group recognises financial assets at fair value through
profit and loss and available for sale assets on the date it
commits to purchase the assets. From this date any gains and losses
arising from changes in fair value of the assets are recognised in
the income statement and other comprehensive income
respectively.
Held-to-maturity investments and loans and receivables are
recognised at cost which is the fair value of the consideration
given on the day that they are transferred to the Group.
3.1.3 Measurement
Financial assets and liabilities are measured initially at fair
value. Subsequent to initial recognition, financial assets and
liabilities measured at fair value through profit and loss and
available-for-sale financial assets are measured at fair value,
except that any instrument that does not have a quoted market price
in an active market and whose fair value cannot be reliably
measured is stated at cost, less impairment losses.
Held-to-maturity investments and loans and receivables are
measured at amortised cost less impairment losses. Amortised cost
is calculated using the effective interest rate method. Premiums
and discounts, including initial transaction costs, are included in
the carrying amount of the related instrument and amortised based
on the effective interest rate of the instrument.
3.1.4 Fair value measurement principles
The fair value of financial instruments is based on their quoted
market price at the reporting date without any deduction for
transaction costs. If a quoted market price is not available, the
fair value of the instrument is estimated using pricing models or
discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future
cash flows are based on management's best estimates and the
discount rate is a market related rate at the reporting date for an
instrument with similar terms and conditions. Where pricing models
are used, inputs are based on market related measures at the
reporting date.
3.2 Investment properties
Investment properties are stated at fair value. Gains and losses
arising from a change in fair value of investment properties are
recognized in the income statement. The fair value is determined at
the end of each reporting period.
3.3 Share - based payments
The Group issues share options to certain employees in terms of
the Employee Share Option Scheme. Share options are measured at
fair value at the date of grant. The fair value determined at the
date of grant of the options is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of shares
that will eventually vest. Fair value is measured using the
Black-Scholes option pricing model. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and other
behavioural considerations.
3.4 Property and equipment
International Accounting Standard 16 (IAS 16) stipulates that
the residual value and the useful life of an asset must be reviewed
at least each financial year-end. If the residual value of an asset
increases by an amount equal to or greater than the asset's
carrying amount, then the depreciation of the asset ceases.
Depreciation will resume only when the residual value decreases to
an amount below the asset's carrying amount.
3.5 Intangible assets
Intangible assets are initially recognised at cost.
Subsequently, the assets are measured at cost less accumulated
armotisation and any accumulated impairment losses.
3.6 Shareholders' funds
Shareholders' funds refers to the total investment made by the
shareholders to the Group and it consists of share capital, share
premium, share options reserve, retained earnings, redeemable
ordinary shares and subordinated term loans.
4. INTEREST INCOME
30 June 2014 30 June 2013
--------------------------------- --------------- --------------
US$ US$
--------------------------------- --------------- --------------
Loans and advances to banks 737 933 936 587
--------------------------------- --------------- --------------
Loans and advances to customers 14 149 747 15 038 076
--------------------------------- --------------- --------------
Investment securities 115 461 124 426
--------------------------------- --------------- --------------
Other 30 519 107
--------------------------------- --------------- --------------
-------------- -------------
--------------------------------- --------------- --------------
15 033 660 16 099 196
--------------------------------- --------------- --------------
======== ========
--------------------------------- --------------- --------------
5. FEE AND COMMISSION INCOME AND NON-INTEREST INCOME
5.1 Fee and commission income
30 June 2014 30 June 2013
------------------------------------- -------------- --------------
US$ US$
------------------------------------- -------------- --------------
Retail banking customer fees 5 416 345 6 503 259
------------------------------------- -------------- --------------
Corporate banking credit - related
fees 94 932 172 005
------------------------------------- -------------- --------------
Financial guarantee income 58 623 95 395
------------------------------------- -------------- --------------
International banking customer fees 824 634 820 106
------------------------------------- -------------- --------------
Corporate finance fees 420 033 -
------------------------------------- -------------- --------------
------------- -------------
------------------------------------- -------------- --------------
6 814 567 7 590 765
------------------------------------- -------------- --------------
======== ========
------------------------------------- -------------- --------------
5.2 non-interest income
30 June 2014 30 June 2013
-------------------------------------------- -------------- --------------
US$ US$
-------------------------------------------- -------------- --------------
Net (losses)/gains from quoted and
other investments (7 374) 37 494
-------------------------------------------- -------------- --------------
Fair value adjustment on non-current
assets held for sale - (75 300)
-------------------------------------------- -------------- --------------
Profit on disposal of property and 5 365 -
equipment
-------------------------------------------- -------------- --------------
Profit on disposal of unquoted investments 21 055 -
-------------------------------------------- -------------- --------------
Profit on disposal of associate - 580 137
-------------------------------------------- -------------- --------------
Insurance claims and recoveries 41 433 4 962
-------------------------------------------- -------------- --------------
Rental income 30 651 16 940
-------------------------------------------- -------------- --------------
Profit on disposal of quoted investments 408 725 -
-------------------------------------------- -------------- --------------
Other net operating income/(loss) 9 724 (2 504)
-------------------------------------------- -------------- --------------
------------- -------------
-------------------------------------------- -------------- --------------
509 579 561 729
-------------------------------------------- -------------- --------------
======== ========
-------------------------------------------- -------------- --------------
6. Operating EXPENDITURE
30 June 2014 30 June 2013
---------------------------------------- -------------- --------------
US$ US$
---------------------------------------- -------------- --------------
The operating profit is after charging
the following:-
---------------------------------------- -------------- --------------
Administration costs 6 156 186 6 279 681
---------------------------------------- -------------- --------------
Staff costs - salaries, allowances
and related costs 6 089 477 5 880 682
---------------------------------------- -------------- --------------
Amortisation of intangible assets 161 435 46 373
---------------------------------------- -------------- --------------
Depreciation 945 146 818 851
---------------------------------------- -------------- --------------
------------- -------------
---------------------------------------- -------------- --------------
13 352 244 13 025 587
---------------------------------------- -------------- --------------
======== ========
---------------------------------------- -------------- --------------
7. taxation
30 June 2014 30 June 2013
-------------------- ------------------ ---------------
US$ US$
-------------------- ------------------ ---------------
Income tax expense
-------------------- ------------------ ---------------
Current tax 1 154 671 1 808 389
-------------------- ------------------ ---------------
Aids levy 34 640 54 252
-------------------- ------------------ ---------------
Deferred tax (717 009) (987 362)
-------------------- ------------------ ---------------
Capital gains tax 8 500 264 024
-------------------- ------------------ ---------------
----------- -------------
-------------------- ------------------ ---------------
480 802 1 139 303
-------------------- ------------------ ---------------
======= ========
-------------------- ------------------ ---------------
8. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment losses are applied to write off loans and advances in
part or in whole when they are considered partly or wholly
irrecoverable. The aggregate impairment losses which are made
during the year are dealt with as per paragraph 8.3.
8.1 Specific provisions
Specific provisions are made where the repayment of identified
loans and advances is in doubt and reflect estimates of the loss.
Loans and advances are written off against specific provisions once
the probability of recovering any significant amounts becomes
remote.
8.2 Portfolio provisions
The portfolio provision relates to the inherent risk of losses
which, although not separately identified, is known to be present
in any loan portfolio.
8.3 Regulatory Guidelines and International Financial Reporting
Standards Requirements
The Banking Regulations 2000 gives guidance on provisioning for
doubtful debts and stipulates certain minimum percentages to be
applied to the respective categories of the loan book.
International Accounting Standard 39, Financial Instruments
Recognition and Measurement (IAS 39), prescribes the provisioning
for impairment losses based on the actual loan losses incurred in
the past applied to the sectoral analysis of book debts and the
discounting of expected cash flows on specific problem
accounts.
The two prescriptions are likely to give different results. The
Group has taken the view that where the IAS 39 charge is less than
the amount provided for in the Banking Regulations, the difference
is recognized directly in equity as a transfer from retained
earnings to a regulatory reserve and where it is more, the full
amount will be charged to the profit or loss.
8.4 Non-performing loans
Interest on loans and advances is accrued to income until such
time as reasonable doubt exists about its collectability,
thereafter and until all or part of the loan is written off,
interest continues to accrue on customers' accounts, but is not
included in income. Such suspended interest is deducted from loans
and advances in the statement of financial position. This policy
meets the requirements of the Banking Regulations 2000 issued by
the RBZ.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
for the period attributable to ordinary equity holders of NMBZ
Holdings Limited by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary equity holders of NMBZ Holdings Limited
adjusted for the after tax effect of: (a) any dividends or other
items related to dilutive potential ordinary shares deducted in
arriving at profit or loss attributable to ordinary equity holders
of the parent entity; (b) any interest recognised in the period
related to dilute potential ordinary shares; (c) any other changes
in income or expense that would result from the conversion of the
dilutive potential ordinary shares, by the weighted average number
of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into
ordinary shares.
9.1 Earnings
30 June 2014 30 June 2013
------- ------------- -------------
US$ US$
------- ------------- -------------
Basic 1 386 233 2 672 911
------- ------------- -------------
9.2 Number of shares
30 June 2014 30 June 2013
------------------------------------------ ----------------------------- ------------------------------
9.2.1 Basic earnings per share
------------------------------------------ ----------------------------- ------------------------------
Weighted average number of ordinary
shares for basic
earnings per share 384 427 401 280 710 729
------------------------------------------ ----------------------------- ------------------------------
9.2.2 Diluted earnings per share
------------------------------------------ ----------------------------- ------------------------------
Number of share at beginning of
period 384 427 401 280 710 729
------------------------------------------ ----------------------------- ------------------------------
Shares issued - 103 716 672
------------------------------------------ ----------------------------- ------------------------------
Redeemable ordinary shares (note
10.2.2) - 103 714 287
------------------------------------------ ----------------------------- ------------------------------
Shares issued on consolidation - 2 385
------------------------------------------ ----------------------------- ------------------------------
Effect of dilution:
------------------------------------------ ----------------------------- ------------------------------
Shares options granted but not exercised 5 035 634 907 200
------------------------------------------ ----------------------------- ------------------------------
Share options approved but not yet
granted 23 942 639 167 087
------------------------------------------ ----------------------------- ------------------------------
---------------- ------------------
------------------------------------------ ----------------------------- ------------------------------
413 405 674 385 501 688
------------------------------------------ ----------------------------- ------------------------------
=========== ===========
------------------------------------------ ----------------------------- ------------------------------
9.3 Earnings per share (US cents)
30 June 2014 30 June 2013
--------------- ------------- -------------
Basic 0.36 0.95
--------------- ------------- -------------
Diluted basic 0.34 0.69
--------------- ------------- -------------
10. SHARE CAPITAL
Restated Restated
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
30 June 2014 31 December 30 June 30 June 31 December 30 June
2014 2013 2014 2013 2013
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
Shares Shares US$ US$
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
million million
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
10.1
Authorised
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
Ordinary
shares
of US$0.00028
each 600 600 600 168 000 168 000 168 000
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
==== ==== ==== ===== ===== ======
--------------- ------------------- ------------------------ ----------- ------------ ------------- ------------
10.2 Issued and fully paid
10.2.1 Ordinary shares
Restated Restated
----------------- ----------------- ------------ ------------- ------------- ----------------- -------------
30 June 2014 31 December 30 June 2013 30 June 2014 31 December 2013 30 June 2013
2014
----------------- ----------------- ------------ ------------- ------------- ----------------- -------------
Shares Shares US$ US$
----------------- ----------------- ------------ ------------- ------------- ----------------- -------------
million million
----------------- ----------------- ------------ ------------- ------------- ----------------- -------------
Ordinary shares 600 600 600 168 000 168 000 168 000
----------------- ----------------- ------------ ------------- ------------- ----------------- -------------
==== ==== ==== ===== ===== ======
----------------- ----------------- ------------ ------------- ------------- ----------------- -------------
10.2.2 Reedemable ordinary shares
Restated Restated
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
30 June 2014 31 December 30 June 2013 30 June 2014 31 December 2013 30 June 2013
2014
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
Shares Shares US$ US$
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
million million
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
At 1 January 104 - - 29 040 - -
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
Shares issued - 104 104 - 29 040 29 040
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
-------- -------- -------- ----------- ----------- -----------
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
104 104 104 29 040 29 040 29 040
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
==== ==== ==== ===== ===== ======
--------------- ------------- ------------ ------------- ------------- ----------------- -------------
Of the unissued ordinary shares of 215 million shares (2013 -
215 million), options which may be granted in terms of the 2012
ESOS amount to 28 071 073 and as at 30 June 2014, 4 128 434 share
options had been issued.
Subject to the provisions of section 183 of the Companies Act
(Chapter 24:03), the unissued shares are under the control of the
directors.
11. REDEEMABLE ORDINARY SHARES
Restated
----------------------------- --------------- ------------------ --------------
30 June 2014 31 December 30 June 2013
2013
----------------------------- --------------- ------------------ --------------
US$ US$ US$
----------------------------- --------------- ------------------ --------------
Balance at 1 January 14 335 253 - -
----------------------------- --------------- ------------------ --------------
Transfer from share capital - 29 040 29 040
----------------------------- --------------- ------------------ --------------
Transfer from share premium - 14 306 213 14 306 213
----------------------------- --------------- ------------------ --------------
-------------- ----------------- -------------
----------------------------- --------------- ------------------ --------------
14 335 253 14 335 253 14 335 253
----------------------------- --------------- ------------------ --------------
========= ========== =========
----------------------------- --------------- ------------------ --------------
The Company received on 30 June 2013 US$14 831 145 capital from
Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden
N.V. (FMO), Norwegian Investment Fund for Developing Countries
(Norfund) and AfricInvest Financial Sector Holdings (AfricInvest)
who were allocated 34 571 429 shares each (total of 103 714 287)
for individually investing US$4 943 715. This amount, net of share
issue expenses, was used to recapitalise the Bank in order to
contribute towards the minimum capital requirements set by the
Reserve Bank of Zimbabwe of US$100 million by 31 December 2020.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back
agreement with Norfund, FMO and AfricInvest, where these three
strategic investors have a right on their own discretion at any
time after the 5(th) anniversary but before the 9(th) anniversary
of its first subscription date, to request NMBZ to buy back all or
part of its NMBZ shares at a price to be determined as the
subscription price of US$0.143 plus the proportionate share of the
distributable reserves above the minimum regulatory capital at the
point of exercising the share buy back . Further, no buy-back
option can be exercised by any investor after the 9(th) anniversary
of the effective date.
The share buy-back agreement creates a potential obligation for
NMBZ Holdings Limited to purchase its own instruments. Thus shares
issued gave rise to a financial liability and are classified as
redeemable ordinary shares.
The investment by the three strategic investors was classified
as ordinary shares as at 30 June 2013 but was subsequently
reclassified to redeemable ordinary shares in the results for the
year ended 31 December 2013.
The effect of this change on the 30 June 2013 results is
summarised below:
30 June 2013
------------------------------------------------ -----------------
US$
------------------------------------------------ -----------------
Consolidated Statement of Comprehensive income
------------------------------------------------ -----------------
Effect on income and expenses -
------------------------------------------------ -----------------
==========
------------------------------------------------ -----------------
Consolidated Statement of Financial Position
------------------------------------------------ -----------------
Decrease in share capital (29 040)
------------------------------------------------ -----------------
Decrease in capital reserves (14 306 213)
------------------------------------------------ -----------------
Increase in redeemable ordinary shares 14 335 253
------------------------------------------------ -----------------
----------------
------------------------------------------------ -----------------
Effect on shareholders' funds -
------------------------------------------------ -----------------
==========
------------------------------------------------ -----------------
12. SUBORDINATED TERM LOAN
Restated
------------------------ --------------- ------------------ ---------------
30 June 2014 31 December 2013 30 June 2013
------------------------ --------------- ------------------ ---------------
US$ US$ US$
------------------------ --------------- ------------------ ---------------
At 1 January 1 485 890 - -
------------------------ --------------- ------------------ ---------------
Subordinated term loan - 1 400 000 1 400 000
------------------------ --------------- ------------------ ---------------
Interest capitalised 86 016 85 890 -
------------------------ --------------- ------------------ ---------------
Interest repaid (85 890) - -
------------------------ --------------- ------------------ ---------------
-------------- ----------------- --------------
------------------------ --------------- ------------------ ---------------
1 486 016 1 485 890 1 400 000
------------------------ --------------- ------------------ ---------------
========= ========== =========
------------------------ --------------- ------------------ ---------------
In 2013, the Bank received a subordinated term loan amounting to
US$1.4 million from a Development Financial Institution which
attracts an interest rate of LIBOR plus 10% and has a seven year
maturity date from the first disbursement date.
The loan was initially classified as a deposit as at 30 June
2013 but was subsequently reclassified to shareholders' funds in
the results for the year ended 31 December 2013.
The effect of this change on the 30 June 2013 results is
summarised below:
30 June 2013
------------------------------------------------ -----------------
US$
------------------------------------------------ -----------------
Consolidated Statement of Comprehensive income
------------------------------------------------ -----------------
Effect on income and expense -
------------------------------------------------ -----------------
==========
------------------------------------------------ -----------------
Consolidated Statement of Financial Position
------------------------------------------------ -----------------
Decrease in deposits and other accounts (1 400 000)
------------------------------------------------ -----------------
----------------
------------------------------------------------ -----------------
Increase in shareholders' funds 1 400 000
------------------------------------------------ -----------------
==========
------------------------------------------------ -----------------
The above liability would, in the event of the winding up of the
issuer, be subordinated to the claims of depositors and all other
creditors of the issuer. The Group has not had any defaults of the
principal, interest and other breaches with respect to this
subordinated loan during the six months period ended 30 June
2014.
13. DepositS and other accounts
13.1 Deposits and other accounts
Restated
------------------------------- --------------- ------------------ -----------------
30 June 2014 31 December 2013 30 June 2013
------------------------------- --------------- ------------------ -----------------
US$ US$ US$
------------------------------- --------------- ------------------ -----------------
Deposits from banks and other
financial institutions 48 479 775 52 338 708 46 592 182
------------------------------- --------------- ------------------ -----------------
Current and deposit accounts 165 315 456 158 876 358 162 681 607
------------------------------- --------------- ------------------ -----------------
-------------- ----------------- ----------------
------------------------------- --------------- ------------------ -----------------
Total deposits 213 795 231 211 215 066 209 273 789
------------------------------- --------------- ------------------ -----------------
Trade and other payables 5 373 363 4 826 643 5 835 948
------------------------------- --------------- ------------------ -----------------
-------------- ----------------- ---------------
------------------------------- --------------- ------------------ -----------------
219 168 594 216 041 709 215 109 737
------------------------------- --------------- ------------------ -----------------
========= ========== ==========
------------------------------- --------------- ------------------ -----------------
13.2 Maturity analysis
Restated
--------------------- ---------------- ----------------- -----------------
30 June 2014 31 December 2013 30 June 2013
--------------------- ---------------- ----------------- -----------------
US$ US$ US$
--------------------- ---------------- ----------------- -----------------
Less than one month 159 326 911 160 919 521 169 304 967
--------------------- ---------------- ----------------- -----------------
1 to 3 months 15 542 250 28 819 465 10 836 168
--------------------- ---------------- ----------------- -----------------
3 to 6 months 16 048 644 2 163 310 20 220 081
--------------------- ---------------- ----------------- -----------------
6 months to 1 year 8 986 475 1 697 507 1 769 715
--------------------- ---------------- ----------------- -----------------
1 to 5 years 13 890 951 17 615 263 7 142 858
--------------------- ---------------- ----------------- -----------------
Over 5 years - - -
--------------------- ---------------- ----------------- -----------------
--------------- --------------- ----------------
--------------------- ---------------- ----------------- -----------------
213 795 231 211 215 066 209 273 789
--------------------- ---------------- ----------------- -----------------
========== ========= ===========
--------------------- ---------------- ----------------- -----------------
13.3 Sectoral analysis of deposits
Restated
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
30 June 2014 31 December 30 June
2013 2013
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
US$ % US$ % US$ %
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Agriculture 8 044 176 4 9 731 279 4 6 659 542 3
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Banks and financial
services 48 479 775 22 52 338 708 25 46 592 182 22
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Distribution 21 647 370 10 21 091 778 10 19 842 897 9
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Individuals 27 570 708 13 28 425 938 13 33 320 712 16
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Manufacturing 28 035 050 13 26 723 790 13 25 123 778 12
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Mining companies 4 079 517 2 3 035 997 1 4 171 466 2
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Municipalities
and
parastatals 10 250 389 5 10 509 776 5 16 266 626 8
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Other deposits 25 396 221 12 20 727 019 10 20 766 674 10
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Services 33 929 554 16 32 933 385 16 30 184 949 15
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
Transport and
Telecommunications
companies 6 362 471 3 5 697 396 3 6 344 963 3
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
--------------- -------- --------------- ---- ----------------- -----
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
209 273
213 795 231 100 211 215 066 100 789 100
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
========= ==== ========= === ========== ===
--------------------- ---------------------- --------- ---------------- -------------- ------------------ ------
14. FINANCIAL INSTRUMENTS
14.1 Investment securities held to maturity
30 June 2014 31 December 2013
---------------------- -------------- -----------------
US$ US$
---------------------- -------------- -----------------
RBZ Bonds
---------------------- -------------- -----------------
Balance at 1 January 4 685 471 5 501 963
---------------------- -------------- -----------------
Maturity - (969 004)
---------------------- -------------- -----------------
Interest 78 425 152 512
---------------------- -------------- -----------------
------------- --------------
---------------------- -------------- -----------------
4 763 896 4 685 471
---------------------- -------------- -----------------
======== ========
---------------------- -------------- -----------------
14.2 Maturity analysis of investment securities held to
maturity
30 June 2014 31 December 2013
--------------------- -------------- -----------------
US$ US$
--------------------- -------------- -----------------
Less than one month - -
--------------------- -------------- -----------------
1 to 3 months - -
--------------------- -------------- -----------------
3 to 6 months 2 502 886 2 424 461
--------------------- -------------- -----------------
6 months to 1 year 969 004 969 004
--------------------- -------------- -----------------
1 to 5 years 1 292 006 1 292 006
--------------------- -------------- -----------------
Over 5 years - -
--------------------- -------------- -----------------
------------- -------------
--------------------- -------------- -----------------
4 763 896 4 685 471
--------------------- -------------- -----------------
======== ========
--------------------- -------------- -----------------
14.3 Fair values of financial instruments
14.3.1 Financial instruments measured at fair value - fair value
hierarchy
30 June 2014 Level 1 Level 2 Level 3
-------------------- ------------- ------------ -------------- ---------------
US$ 2013 US$ US$
-------------------- ------------- ------------ -------------- ---------------
Trade investments 76 202 - - 76 202
-------------------- ------------- ------------ -------------- ---------------
Quoted investments 138 477 138 477 - -
-------------------- ------------- ------------ -------------- ---------------
----------- ----------- ------------- --------------
-------------------- ------------- ------------ -------------- ---------------
214 679 138 477 - 76 202
-------------------- ------------- ------------ -------------- ---------------
======= ======= ======== ========
-------------------- ------------- ------------ -------------- ---------------
During the reporting period ended 30 June 2014, there were no
transfers between Level 1 and Level 2 fair value measurements, and
no transfers into and out of Level 3 fair value measurements. The
trade investments were valued using the net asset value method.
31 December 2013 Level 1 Level 2 Level 3
-------------------- ----------------- ------------ -------------- ---------------
US$ 2013 US$ US$
-------------------- ----------------- ------------ -------------- ---------------
Trade investments 190 148 - - 190 148
-------------------- ----------------- ------------ -------------- ---------------
Quoted investments 145 850 145 850 - -
-------------------- ----------------- ------------ -------------- ---------------
----------- ----------- ------------- --------------
-------------------- ----------------- ------------ -------------- ---------------
335 998 145 850 - 190 148
-------------------- ----------------- ------------ -------------- ---------------
======= ======= ======== ========
-------------------- ----------------- ------------ -------------- ---------------
During the reporting period ended 31 December 2013, there were
no transfers between Level 1 and Level 2 fair value measurements,
and no transfers into and out of Level 3 fair value
measurements.
Level 3 fair value measurements
Reconciliation of Trade investments
30 June 2014 31 December 2013
------------------------------ -------------- -----------------
US$ US$
------------------------------ -------------- -----------------
Opening balance 190 148 195 790
------------------------------ -------------- -----------------
Total loss in profit or loss - (5 642)
------------------------------ -------------- -----------------
Disposal (113 946) -
------------------------------ -------------- -----------------
------------- --------------
------------------------------ -------------- -----------------
Closing balance 76 202 190 148
------------------------------ -------------- -----------------
======== ========
------------------------------ -------------- -----------------
14.3.2Financial instruments not measured at fair value
The table below sets out the fair values of financial
instruments not measured at fair value and analyses them by the
level in the fair value hierarchy into which each fair value
measurement is categorised.
30 June 2014
Total carrying
--------------------------- ------------------ ----------------- ------------------- ------------------
Level 1 Level 2 Level 3 Amount
--------------------------- ------------------ ----------------- ------------------- ------------------
US$ US$ US$ US$
--------------------------- ------------------ ----------------- ------------------- ------------------
Assets
--------------------------- ------------------ ----------------- ------------------- ------------------
Cash and cash equivalents - 56 122 895 - 56 122 895
--------------------------- ------------------ ----------------- ------------------- ------------------
Advances and other
assets - 179 128 700 - 179 128 700
--------------------------- ------------------ ----------------- ------------------- ------------------
Investment in debentures - 4 117 756 - 4 117 756
--------------------------- ------------------ ----------------- ------------------- ------------------
Investment securities
held to
maturity - 4 763 896 - 4 763 896
--------------------------- ------------------ ----------------- ------------------- ------------------
---------------- ---------------- ----------------- -----------------
--------------------------- ------------------ ----------------- ------------------- ------------------
Total - 244 133 247 - 244 133 247
--------------------------- ------------------ ----------------- ------------------- ------------------
========== ========== =========== ==========
--------------------------- ------------------ ----------------- ------------------- ------------------
Liabilities
--------------------------- ------------------ ----------------- ------------------- ------------------
Deposits and other
liabilities - 219 168 594 - 219 168 594
--------------------------- ------------------ ----------------- ------------------- ------------------
--------------- ---------------- ------------------ ---------------
--------------------------- ------------------ ----------------- ------------------- ------------------
- 219 168 594 - 219 168 594
---------------------------------------------- ----------------- ------------------- ------------------
======== ========== =========== ==========
---------------------------------------------- ----------------- ------------------- ------------------
The fair value of the financial assets and liabilities are
included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a
forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:
-- The fair values of cash and cash equivalents, advances and
other assets and deposits and other liabilities carrying amounts
approximate their fair values largely due to the short - term
maturities of these instruments.
-- Fair value of financial assets and liabilities at fair value
through profit or loss is derived from quoted market prices in
active markets. If quoted market prices are not available the fair
value is estimated using pricing models or discounted cash flow
techniques.
15. CASH AND CASH EQUIVALENTS
30 June 2014 31 December 2013
----------------------------------- -------------- -----------------
US$ US$
----------------------------------- -------------- -----------------
Balances with Central Bank 9 635 428 13 480 628
----------------------------------- -------------- -----------------
Current, nostro accounts and cash 21 387 467 31 391 355
----------------------------------- -------------- -----------------
Interbank placements 25 100 000 4 000 000
----------------------------------- -------------- -----------------
------------- --------------
----------------------------------- -------------- -----------------
56 122 895 48 871 983
----------------------------------- -------------- -----------------
======== ========
----------------------------------- -------------- -----------------
16. INVESTMENT IN DEBENTURES
30 June 2013 31 December 2012
------------------------------- --------------- -----------------
US$ US$
------------------------------- --------------- -----------------
Debentures 4 787 074 4 787 074
------------------------------- --------------- -----------------
Provision for impairment loss (669 318) (802 351)
------------------------------- --------------- -----------------
-------------- -------------
------------------------------- --------------- -----------------
4 117 756 3 984 723
------------------------------- --------------- -----------------
========= ========
------------------------------- --------------- -----------------
The Bank has convertible debentures with a carrying amount of
US$4 787 074 with a maturity of 5 years from inception. The
debentures are at an interest rate of 10% per annum. The Bank has
an option to convert the debentures to equity or redeem the
debentures at par on or before the maturity date of 9 March
2018.
17. LOANS, ADVANCES AND OTHER ACCOUNTS
17.1 Total loans, advances and other accounts
30 June 2014 31 December 2013
-------------------------------- --------------- -----------------
17.1.1 Advances US$ US$
-------------------------------- --------------- -----------------
Fixed term loans 20 240 766 21 711 476
-------------------------------- --------------- -----------------
Local loans and overdrafts 157 927 045 159 806 508
-------------------------------- --------------- -----------------
-------------- ---------------
-------------------------------- --------------- -----------------
178 167 811 181 517 984
-------------------------------- --------------- -----------------
Reclassification to debentures (4 117 756) (3 984 723)
-------------------------------- --------------- -----------------
Other accounts 5 078 645 3 783 010
-------------------------------- --------------- -----------------
-------------- --------------
-------------------------------- --------------- -----------------
179 128 700 181 316 271
-------------------------------- --------------- -----------------
========= ========
-------------------------------- --------------- -----------------
17.1.2 Maturity analysis
---------------------------------- ----------------- -----------------
30 June 2014 31 December 2013
---------------------------------- ----------------- -----------------
US$ US$
---------------------------------- ----------------- -----------------
Less than one month 128 956 729 118 711 869
---------------------------------- ----------------- -----------------
1 to three months 10 943 824 18 082 940
---------------------------------- ----------------- -----------------
3 to 6 months 2 695 378 3 826 276
---------------------------------- ----------------- -----------------
6 months to 1 year 4 261 535 2 869 815
---------------------------------- ----------------- -----------------
1 to 5 years 46 762 570 51 286 898
---------------------------------- ----------------- -----------------
Over 5 years - -
---------------------------------- ----------------- -----------------
--------------- ---------------
---------------------------------- ----------------- -----------------
Total advances 193 620 036 194 777 798
---------------------------------- ----------------- -----------------
Provision for impairment losses
on loans and advances (13 266 246) (11 685 201)
---------------------------------- ----------------- -----------------
Suspended interest (2 185 979) (1 574 613)
---------------------------------- ----------------- -----------------
---------------- ---------------
---------------------------------- ----------------- -----------------
178 167 811 181 517 984
---------------------------------- ----------------- -----------------
Reclassification to debentures (4 117 756) (3 984 723)
---------------------------------- ----------------- -----------------
Other accounts 5 078 645 3 783 010
---------------------------------- ----------------- -----------------
--------------- ---------------
---------------------------------- ----------------- -----------------
179 128 700 181 316 271
---------------------------------- ----------------- -----------------
========== =========
---------------------------------- ----------------- -----------------
17.2 Sectoral analysis of utilisations
30 June 2014 31 December 2013
------------------------------ --------------- ------- ----------------------------- -----
US$ % US$ %
------------------------------ --------------- ------- ----------------------------- -----
Agriculture and horticulture 11 901 579 6 11 208 448 6
------------------------------ --------------- ------- ----------------------------- -----
Conglomerates 10 123 896 4 9 190 491 4
------------------------------ --------------- ------- ----------------------------- -----
Distribution 45 605 482 24 46 458 831 24
------------------------------ --------------- ------- ----------------------------- -----
Food & beverages 634 913 - 480 502 -
------------------------------ --------------- ------- ----------------------------- -----
Individuals 45 505 188 24 46 499 825 24
------------------------------ --------------- ------- ----------------------------- -----
Manufacturing 37 811 883 20 36 880 202 19
------------------------------ --------------- ------- ----------------------------- -----
Mining 401 330 - 1 584 085 1
------------------------------ --------------- ------- ----------------------------- -----
Services 41 635 765 22 42 475 414 22
------------------------------ --------------- ------- ----------------------------- -----
-------------- ------ --------------- ----
------------------------------ --------------- ------- ----------------------------- -----
193 620 036 100 194 777 798 100
------------------------------ --------------- ------- ----------------------------- -----
========= === ========= ===
------------------------------ --------------- ------- ----------------------------- -----
The material concentration of loans and advances are in the
distribution sector at 24% (2013-24%) and individuals at 24%
(2013-24%).
17.3 Allowance for impairment losses on loans, advances and
debentures
30 June 2014 31 December
2013
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
Specific Portfolio Total Specific Portfolio Total
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
US$ US$ US$ US$ US$ US$
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
11 427
At 1 January 356 257 845 11 685 201 7 164 064 105 735 7 269 799
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
Charge against 16 493 16 645
profits 1 567 875 13 170 1 581 045 700 152 110 810
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
Bad debts
Written (12 230 (12 230
off - - - 408) - 408)
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
------------- ------------ -------------- --------------- ------------ ---------------
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
12 995 11 427 11 685
Balance 231 271 015 13 266 246 356 257 845 201
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
======== ======= ========= ========= ======== =========
---------------- -------------- --------------- --------------- ---------------- -------------- ----------------
17.4 Non-performing loans and advances
30 June 2014 31 December 2013
----------------------------------------- -------------- -----------------
US$ US$
----------------------------------------- -------------- -----------------
Total non-performing loans and advances 38 739 836 38 730 878
----------------------------------------- -------------- -----------------
Provision for impairment loss on loans
and advances (12 995 231) (11 427 356)
----------------------------------------- -------------- -----------------
Provision for impairment losses on
debentures (note 16) 669 318 802 351
----------------------------------------- -------------- -----------------
Suspended interest (2 185 979) (1 574 613)
----------------------------------------- -------------- -----------------
------------- --------------
----------------------------------------- -------------- -----------------
Residue 24 227 944 26 531 260
----------------------------------------- -------------- -----------------
======== ========
----------------------------------------- -------------- -----------------
The residue of these accounts represents recoverable portions
covered by realisable security.
18. INVESTMENT IN ASSOCIATES
18.1 Investment in African Century Limited
The Group had a 24.79% interest in African Century Limited,
which is involved in the provision of lease finance. The investment
was disposed off on the 29(th) of May 2013 for a consideration of
US$1 850 000.
African Century Limited is a company that is not listed on any
public exchange. The following table illustrates the summarized
unaudited and audited financial information of the Group's
investment in African Century Limited:
30 June 2014 31 December 2013
--------------------------------------------- ---------------- -----------------
US$ US$
--------------------------------------------- ---------------- -----------------
Unaudited Audited
--------------------------------------------- ---------------- -----------------
Associate's statement of financial position
summary
--------------------------------------------- ---------------- -----------------
Current assets - -
--------------------------------------------- ---------------- -----------------
Non-current assets - -
--------------------------------------------- ---------------- -----------------
Current liabilities - -
--------------------------------------------- ---------------- -----------------
Non - current liabilities - -
--------------------------------------------- ---------------- -----------------
------------- --------------
--------------------------------------------- ---------------- -----------------
Equity - -
--------------------------------------------- ---------------- -----------------
========= =========
--------------------------------------------- ---------------- -----------------
Share of associate's equity - -
--------------------------------------------- ---------------- -----------------
========= ==========
--------------------------------------------- ---------------- -----------------
Associate's revenue and profit
--------------------------------------------- ---------------- -----------------
Revenue - 2 208 806
--------------------------------------------- ---------------- -----------------
========= ==========
--------------------------------------------- ---------------- -----------------
Profit - -
--------------------------------------------- ---------------- -----------------
========= ==========
--------------------------------------------- ---------------- -----------------
Share of associate's profit - 217 768
--------------------------------------------- ---------------- -----------------
========= ==========
--------------------------------------------- ---------------- -----------------
Reconciliation of carrying amount of
investment in
associate
--------------------------------------------- ---------------- -----------------
Balance at 1 January - 1 025 919
--------------------------------------------- ---------------- -----------------
Share of profits of associate - 217 768
--------------------------------------------- ---------------- -----------------
Disposal of investment - (1 243 687)
--------------------------------------------- ---------------- -----------------
-------------- ----------------
-------------------------------------------------------------- -----------------
Balance - -
--------------------------------------------- ---------------- -----------------
========== ==========
-------------------------------------------------------------- -----------------
18.2 Investment in Altiwave Investments (Private) Limited
NMB Bank Limited has a 25.5% interest in Altiwave Investments
(Private) Limited which is the holding company of Lobels Holdings
(Private) Limited. The investment arose from a Scheme of
Arrangement agreed to by Lobels Holdings (Private) Limited
shareholders and creditors (banks, trade and employees). Lobels
Holdings (Private) Limited is in the bread and confectionery
business. Altiwave Investments (Private) Limited is a company that
is not listed on any public exchange.
The following table illustrates the summarised unaudited
financial information of the Group's investment in Altiwave
Investments (Private) Limited:
30 June 2014 31 December 2013
------------------------------------- --------------- -----------------
US$ US$
------------------------------------- --------------- -----------------
Unaudited Unaudited
------------------------------------- --------------- -----------------
Associate's statement of financial
position summary
------------------------------------- --------------- -----------------
Current assets 9 700 726 7 867 222
------------------------------------- --------------- -----------------
Non-current assets 9 928 174 15 487 433
------------------------------------- --------------- -----------------
Current liabilities (6 289 153) (10 717 574)
------------------------------------- --------------- -----------------
Non-current liabilities (31 303 684) (30 857 571)
------------------------------------- --------------- -----------------
------------- --------------
------------------------------------- --------------- -----------------
Equity (17 963 937) (18 220 490)
------------------------------------- --------------- -----------------
========= =========
------------------------------------- --------------- -----------------
Share of associate's equity (25.5%) (4 580 804) (4 646 225)
------------------------------------- --------------- -----------------
========= ==========
------------------------------------- --------------- -----------------
Associate's revenue and profit
------------------------------------- --------------- -----------------
Revenue 41 842 356 64 753 584
------------------------------------- --------------- -----------------
========= ==========
------------------------------------- --------------- -----------------
Profit 1 805 676 1 759 363
------------------------------------- --------------- -----------------
========= ==========
------------------------------------- --------------- -----------------
Share of associate's profit (25.5%) 460 447 448 632
------------------------------------- --------------- -----------------
========= ==========
------------------------------------- --------------- -----------------
30 June 2014 31 December 2013
------------------------------------- --------------- -----------------
US$ US$
------------------------------------- --------------- -----------------
Unaudited Unaudited
------------------------------------- --------------- -----------------
Reconciliation of carrying amount
of investment in
associate
------------------------------------- --------------- -----------------
Balance at 1 January - -
------------------------------------- --------------- -----------------
Increase in investment - 510
------------------------------------- --------------- -----------------
Share of profits of associate 460 447 448 638
------------------------------------- --------------- -----------------
Allowance for impairement (460 447) (449 148)
------------------------------------- --------------- -----------------
-------------- ----------------
------------------------------------- --------------- -----------------
Balance - -
------------------------------------- --------------- -----------------
========== ==========
------------------------------------- --------------- -----------------
19. INTANGIBLE ASSETS
US$
----------------------------------------- -----------------
Cost
----------------------------------------- -----------------
Balance at 1 January 2013 -
----------------------------------------- -----------------
Reclassification from property and
equipment 740 615
----------------------------------------- -----------------
Acquisitions 1 170 868
----------------------------------------- -----------------
----------------
----------------------------------------- -----------------
Balance at 31 December 2013 1 911 483
----------------------------------------- -----------------
Acquisitions 271 480
----------------------------------------- -----------------
----------------
----------------------------------------- -----------------
Balance at 30 June 2014 2 182 963
----------------------------------------- -----------------
==========
----------------------------------------- -----------------
Accumulated amortisation and impairment
loss
----------------------------------------- -----------------
Balance at 1 January 2013 -
----------------------------------------- -----------------
Reclassification from property and
equipment 116 398
----------------------------------------- -----------------
Amortisation for the year 130 716
----------------------------------------- -----------------
---------------
----------------------------------------- -----------------
Balance at 31 December 2013 247 114
----------------------------------------- -----------------
Amortisation for the period 161 435
----------------------------------------- -----------------
--------------
----------------------------------------- -----------------
Balance at 30 June 2014 408 549
----------------------------------------- -----------------
========
----------------------------------------- -----------------
Carrying amount
----------------------------------------- -----------------
Balance at 30 June 2014 1 774 414
----------------------------------------- -----------------
=========
----------------------------------------- -----------------
Balance at 31 December 2013 1 664 369
----------------------------------------- -----------------
=========
----------------------------------------- -----------------
20. PROPERTY AND EQUIPMENT
Motor Furniture Freehold
and
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Computers vehicles equipment buildings Total
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
US$ US$ US$ US$ US$
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
COST
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Balance at 1 January 11 318
2013 2 696 533 3 322 357 2 484 201 2 815 724 815
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
1 506
Additions 340 606 682 969 459 413 23 381 369
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Revaluation gain - - - 4 803 4 803
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Reclassification
to intangible
assets (740 615) - - - (740 615)
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Disposals (9 862) (2 198) (29 250) - (41 310)
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
------------- ----------- ------------- ----------- -------------
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
At 31 December 12 048
2013 2 288 662 4 003 128 2 914 364 2 843 908 062
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Additions 224 815 331 475 60 446 - 616 736
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Disposals (5) (5 400) (2) - (5 407)
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
--------------- ------------- -------------- ------------ ----------
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Balance at 30 12 659
June 2014 2 511 472 4 329 203 2 974 808 2 843 908 391
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
------------- ------------- ------------- ------------ -----------
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
ACCUMULATED
DEPRECIATION
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
3 131
At 1 January 2013 846 183 985 396 1 254 054 45 723 356
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Charge for the 1 695
year 308 164 910 994 435 589 41 109 856
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Reclassification
to intangible
assets (116 398) - - - (116 398)
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Disposals (8 637) (1 966) (25 092) - (35 695)
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
-------------- -------------- --------------- ------------- ------------
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Balance at 31
December 4 675
2013 1 029 312 1 894 424 1 664 551 86 832 119
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Charge for the
period 170 410 515 775 231 332 27 629 945 146
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Disposals (5) (5 400) (1) - (5 406)
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
-------------- --------------- ------------- ------------ -------------
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Balance at 30 5 614
June 2014 1 199 717 2 404 799 1 895 882 114 461 859
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
-------------- -------------- ------------- ----------- ------------
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Carrying amount
At 7 044
30 June 2014 1 311 755 1 924 404 1 078 926 2 729 447 532
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
======== ======= ======== ======= ========
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
At 31 December 7 372
2013 1 257 350 2 108 704 1 249 813 2 757 076 943
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
======== ======= ======= ======= ========
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
8 187
At 1 January 2013 1 850 350 2 336 961 1 230 147 2 770 001 459
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
======== ====== ======= ======= ========
---------------------- ---------------- ---------------- ---------------- ----------------------- --------------
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2013 on the
basis of valuations carried out by independent professional
valuers, PMA Real Estate (Private) Limited. The valuation which
conforms to International Valuation Standards, was in terms of the
policy as set out in the accounting policies section. All movable
assets are measured at their carrying amounts which are arrived at
by the application of a depreciation charge on their cost values
over the useful lives of the assets.
The valuation of land and buildings was arrived by applying
yield rates of 9.5% on rental levels of between US$6 - US$8 per
square metre.
During the period under review, the Directors assessed the fair
values of the land and buildings and concluded that there were no
material changes to the fair values obtained by the professional
valuers as at 31 December 2013.
The carrying cost less accumulated depreciation of the land and
buildings had revaluations not been performed would be US$3 391 957
as at 30 June 2014 (31 December 2013 -US$3 419 586).
Level 3
The fair value of immovable properties of US$2 729 447 has been
categorised under Level 3 in fair value hierarchy based on the
inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening
and closing balances for Level 3 fair values:
30 June 2014 31 December 2013
------------------ --------------- -----------------
US$ US$
------------------ --------------- -----------------
At 1 January 2 757 076 2 770 001
------------------ --------------- -----------------
Additions - 23 381
------------------ --------------- -----------------
Revaluation gain - 4 803
------------------ --------------- -----------------
Depreciation (27 629) (41 109)
------------------ --------------- -----------------
-------------- ----------------
------------------ --------------- -----------------
Balance 2 729 447 2 757 076
------------------ --------------- -----------------
======== =========
------------------ --------------- -----------------
21. CAPITAL COMMITMENTS
30 June 2014 31 December 2013
-------------------------------- --------------- -----------------
US$ US$
-------------------------------- --------------- -----------------
Capital expenditure contracted
for 585 000 1 157 882
-------------------------------- --------------- -----------------
Capital expenditure authorised
but not yet contracted for 2 173 788 2 294 978
-------------------------------- --------------- -----------------
-------------- ----------------
-------------------------------- --------------- -----------------
2 758 788 3 452 860
-------------------------------- --------------- -----------------
======== =========
-------------------------------- --------------- -----------------
The capital expenditure will be funded from internal
resources.
22. CONTINGENT LIABILITIES
30 June 2014 31 December 2013
--------------------- ----------------- ------------------
US$ US$
--------------------- ----------------- ------------------
Guarantees 2 192 919 869 778
--------------------- ----------------- ------------------
Commitments to lend 31 111 497 41 195 923
--------------------- ----------------- ------------------
---------------- -----------------
--------------------- ----------------- ------------------
33 304 416 42 065 701
--------------------- ----------------- ------------------
========= ==========
--------------------- ----------------- ------------------
23. EXCHANGE RATES
The following exchange rates have been used to translate the
foreign currency balances to United States of America dollars (US$)
at period end:-
Mid-rate Mid-rate
------------------------ ----- ------------- -----------------
30 June 2014 31 December 2013
------------------------ ----- ------------- -----------------
US$ US$
------------------------ ----- ------------- -----------------
British Pound Sterling GBP 1.7029 1.6014
------------------------ ----- ------------- -----------------
South African Rand ZAR 10.5835 9.9487
------------------------ ----- ------------- -----------------
European Euro EUR 1.3646 1.3697
------------------------ ----- ------------- -----------------
Botswana Pula BWP 8.6806 8.5034
------------------------ ----- ------------- -----------------
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2014
30 June 2014 30 June 2013
-------------------------------- ------ ------------------------------------- ----------------
US$ US$
-------------------------------- ------ ------------------------------------- ----------------
Unaudited Reviewed
-------------------------------- ------ ------------------------------------- ----------------
Note
-------------------------------- ------ ------------------------------------- ----------------
Interest income 15 033 660 16 099 198
---------------------------------------- ------------------------------------- ----------------
Interest expense (6 502 936) (6 610 712)
---------------------------------------- ------------------------------------- ----------------
--------------- ---------------
-------------------------------- ------ ------------------------------------- ----------------
Net interest income 8 530 724 9 488 486
---------------------------------------- ------------------------------------- ----------------
Net foreign exchange gains 945 309 866 453
---------------------------------------- ------------------------------------- ----------------
Fee and commission income 6 814 567 7 590 765
---------------------------------------- ------------------------------------- ----------------
--------------- ---------------
-------------------------------- ------ ------------------------------------- ----------------
Net operating income 16 290 600 17 945 704
---------------------------------------- ------------------------------------- ----------------
Non-interest income/(loss) a 496 018 (54 645)
-------------------------------- ------ ------------------------------------- ----------------
Operating expenditure b (13 345 786) (13 009 202)
-------------------------------- ------ ------------------------------------- ----------------
Impairment losses on loans,
advances and
debentures (1 581 045) (1 887 537)
---------------------------------------- ------------------------------------- ----------------
---------------- ---------------
-------------------------------- ------ ------------------------------------- ----------------
Profit before taxation 1 859 787 2 994 320
---------------------------------------- ------------------------------------- ----------------
Taxation (478 303) (815 104)
---------------------------------------- ------------------------------------- ----------------
-------------- ---------------
-------------------------------- ------ ------------------------------------- ----------------
Profit for the period 1 381 484 2 179 216
---------------------------------------- ------------------------------------- ----------------
Other comprehensive income, - -
net of tax
-------------------------------- ------ ------------------------------------- ----------------
-------------- --------------
-------------------------------- ------ ------------------------------------- ----------------
Total comprehensive income
for the
period 1 381 484 2 179 216
---------------------------------------- ------------------------------------- ----------------
======== ==========
-------------------------------- ------ ------------------------------------- ----------------
Earnings per share (US cents):
-------------------------------- ------ ------------------------------------- ----------------
-Basic c 8.37 13.21
-------------------------------- ------ ------------------------------------- ----------------
STATEMENT OF FINANCIAL POSITION
As at 30 June 2014
30 June 2014 31 December 2013
----------------------------- ------ ---------------- -------------------
US$ US$
----------------------------- ------ ---------------- -------------------
Unaudited Audited
----------------------------- ------ ---------------- -------------------
EQUITY Note
----------------------------- ------ ---------------- -------------------
Share capital d 16 506 16 506
----------------------------- ------ ---------------- -------------------
Capital reserves 35 723 458 33 628 754
------------------------------------- ---------------- -------------------
Retained earnings 8 089 759 8 802 979
------------------------------------- ---------------- -------------------
------------- --------------
----------------------------- ------ ---------------- -------------------
Total shareholder's funds 43 829 723 42 448 239
------------------------------------- ---------------- -------------------
LIABILITIES
----------------------------- ------ ---------------- -------------------
Deposits and other accounts 219 126 801 216 020 406
------------------------------------- ---------------- -------------------
Subordinated term loan 1 486 016 1 485 890
------------------------------------- ---------------- -------------------
--------------- ---------------
----------------------------- ------ ---------------- -------------------
Total liabilities 220 612 817 217 506 296
------------------------------------- ---------------- -------------------
-------------- ---------------
----------------------------- ------ ---------------- -------------------
Total shareholder's funds
and liabilities 264 442 540 259 954 535
------------------------------------- ---------------- -------------------
========= =========
----------------------------- ------ ---------------- -------------------
ASSETS
----------------------------- ------ ---------------- -------------------
Cash and cash equivalents e 56 122 895 48 871 983
----------------------------- ------ ---------------- -------------------
Current tax assets 564 834 1 657 722
------------------------------------- ---------------- -------------------
Investment securities held
to maturity 4 763 896 4 685 471
------------------------------------- ---------------- -------------------
Amount owing from Holding
Company 726 527 747 044
------------------------------------- ---------------- -------------------
Investment in debentures 4 117 756 3 984 723
------------------------------------- ---------------- -------------------
Loans, advances and other
accounts 179 049 163 181 371 734
------------------------------------- ---------------- -------------------
Non - current asset held
for sale g 2 264 300 2 303 300
----------------------------- ------ ---------------- -------------------
Unquoted investments 76 202 76 202
------------------------------------- ---------------- -------------------
Deferred tax assets 3 542 522 2 833 744
------------------------------------- ---------------- -------------------
Investment properties f 4 395 500 4 385 300
----------------------------- ------ ---------------- -------------------
Intangible assets 1 774 414 1 664 369
------------------------------------- ---------------- -------------------
Property and equipment 7 044 531 7 372 943
------------------------------------- ---------------- -------------------
-------------- ------------------
----------------------------- ------ ---------------- -------------------
Total assets 264 442 540 259 954 535
------------------------------------- ---------------- -------------------
========= =========
------------------------------------ ---------------- -------------------
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2014
Capital Reserves
------------------------- -------------- -------------------------------------- ------------------ ---------------
Share Capital Share Premium Regulatory Reserve Retained Earnings Total
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
US$ US$ US$ US$ US$
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Balances at 1 January
2013 16 502 15 577 932 2 301 683 12 487 547 30 383 664
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Shares issued 4 15 896 570 - - 15 896 574
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Total comprehensive
income
for the six months - - - 2 179 216 2 179 216
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Impairment allowance
reversal
for loans and advances - - 2 114 005 (2 114 005) -
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
----------- ------------ -------------- -------------- --------------
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Balances at 30 June 2013 16 506 31 474 502 4 415 688 12 552 758 48 459 454
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Total comprehensive
income
for the six months - - - (6 011 215) (6 011 215)
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Impairment allowance for
loans and
advances - - (2 261 436) 2 261 436 -
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
------------ ------------- -------------- ------------ ------------
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Balances at 31 December
2013 16 506 31 474 502 2 154 252 8 802 979 42 448 239
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Total comprehensive
income
for the six months - - - 1 381 484 1 381 434
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Impairment allowance for
loans and advances - - 2 094 704 (2 094 704) -
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
------------- ------------- ------------ ------------ --------------
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
Balances at 30 June 2014 16 506 31 474 502 4 248 956 8 089 759 43 829 723
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
======== ======== ======== ======== ========
------------------------- -------------- -------------- ---------------------- ------------------ ---------------
STATEMENT OF CASH FLOWS
for the six months ended 30 June 2014
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------------------ ------------------- --------------------
30 June 2014 30 June 2013
------------------------------------------------ ------------------- --------------------
US$ US$
------------------------------------------------ ------------------- --------------------
Unaudited Reviewed
------------------------------------------------ ------------------- --------------------
Profit before taxation 1 859 787 2 994 320
------------------------------------------------ ------------------- --------------------
Non-cash items
------------------------------------------------ ------------------- --------------------
-Impairment losses on loans, advances
and debentures 1 581 045 1 887 537
------------------------------------------------ ------------------- --------------------
-Non - current assets held for sale fair
value adjustment - 75 300
------------------------------------------------ ------------------- --------------------
-Profit on disposal of property and equipment (5 365) -
------------------------------------------------ ------------------- --------------------
-Quoted and other investments fair value
adjustment - (1 237)
------------------------------------------------ ------------------- --------------------
-Amortisation of intangible assets 161 435 46 373
------------------------------------------------ ------------------- --------------------
-Depreciation 945 146 818 851
------------------------------------------------ ------------------- --------------------
---------------- -------------------
------------------------------------------------ ------------------- --------------------
Operating cash flows before changes in
operating assets and liabilities 4 542 048 5 821 144
------------------------------------------------ ------------------- --------------------
Changes in operating assets and liabilities
------------------------------------------------ ------------------- --------------------
Deposits and other liabilities 3 106 395 21 353 382
------------------------------------------------ ------------------- --------------------
Amount owing from holding company 20 517 314 842
------------------------------------------------ ------------------- --------------------
Loans, advances and other accounts 741 526 (33 205 251)
------------------------------------------------ ------------------- --------------------
Investment in debentures (133 033) (3 984 723)
------------------------------------------------ ------------------- --------------------
----------------- -------------------
------------------------------------------------ ------------------- --------------------
8 277 453 (9 700 606)
------------------------------------------------ ------------------- --------------------
----------------- -------------------
------------------------------------------------ ------------------- --------------------
Taxation
------------------------------------------------ ------------------- --------------------
Corporate tax paid (92 442) (2 127 185)
------------------------------------------------ ------------------- --------------------
Capital gains tax paid (1 750) (1 425)
------------------------------------------------ ------------------- --------------------
----------------- ------------------
------------------------------------------------ ------------------- --------------------
Net cash inflow/(outflow) from operating
activities 8 183 261 (11 829 216)
------------------------------------------------ ------------------- --------------------
----------------- ------------------
------------------------------------------------ ------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------------------ ------------------- --------------------
Proceeds on disposal of property and equipment 5 365 -
------------------------------------------------ ------------------- --------------------
Acquisition of intangible assets (271 480) -
------------------------------------------------ ------------------- --------------------
Purchase of property and equipment (616 736) (1 161 728)
------------------------------------------------ ------------------- --------------------
Acquisition of investment property (10 200) -
------------------------------------------------ ------------------- --------------------
Proceeds on disposal of non - current
assets held for sale 39 000 28 500
------------------------------------------------ ------------------- --------------------
Investment securities held to maturity (78 424) (76 107)
------------------------------------------------ ------------------- --------------------
---------------- -----------------
------------------------------------------------ ------------------- --------------------
Net cash outflow from investing activities (932 475) (1 209 335)
------------------------------------------------ ------------------- --------------------
----------------- -----------------
------------------------------------------------ ------------------- --------------------
Net cash inflow/(outflow) before financing
activities 7 250 786 (13 038 551)
------------------------------------------------ ------------------- --------------------
----------------- -----------------
------------------------------------------------ ------------------- --------------------
CASHFLOWS FROM FINANCING ACTIVITIES
------------------------------------------------ ------------------- --------------------
Issue of shares - 15 896 574
------------------------------------------------ ------------------- --------------------
Repayment of interest on subordinated (85 890) -
term loan
------------------------------------------------ ------------------- --------------------
Interest capitalized on subordinated term 86 016 -
loan
------------------------------------------------ ------------------- --------------------
----------------- ------------------
------------------------------------------------ ------------------- --------------------
Net cash inflow from financing activities 126 15 896 574
------------------------------------------------ ------------------- --------------------
----------------- -----------------
------------------------------------------------ ------------------- --------------------
Net increase in cash and cash equivalents 7 250 912 2 858 023
------------------------------------------------ ------------------- --------------------
Cash and cash equivalents at the beginning
of the period 48 871 983 58 171 045
------------------------------------------------ ------------------- --------------------
------------------ -----------------
------------------------------------------------ ------------------- --------------------
Cash and cash equivalents at the end of
the period 56 122 895 61 029 068
------------------------------------------------ ------------------- --------------------
========== ==========
------------------------------------------------ ------------------- --------------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2014
There are no material differences between the Bank and the
Holding company as the Bank is the principal operating subsidiary
of the Group. The notes to the financial statements under NMBZ
Holdings Limited are therefore the same as those of the Bank in
every material respect.
a. NON-INTEREST income/(LOSS)
30 June 2014 30 June 2013
---------------------------------------------- --------------- ---------------
US$ US$
---------------------------------------------- --------------- ---------------
Rental income 30 651 16 940
---------------------------------------------- --------------- ---------------
Non - current assets held for sale fair
value adjustments - (75 300)
---------------------------------------------- --------------- ---------------
Unquoted investments fair value adjustments - 1 237
---------------------------------------------- --------------- ---------------
Insurance claims and recoveries 41 433 4 962
---------------------------------------------- --------------- ---------------
Profit on disposal of property and equipment 5 365 -
---------------------------------------------- --------------- ---------------
Profit on disposal of quoted investments 408 725 -
---------------------------------------------- --------------- ---------------
Other net operating income/(loss) 9 844 (2 484)
---------------------------------------------- --------------- ---------------
-------------- --------------
---------------------------------------------- --------------- ---------------
496 018 (54 645)
---------------------------------------------- --------------- ---------------
======== ========
---------------------------------------------- --------------- ---------------
b. Operating EXPENDITURE
30 June 2014 30 June 2013
---------------------------------------- --------------- ---------------
US$ US$
---------------------------------------- --------------- ---------------
The operating profit is after charging
the following:-
---------------------------------------- --------------- ---------------
Administration costs 6 156 186 6 637 891
---------------------------------------- --------------- ---------------
Staff costs - salaries, allowances and
related costs 6 083 019 5 506 087
---------------------------------------- --------------- ---------------
Amortisation of intangible assets 161 435 46 373
---------------------------------------- --------------- ---------------
Depreciation 945 146 818 851
---------------------------------------- --------------- ---------------
-------------- --------------
---------------------------------------- --------------- ---------------
Total 13 345 786 13 009 202
---------------------------------------- --------------- ---------------
======== ========
---------------------------------------- --------------- ---------------
c. EARNINGS PER SHARE
The calculation of earnings per share is based on the following
figures:
c.1 Earnings
30 June 2014 30 June 2013
------- ------------- -------------
US$ US$
------- ------------- -------------
Basic 1 381 484 2 179 216
------- ------------- -------------
c.2 Number of shares
Weighted average shares in issue 16 506 050 16 501 075
---------------------------------- ----------- -----------
c.3 Earnings per share (US cents)
Basic 8.37 13.21
------- ----- ------
d. SHARE CAPITAL
d.1 Authorised
The authorised ordinary share capital at 30 June 2014 is at the
historical cost figure of US$25 000 (2013 - US$25 000) comprising
25 million ordinary shares of US$0.001 each.
d.2 Issued and fully paid
The issued share capital at 30 June 2014 is at the historical
cost figure of US$16 506 (2013 - US$16 506) comprising 16.506
million ordinary shares of US$0.001 each.
e. CASH AND CASH EQUIVALENTS
30 June 2014 31 December 2013
----------------------------------- ---------------- -----------------
US$ US$
----------------------------------- ---------------- -----------------
Balances with the Central Bank 9 635 428 13 480 628
----------------------------------- ---------------- -----------------
Current, nostro accounts and cash 21 387 467 31 391 355
----------------------------------- ---------------- -----------------
Interbank placements 25 100 000 4 000 000
----------------------------------- ---------------- -----------------
--------------- --------------
----------------------------------- ---------------- -----------------
56 122 895 48 871 983
----------------------------------- ---------------- -----------------
========= =========
----------------------------------- ---------------- -----------------
f. INVESTMENT PROPERTIES
30 June 2014 31 December 2013
----------------------------------- ---------------- -----------------
US$ US$
----------------------------------- ---------------- -----------------
Balance at 1 January 4 385 300 3 115 300
----------------------------------- ---------------- -----------------
Additions 10 200 769 550
----------------------------------- ---------------- -----------------
Transfers to non - current assets
held for sale - (95 000)
----------------------------------- ---------------- -----------------
Fair value adjustments - 595 450
----------------------------------- ---------------- -----------------
--------------- --------------
----------------------------------- ---------------- -----------------
Balance 4 395 500 4 385 300
----------------------------------- ---------------- -----------------
========= ========
----------------------------------- ---------------- -----------------
Investment properties comprise a commercial property and
residential properties that are leased out to third parties and
land held for future development. All investment properties were
not encumbered.
Measurement of fair value
Fair value hierarchy
The fair value of the Bank's investment properties as at 31
December 2013 was arrived at on the basis of valuations carried out
by independent professional valuers, PMA Real Estate (Private)
Limited. The valuation which conforms to International Valuation
Standards, was in terms of the policy as set out in the accounting
policies section and was derived with reference to market
information close to the date of the valuation.
The values were arrived at by applying yield rates of 9.5% on
rental levels of between US$6 - US$8 per square metre. The
properties are leased out under operating lease to various
tenants.
During the period under review, the Directors assessed the fair
values of the non-current assets held for sale and concluded that
there were no material changes to the fair values as obtained by
the professional valuers as at 31 December 2013.
The Bank has no restrictions on the realisability of all
investment properties and no contractual obligations to purchase,
construct or develop the investment properties or for repairs,
maintenance and enhancements.
Rental income amounting to US$30 651 (2013 - US$16 940) was
received and no operating expenses were incurred on the investment
properties in the current period due to the net leasing
arrangements on the properties.
Level 2
The fair value for investment properties of US$2 585 500 has
been categorised under Level 2 in fair value hierarchy based on the
inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening
and closing balances for Level 2 fair values:
30 June 2014 31 December2013
----------------------------------------- ---------------- ----------------
US$ US$
----------------------------------------- ---------------- ----------------
At 1 January 2 575 300 2 670 300
----------------------------------------- ---------------- ----------------
Additions 10 200 -
----------------------------------------- ---------------- ----------------
Transfer to non-current assets held for
sale - (95 000)
----------------------------------------- ---------------- ----------------
Fair value adjustments - -
----------------------------------------- ---------------- ----------------
--------------- --------------
----------------------------------------- ---------------- ----------------
Balance 2 585 500 2 575 300
----------------------------------------- ---------------- ----------------
========= ========
----------------------------------------- ---------------- ----------------
Level 3
The fair value for investment properties of US$1 810 000 has
been categorised under Level 3 in fair value hierarchy based on the
inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening
and closing balances for Level 3 fair values:
30 June 2014 31 December 2013
------------------------ ---------------- -----------------
US$ US$
------------------------ ---------------- -----------------
At 1 January 1 810 000 445 000
------------------------ ---------------- -----------------
Additions - 769 550
------------------------ ---------------- -----------------
Fair value adjustments - 595 450
------------------------ ---------------- -----------------
--------------- --------------
------------------------ ---------------- -----------------
Balance 1 810 000 1 810 000
------------------------ ---------------- -----------------
========= ========
------------------------ ---------------- -----------------
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of investment properties, as well as the
significant unobservable inputs used.
Valuation technique Significant unobservable Inter-relationship
inputs between key unobservable
inputs and fair value
measurement
------------------------------------------------------------ ---------------------------- --------------------------
.Expected market .The estimated fair
* Discounted cash flows: rental growth value would increase
(weighted average (decrease) if:
5%) -expected market rental
The discounting method .Void period growth were higher
considers the present (average 2 months (lower);
value of the net cash after the end of -void periods were
flows to be generated each lease) shorter (longer);
from the property, .Occupancy rate (70-100%), -the occupancy rates
taking into account weighted average were higher (lower);
expected growth rate, 95%) -the risk adjusted
void periods and occupancy .Risk adjusted discount discount rates were
rate. rates lower (higher).
* The expected net cash flows are discounted using risk (9.5% - 11.5%, weighted
adjusted discount rates. average 9.5%)
* Among other factors the discount rate estimation
considers the quality of the building and its
location (prime vs secondary), tenant credit quality
and lease terms.
------------------------------------------------------------ ---------------------------- --------------------------
g. NON-CURRENT ASSETS HELD FOR SALE
30 June 2014 31 December 2013
-------------------------------------- ---------------- -----------------
US$ US$
-------------------------------------- ---------------- -----------------
Carrying amount as at 1 January 2 303 300 2 225 300
-------------------------------------- ---------------- -----------------
Transfers from investment properties - 95 000
-------------------------------------- ---------------- -----------------
Fair value adjustments - 21 000
-------------------------------------- ---------------- -----------------
Disposals (39 000) (38 000)
-------------------------------------- ---------------- -----------------
--------------- --------------
-------------------------------------- ---------------- -----------------
2 264 300 2 303 300
-------------------------------------- ---------------- -----------------
========= ========
-------------------------------------- ---------------- -----------------
The Bank is in possession of land with a fair value of US$2 264
300 as at 30 June 2014. The Bank entered into a sale agreement for
a certain piece of land in 2012, however the execution and
finalisation of the sale under this contract has not yet been
concluded due to unexpected delays in obtaining certain regulatory
approvals. The disposal process is expected to be completed by the
end of the financial year. The disposal will improve the Bank's
cash flows.
Measurement of fair value
Fair value hierarchy
The fair value of non-current assets held for sale was
determined by Independent professional valuers. PMA Real Estate
(Private) Limited as at 31 December 2013. The valuation which
conforms to International Valuation Standards, was in terms of the
policy as set out in the accounting policies section and was
derived with reference to market information close to the date of
the valuation. All non-current assets held for sale are measured at
their fair values.
The values were arrived at by applying yield rates of 9.5% on
rental levels of between US$6 - US$8 per square metre.
During the period under review, the Directors assessed the fair
values of the non-current assets held for sales and concluded that
there were no material changes to the fair values as obtained by
the professional valuers as at 31 December 2013.
Level 2
The fair value of non-current assets held for sale of U$2 264
300 has been categorised under Level 2 in fair value hierarchy
based on the inputs used for the valuation technique highlighted
above. (see note 2.4.7 use of judgement and estimates).
h. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These condensed interim financial statements are the
responsibility of the directors. This responsibility includes the
setting up of internal control and risk management processes, which
are monitored independently. The information contained in these
condensed interim financial statements has been prepared on the
going concern basis and is in accordance with the provisions of the
Companies Act (Chapter 24:03), the Banking Act (Chapter 24:20) and
International Financial Reporting Standards.
2. CORPORATE GOVERNANCE
The Group adheres to principles of corporate governance derived
from the King II Report, the United Kingdom Combined Code and RBZ
Corporate Governance Guidelines. The Group is cognisant of its duty
to conduct business with due care and in good faith in order to
safeguard all stakeholders' interests.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and
expertise on the Board. Non-executive directors are of such calibre
as to provide independence to the Board. The Chairman of the Board
is an independent non-executive director. The Board is supported by
mandatory committees in executing its responsibilities. The Board
meets at least quarterly to assess risk, review performance and
provide guidance to management on both operational and policy
issues.
The Board conducts an annual peer based evaluation on the
effectiveness of its activities. The process involves the members
evaluating each other collectively as a board and individually as
members. The evaluation, as prescribed by the RBZ, takes into
account the structure of the board, effectiveness of committees,
strategic leadership, corporate social responsibility, attendance
and participation of members and weaknesses noted. Remedial plans
are invoked to address identified weaknesses with a view to
continually improve the performance and effectiveness of the Board
and its members.
3.1 Directors' attendance at NMB Bank Limited Board meetings
Human
Asset and Resources,
Liability Remuneration
Risk Management Loans and
Board of Audit Management Committee Review Nominations Credit
Directors Committee Committee (ALCO) Committee Committee Committee
Finance
& Strategy
Committee
------------- ------------- -------------- -------------- -------------- ------------- --------------- -------------
T N
Mundawarara 2 2 2 2 2 2 5 5
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
A M T
Mutsonziwa 2 2 2 2 2 2
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
J A Mushore 2 2 2 2 2 2 2 2 5 5
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
M Svova 2 2 2 2 5 5
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
B
Chikwanha** 2 2 1 1 1 1 2 2
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
B W
Madzivire 2 2 2 2 2 2
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
D Malik 2 2 2 2 2 2
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
J Chigwedere 2 2 2 2 2 2
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
J Chenevix -
Trench 2 2 2 2 2 2 5 5
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
B P Washaya 2 2 2 2 2 2 2 2 5 5
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
B A M
Zwinkels 2 2 2 2 1 1 2 2
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
C I F Ndiaye 2 2 2 2 2 2 2 2 2 1
------------- ----- ------ --- --------- --- --------- ---- -------- ---- ------- ---- --------- ----- ------
KEY
**Mr B Chikwanha became a member of the Risk Committee on 20
March 2014.
**Mr B Chikwanha was a member of the ALCO Finance and Strategy
Committee until 20 March 2014.
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the
establishment and oversight of the Bank's risk management
framework. The Board has established the Board Asset and Liability
Management Committee (ALCO) and Board Risk Committee, which are
responsible for defining the Bank's risk universe, developing
policies and monitoring implementation. The Bank strengthened its
risk management function by appointing a Chief Risk Officer in
September 2013 with overall responsibility over all risks in the
Bank. The Bank has complied with Basel II implementation timelines
set by the Reserve Bank of Zimbabwe.
Risk management is linked logically from the level of individual
transactions to the Bank level. Risk management activities broadly
take place simultaneously at the following different hierarchy
levels:
a) Strategic Level: This involves risk management functions
performed by senior management and the board of directors. It
includes the definition of risk, ascertaining the Bank's risk
appetite, formulating strategy and policy for managing risk and
establishes adequate systems and controls to ensure overall risk
remains within acceptable levels and is adequately compensated.
b) Macro Level: It encompasses risk management within a business
area or across business lines. These risk management functions are
performed by middle management.
c) Micro Level: This involves "On-the-line" risk management
where risks are actually created. These are the risk management
activities performed by individuals who assume risk on behalf of
the organization such as Treasury Front Office, Corporate Banking,
Retail banking etc. The risk management in these areas is confined
to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing
pillars, namely:
a) adequate board and senior management oversight;
b) adequate strategy, policies, procedures and limits;
c) adequate risk identification, measurement, monitoring and information systems;
and
d) comprehensive internal controls and independent reviews.
4.1 Credit risk
Credit risk is the risk that a financial contract will not be
honoured according to the original set of terms. The risk arises
when borrowers or counterparties to a financial instrument fail to
meet their contractual obligations. The Bank reviewed its credit
risk management structures aimed at enhancing credit risk and asset
quality. The Bank's general credit strategies centre on sound
credit granting process, diligent credit monitoring and strong loan
collection and recovery. There is a separation between loan
collection and recovery. There is a separation between loan
granting and credit.
Monitoring to ensure independence and effective management of
the loan portfolio. The Board has put in place sanctioning
committees with specific credit approval limits. The Credit
Management department does the initial review of all applications
before recommending them to the Executive Credit Committee and
finally the Board Credit Committee depending on the loan amount.
The Bank has in place a Board Loans Review Committee responsible
for reviewing the quality of the loan book.
The Bank is in the process of implementing a Credit Management
System and this will entail an automated end to end management of
credit from the loan origination to recoveries. The system should
be in place by the third quarter of 2014.
Management of credit risk is the responsibility of Credit
Management, Credit Monitoring, Credit Administration and Recoveries
departments with the following responsibilities:
Credit Management
-- Responsible for evaluating & approving credit proposals from the business units.
-- Together with business units, has primary responsibility on the quality of the
loan book.
-- Reviewing credit policy for approval by the Board Credit Committee.
-- Reviewing business unit level credit portfolios to ascertain
changes in the credit quality of individual customers or other
counterparties as well as the overall portfolio and detect unusual
developments.
-- Approve initial customer internal credit grades or recommend
to the Credit Committees for approval.
-- Setting the credit risk appetite parameters.
-- Ensure the bank adheres to limits, mandates and its credit policy.
-- Ensure adherence to facility covenants and conditions of
sanction e.g. annual audits, gearing levels, management
accounts.
-- Manage trends in asset and portfolio composition, quality and growth and non-performing loans.
-- Manage concentration risk both in terms of single borrowers
or group as well as sector concentrations and the review of such
limits.
Credit Monitoring and Financial Modelling
-- Independent Credit Risk Management.
-- Independent on-going monitoring of individual credit and portfolios.
-- Triggers remedial actions to protect the interests of the
Bank, if appropriate (e.g. in relation to deteriorated
credits).
-- Monitors the on-going development and enhancement of credit risk management across the Bank.
-- Reviews the Internal Credit Rating System.
-- On-going championing of the Basel II methodologies across the Bank.
-- Ensures consistency in the rating processes and performs
independent review of credit grades to ensure they conform to the
rating standards.
-- Confirm the appropriateness of the credit risk strategy and
policy or recommends necessary revisions in response to
changes/trends identified.
Credit Administration
-- Prepares and keeps custody of all facility letters.
-- Security registration.
-- Safe custody of security documents.
-- Ensures all conditions of sanction are fulfilled before allowing drawdown or limit marking.
-- Review of credit files for documentation compliance e.g. call reports, management accounts.
Recoveries
The recoveries unit is responsible for all collections and
ensures that the Bank maximizes recoveries from Non-Performing
Loans (NPLs).
4.2 Market risk
This is the exposure of the Bank's on and off balance sheet
positions to adverse movement in market prices resulting in a loss
in earnings and capital. The market prices will range from money
market (interest rate risk), foreign exchange and equity markets in
which the Bank operates. The Bank has in place a Management Asset
and Liability Committee (ALCO) which monitors market risk and
recommends the appropriate levels to which the bank should be
exposed at any time. Net Interest Margin is the primary measure of
interest rate risk, supported by periodic stress tests to assess
the Bank's ability to withstand stressed market conditions. On
foreign exchange risk, the Bank monitors currency mismatches and
make adjustments depending on exchange rate movement forecast. The
mismatches are also contained within 10% of the Bank's capital
position.
ALCO meets on a monthly basis and operates within the prudential
guidelines and policies established by the Board ALCO. The Board
ALCO is responsible for setting exposure thresholds and limits, and
meets on a quarterly basis.
4.3 Liquidity risk
Liquidity risk is the risk of financial loss arising from the
inability of the Bank to fund asset increases or meet obligations
as they fall due without incurring unacceptable costs or losses.
The Bank identifies this risk through maturity profiling of assets
and liabilities and assessment of expected cash flows and the
availability of collateral which could be used if additional
funding is required.
4.3 Liquidity risk
The daily liquidity position is monitored and regular liquidity
stress testing is conducted under a variety of scenarios covering
both normal and more severe market conditions. All liquidity
policies and procedures are subject to review and approval by the
Board ALCO.
The key measure used by the Bank for managing liquidity risk is
the ratio of net liquid assets to deposits from customers. The Bank
also actively monitors its loans to deposit ratio against a set
threshold in a bid to monitor and limit funding risk. Liquidity
risk is monitored through a daily treasury strategy meeting. This
is augmented by a monthly management ALCO and a quarterly Board
ALCO.
4.4 Operational risk
This risk is inherent in all business activities and is the risk
of loss arising from inadequate or failed internal processes,
people, systems or from external events. The Bank utilises monthly
key risk indicators to monitor operational risk in all units.
Further to this, the Bank has an elaborate operational loss
reporting system in which all incidents with a material impact on
the well-being of the Bank are reported to risk management. The
risk department conducts periodic risk assessments on all the units
within the Bank aimed at identifying the top risks and ways to
minimise their impact. There is a Board Risk Committee whose
function is to ensure that this risk is minimized. The Risk
Committee with the assistance of the Internal Audit function and
the Risk Management department assesses the adequacy of the
internal controls and makes the necessary recommendations to the
Board.
4.5 Legal and compliance risk
Legal risk is risk from uncertainty due to legal actions or
uncertainty in the applicability or interpretation of contracts,
laws or regulations. Legal risk may entail such issues as contract
formation, capacity and contract frustration. Compliance risk is
the risk arising from non - compliance with laws and regulations.
To manage this risk permanent relationships are maintained with
firms of legal practitioners and access to legal advice is readily
available to all departments. The Bank has an independent
compliance function which is responsible for identifying and
monitoring all compliance issues and ensures the Bank complies with
all regulatory and statutory requirements.
4.7 Reputational risk
Reputation risk is the risk of loss of business as a result of
negative publicity or negative perceptions by the market with
regards to the way the Bank conducts its business. To manage this
risk, the Bank strictly monitors customers' complaints,
continuously train staff at all levels, conducts market surveys and
periodic reviews of business practices through its internal audit
department. The directors are satisfied with the risk management
processes in the Bank as these have contributed to the minimization
of losses arising from risky exposures.
4.8 Strategic risk
This refers to current and prospective impact on a Bank's
earnings and capital arising from adverse business decisions or
implementing strategies that are not consistent with the internal
and external environment. To manage this risk, the Bank always has
a strategic plan that is adopted by the Board of directors.
Further, attainment of strategic objectives by the various
departments is monitored periodically at management level. Further,
there is an ALCO, Finance and Strategy Committee at Board level
responsible for monitoring overall progress towards attaining
strategic objectives for the Bank.
The directors are satisfied with the risk management processes
in the Bank as these have contributed to the minimisation of losses
arising from risky exposures.
4.9 Risk Ratings
4.9.1 Reserve Bank of Zimbabwe Ratings
The following are the ratings that were obtained when the
Reserve Bank of Zimbabwe conducted onsite inspections on the Bank
in the previous periods;
4..9.1.1 CAMELS* Ratings
Latest RBS** Previous RBS Previous RBS
CAMELS Component Ratings Ratings Ratings
30/06/2013 31/01/2008 30/06/2007
----------------------- ------------- ------------- -------------
Capital Adequacy 2 4 4
----------------------- ------------- ------------- -------------
Asset Quality 4 2 3
----------------------- ------------- ------------- -------------
Management 3 3 3
----------------------- ------------- ------------- -------------
Earnings 2 3 3
----------------------- ------------- ------------- -------------
Liquidity 2 3 3
----------------------- ------------- ------------- -------------
Sensitivity to Market
Risk 2 3 3
----------------------- ------------- ------------- -------------
Composite Rating 3 3 4
----------------------- ------------- ------------- -------------
*CAMELS is an acronym for Capital Adequacy, Asset quality,
Management, Earnings, Liquidity and Sensitivity to Market Risk.
CAMELS rating system uses a rating scale of 1-5, where '1' is
Strong, '2' is Satisfactory, '3' is Fair, '4' is Weak and '5' is
Critical.
**RBS stands for Risk-Based Supervision.
4.9.1.2 Summary RAS ratings
Latest RAS*** Previous RBS Previous RBS
RAS Component Ratings Ratings Ratings
30/06/2013 31/01/2008 30/06/2007
------------------------------- -------------- ------------- -------------
Overall Inherent Risk Moderate Moderate High
------------------------------- -------------- ------------- -------------
Overall Risk Management Acceptable Acceptable Weak
Systems
------------------------------- -------------- ------------- -------------
Overall Composite Risk Moderate Moderate High
------------------------------- -------------- ------------- -------------
Direction of Overall Composite Stable Stable Increasing
Risk
------------------------------- -------------- ------------- -------------
*** RAS stands for Risk Assessment System.
4.9.1.3 Summary risk matrix -30 June 2013 on - site examination
Level of Inherent Adequacy of Overall Composite Direction
Type of Risk Risk Risk Management Risk of Overall
Systems Composite
Risk
------------------- ------------------ ----------------- ------------------ ------------
Credit High Weak High Increasing
------------------- ------------------ ----------------- ------------------ ------------
Liquidity Moderate Acceptable Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
Interest Rate Moderate Acceptable Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
Foreign Exchange Low Acceptable Low Stable
------------------- ------------------ ----------------- ------------------ ------------
Strategic Risk Moderate Acceptable Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
Operational Risk Moderate Acceptable Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
Legal & Compliance Moderate Strong Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
Reputation Moderate Strong Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
Overall Moderate Acceptable Moderate Stable
------------------- ------------------ ----------------- ------------------ ------------
KEY
Level of Inherent Risk
Low - reflects a lower than average probability of an adverse
impact on a banking institution's capital and earnings. Losses in a
functional area with low inherent risk would have little negative
impact on the banking institution's overall financial
condition.
Moderate - could reasonably be expected to result in a loss
which could be absorbed by a banking institution in the normal
course of business.
High - reflects a higher than average probability of potential
loss. High inherent risk could reasonably be expected to result in
a significant and harmful loss to the banking institution.
Adequacy of Risk Management Systems
Weak - risk management systems are inadequate or inappropriate
given the size, complexity and risk profile of the banking
institution. Institution's risk management systems are lacking in
important ways and therefore a cause of more than normal
supervisory attention. The internal control systems will be lacking
in important aspects particularly as indicated by continued control
exceptions or by the failure to adhere to written policies and
procedures.
Acceptable - management of risk is largely effective but lacking
to some modest degree. While the institution might be having some
minor risk management weaknesses, these have been recognised and
are being addressed. Management information systems are generally
adequate.
Strong - management effectively identifies and controls all
types of risk posed by the relevant functional areas or per
inherent risk. The board and senior management are active
participants in managing risk and ensure appropriate policies and
limits are put in place. The policies comprehensively define the
bank's risk tolerance, responsibilities and accountabilities are
effectively communicated.
Overall Composite Risk
Low - would be assigned to low inherent risk areas. Moderate
risk areas may be assigned a low composite risk where internal
controls and risk management systems are strong and effectively
mitigate much of the risk.
Moderate - risk management systems appropriately mitigates
inherent risk. For a given low risk area, significant weaknesses in
the risk management systems may result in a moderate composite risk
assessment. On the other hand, a strong risk management system may
reduce the risk so that any potential financial loss from the
activity would have only a moderate negative impact on the
financial condition of the organisation.
High - risk management systems do not significantly mitigate the
high inherent risk. Thus, the activity could potentially result in
a financial loss that would have a significant impact on the bank's
overall condition.
Direction of Overall Composite Risk
Increasing - based on the current information, risk is expected
to increase in the next 12 months.
Decreasing - based on current information, risk is expected to
decrease in the next 12 months.
Stable - based on the current information, risk is expected to
be stable in the next 12 months.
4.9.2 External Credit Ratings
The external credit ratings were given by Global Credit Rating
(GCR), a credit rating agency accredited with the Reserve Bank of
Zimbabwe.
Security class 2013 2012
Long term BBB- BBB-
5. REGULATORY COMPLIANCE
There were no instances of regulatory non compliance in the
period under review. The Bank remains committed to complying with
and adhering to all regulatory requirements.
6. CAPITAL MANAGEMENT
The primary objective of the Bank's capital management is to
ensure that the Bank complies with the RBZ requirements. In
implementing the current capital requirements, the RBZ requires the
Banking subsidiary to maintain a prescribed ratio of total capital
to total risk weighted assets.
Regulatory capital consists of Tier 1 capital, which comprises
share capital, share premium, retained earnings (including current
year profit), statutory reserve and other equity reserves.
The other component of regulatory capital is Tier 2 capital,
which includes subordinated term debt, revaluation reserves and
portfolio provisions.
Tier 3 capital relates to an allocation of capital to market and
operational risk.
Various limits are applied to elements of the capital base. The
core capital (Tier 1) shall comprise not less than 50% of the
capital base and the regulatory reserves and portfolio provisions
are limited to 1.25% of total risk weighted assets.
The Bank's regulatory capital position at 30 June 2014 was as
follows:
30 June 2014 31 December
2013
----------------------------------------------- ------------------ ----------------------
US$ US$
----------------------------------------------- ------------------ ----------------------
Share capital 16 506 16 502
----------------------------------------------- ------------------ ----------------------
Share premium 31 474 502 31 474 506
----------------------------------------------- ------------------ ----------------------
Retained earnings 8 089 759 8 802 979
----------------------------------------------- ------------------ ----------------------
Fair value gain on investment property (2 925 868) (2 925 868)
----------------------------------------------- ------------------ ----------------------
----------------- -------------
----------------------------------------------- ------------------ ----------------------
36 654 899 37 368 119
----------------------------------------------- ------------------ ----------------------
Less: capital allocated for market and
operational risk (533 977) (1 240 678)
----------------------------------------------- ------------------ ----------------------
Credit to insiders (4 629 174) (4 734 129)
----------------------------------------------- ------------------ ----------------------
----------------- -------------
----------------------------------------------- ------------------ ----------------------
Tier 1 capital 31 491 748 31 393 312
----------------------------------------------- ------------------ ----------------------
Tier 2 capital (subject to limit as per
Banking
regulations) 7 131 823 6 823 855
----------------------------------------------- ------------------ ----------------------
Revaluation reserve 2 925 868 2 925 868
----------------------------------------------- ------------------ ----------------------
Subordinated debt 1 400 000 1 485 890
----------------------------------------------- ------------------ ----------------------
Regulatory reserve (limited to 1.25% of
risk
weighted assets) 2 805 955 2 154 252
----------------------------------------------- ------------------ ----------------------
Portfolio provisions (limited to 1.25%
of risk
weighted assets) - 257 845
----------------------------------------------- ------------------ ----------------------
Total Tier 1 & 2 capital 38 623 571 38 217 167
----------------------------------------------- ------------------ ----------------------
Tier 3 capital (sum of market and operational
risk capital) 533 977 1 240 678
----------------------------------------------- ------------------ ----------------------
----------------- -------------
----------------------------------------------- ------------------ ----------------------
Total capital base 39 157 548 39 457 845
----------------------------------------------- ------------------ ----------------------
=========== ========
----------------------------------------------- ------------------ ----------------------
Total risk weighted assets 224 476 411 228 275 322
----------------------------------------------- ------------------ ----------------------
=========== ========
----------------------------------------------- ------------------ ----------------------
Tier 1 ratio 14.03% 13.75%
----------------------------------------------- ------------------ ----------------------
Tier 2 ratio 3.17% 2.99%
----------------------------------------------- ------------------ ----------------------
Tier 3 ratio 0.24% 0.54%
----------------------------------------------- ------------------ ----------------------
Total capital adequacy ratio 17.44% 17.28%
----------------------------------------------- ------------------ ----------------------
RBZ minimum required capital adequacy
ratio 12.00% 12.00%
----------------------------------------------- ------------------ ----------------------
7. SEGMENT INFORMATION
For management purposes, the Bank is organised into five
operating segments based on products and services as follows:
Retail Banking - Individual customers deposits and consumer
loans, overdrafts, credit card facilities, funds transfer
facilities and bancassurance.
Corporate Banking - Loans and other credit facilities and
deposit and current accounts for corporate and institutional
customers.
Treasury - Money market investment, securities trading,
accepting and discounting of
instruments and foreign currency trading.
International Banking -Handles the Bank's foreign currency
denominated banking business and manages relationships with
correspondent banks
Corporate Finance -Corporate restructuring, empowerment
transactions, investment advisory services, structured finance and
capital raising.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss which in certain
respects is measured differently from operating profit or loss in
the financial statements. Income taxes are managed on a bank - wide
basis and are not allocated to operating segments.
Interest income is reported net as management primarily relies
on net interest revenue as a performance measure not the gross
income and expense.
Transfer prices between operating segments are on arm's length
basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or
counterparty amounted to 10% or more of the Bank's total revenue in
2014 and 2013.
The following tables present income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
For the six months ended 30 June 2014
Retail Corporate International Corporate
---------------
Banking Banking Treasury Banking Finance Unallocated Total
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
US$ US$ US$ US$ US$ US$ US$
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Income
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
10 008
Third party 317 9 510 601 1 798 703 824 633 862 440 284 859 23 289 553
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Impairment
losses on
loans,
advances
And
debentures (334 733) (1 246 312) - - - - (1 581 045)
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
------------ ------------- ----------- ----------- ----------- ------------ --------------
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Net operating
income 9 673 584 8 264 289 1 798 703 824 633 862 440 284 859 21 708 508
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
------------- ------------- ------------- ----------- ----------- ----------- ---------------
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Results
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Interest and
similar
income 4 591 972 9 357 046 853 394 - 33 722 197 526 15 033 660
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Interest and
similar (1 405
expense 742) (4 636 114) (461 080) - - - (6 502 936)
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
------------ ------------- ------------- ------------ ----------- ------------ -------------
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Net interest
income 3 186 230 4 720 932 392 314 - 33 722 197 526 8 530 724
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
------------- -------------- ------------- ------------ ----------- --------- -------------
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Fee and
commission
income 5 416 345 153 556 - 824 633 420 033 - 6 814 567
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Amortisation
of intangible
assets - - - - - 161 435 161 435
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Depreciation
of property
and
equipment 411 783 59 840 25 936 23 764 2 346 421 477 945 146
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Segment
profit/
(loss) 3 272 134 1 254 946 1 138 490 317 722 711 858 (4 835 363) 1 859 787
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Income tax
expense - - - - - (478 303) (478 303)
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
------------- ------------- ------------ ------------ ------------ --------------- -------------
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
Profit/(loss)
for the
period 3 272 134 1 254 946 1 138 490 317 722 711 858 (5 313 666) 1 381 484
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
======== ======== ======== ======= ======= ========= ========
--------------- -------------- -------------------- -------------- -------------- ------------- ---------------- ----------------
For the six months ended 30 June 2014
Retail Corporate International
------------------------
Banking Banking Treasury Banking Leasing Unallocated Total
------------------------ --------- ------------ ----------- -------------- ---------- ------------ ------------
US$ US$ US$ US$ US$ US$ US$
------------------------ --------- ------------ ----------- -------------- ---------- ------------ ------------
Assets and Liabilities
------------------------ --------- ------------ ----------- -------------- ---------- ------------ ------------
Capital expenditure 244 658 2 492 3 807 10 503 - 626 750 888 210
------------------------ --------- ------------ ----------- -------------- ---------- ------------ ------------
66 006
Total assets 673 126 387 266 53 345 164 119 720 1 630 210 16 953 507 264 442 540
------------------------ --------- ------------ ----------- -------------- ---------- ------------ ------------
Total liabilities and 79 124
capital 801 80 942 351 51 942 272 - 1 500 000 7 103 393 220 612 817
------------------------ --------- ------------ ----------- -------------- ---------- ------------ ------------
For the six months ended 30 June 2013
Retail Corporate International Corporate
---------------
Banking Banking Treasury Banking Finance Unallocated Total
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
US$ US$ US$ US$ US$ US$
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Income
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
10 770
Third party 870 10 397 840 2 232 510 820 236 - 280 315 24 501 771
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Impairment
losses on
loans,
advances and
debentures (352 094) (1 535 443) - - - - (1 887 537)
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
------------ ------------- ----------- ----------- ------------ ------------ --------------
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Net operating 10 418
income 776 8 862 397 2 232 510 820 236 - 280 315 22 614 234
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
------------ -------------- ----------- --------- ------------ ------------ --------------
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Results
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Interest and
similar
income 6 193 946 8 720 435 1 061 013 - - 123 804 16 099 198
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Interest and
similar (1 081
expense 104) (4 982 657) (546 951) - - - (6 610 712)
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
------------ ------------- ------------- ------------ ------------- ------------ -------------
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Net interest
income 5 112 842 3 737 778 514 062 - - 123 804 9 488 486
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
------------- -------------- ------------- ------------ ---------- --------- -------------
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Fee and
commission
income 6 503 259 267 400 - 820 106 - - 7 590 765
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Amortisation
of property,
plant and
equipment - - - - - 46 373 46 373
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Depreciation
of property
and
equipment 344 989 64 588 15 873 23 372 2 233 367 796 818 851
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Segment
profit/
(loss) 1 626 455 632 637 443 623 77 767 (219 421) 433 259 2 994 320
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Income tax
expense - - - - - (815 104) (815 104)
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
------------- ------------- ------------ ------------ ------------ --------------- -------------
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
Profit/(loss)
for the
period 1 626 455 632 637 443 623 77 767 (219 421) (381 845) 2 179 216
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
======== ======== ======== ======= ======== ========= ========
--------------- -------------- -------------------- -------------- -------------- -------------- ---------------- ---------------
As at 31 December 2013
Retail Corporate International Corporate
-------------------------
Banking Banking Treasury Banking Finance Unallocated Total
------------------------- -------- ------------ ----------- -------------- ---------- ------------ ------------
US$ US$ US$ US$ US$ US$
------------------------- -------- ------------ ----------- -------------- ---------- ------------ ------------
Assets and Liabilities
------------------------- -------- ------------ ----------- -------------- ---------- ------------ ------------
1 058
Capital expenditure 456 133 532 132 113 12 027 2 763 1 338 345 2 677 236
------------------------- -------- ------------ ----------- -------------- ---------- ------------ ------------
54 124
Total assets 890 144 209 819 41 326 313 121 897 68 854 20 102 762 259 954 535
------------------------- -------- ------------ ----------- -------------- ---------- ------------ ------------
Total liabilities and 72 525
capital 463 77 182 723 61 092 072 - - 6 706 038 217 506 296
------------------------- -------- ------------ ----------- -------------- ---------- ------------ ------------
8. GEOGRAPHICAL INFORMATION
The Group operates in one geographical market, Zimbabwe.
Registered Offices
1(st) Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1(st) Street/Kwame Nkrumah Avenue Leopold Takawira Street
Harare Bulawayo
Zimbabwe Zimbabwe
Telephone +263 4 759651 +263 9 70169
Facsimile +263 4 759648 +263 9 68535
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Services PLC
1 Armagh Avenue 36 St Andrew Square
(Off Enterprise Road) Edinburgh
Eastlea EH2 2YB
P O Box 11 UK
Harare
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Nmbz Holdings Ld (LSE:NMB)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Nmbz Holdings Ld (LSE:NMB)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024
