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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nmbz Holdings Ld | LSE:NMB | London | Ordinary Share | ZW0009011389 | ORD ZWR0.25 (UK REG) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMNMB
RNS Number : 6871O
NMBZ Holdings Ld
24 August 2017
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED UNAUDITED RESULTS
FOR THE SIX MONTHSED 30 JUNE 2017
FINANCIAL SUMMARY
Hot Features
Premium
30 June 2017 30 June 2016 31 December
2016
---------------------------- ------------------------ ------------------------ ------------------
US$ US$ US$
---------------------------- ------------------------ ------------------------ ------------------
Unaudited Unaudited Audited
---------------------------- ------------------------ ------------------------ ------------------
Total income (US$) 23 907 254 26 096 925 51 520 403
---------------------------- ------------------------ ------------------------ ------------------
Total comprehensive income
(US$) 3 556 915 2 640 274 5 055 196
---------------------------- ------------------------ ------------------------ ------------------
Basic earnings per share
(US cents) 0.93 0.69 1.32
---------------------------- ------------------------ ------------------------ ------------------
Total deposits (US$) 273 478 790 249 205 508 260 550 383
---------------------------- ------------------------ ------------------------ ------------------
Loans and advances (US$) 201 607 913 225 292 910 205 858 392
---------------------------- ------------------------ ------------------------ ------------------
Total shareholders' funds
(US$) 59 178 793 53 184 655 55 600 406
---------------------------- ------------------------ ------------------------ ------------------
Enquiries:
NMBZ HOLDINGS LIMITED
Benefit P Washaya, Chief Executive Officer, NMBZ Holdings 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
Telephone: (+263-4) 759 651/9
CHAIRMAN'S STATEMENT
INTRODUCTION
The Group continued to operate in an environment characterised by nostro funding challenges, interest rate and non - funded income price controls, cash shortages, job losses, deflationary pressures and company closures. The Group has however continued to make considerable progress towards attaining its short and medium term goals. The financial results were largely driven by the banking subsidiary's continued expansion into the broader market segment, stricter credit underwriting standards and concerted efforts to contain non-performing loans and operating costs.
The key financial highlights at 30 June 2017, which are commendable in the current harsh operating environment are:
- Shareholders' funds stood at US$59.2 million; - Capital adequacy ratio of 23.88% against the RBZ's minimum requirement of 12%; and - Liquidity ratio of 35.7% versus RBZ's minimum requirement of 30%.
GROUP RESULTS
Financial performance
The profit before taxation was US$4 838 174 during the period under review and this gave rise to total comprehensive income of US$3 556 915. The Group achieved an earnings per share of 0.93 cents (2016 - 0.69 cents).
Operating expenses amounted to US$13 627 312 and these were up 1% from a prior year amount of US$13 537 382 as a net result of some non-recurring expenditures incurred in the period.
Impairment losses on loans and advances amounted to US$878 304 for the current period from a prior year amount of US$3 191 396 and the decrease was mainly due to stricter credit underwriting on the back of a deteriorating economic environment as well as concerted effort being put on recoveries.
Financial position
The Group's total assets increased by 5% from US$320 984 926 as at 31 December 2016 to US$337 754 147 as at 30 June 2017 mainly due to an increase of 24% in cash and cash equivalents as well as a 26% increase in investment properties and these were partly offset by decreases in non-current assets held for sale and deferred tax assets.
Gross loans and advances decreased by 2% from US$205 858 392 as at 31 December 2016 to US$201 607 913 as at 30 June 2017 mainly due to constrained lending as a result of the difficult operating environment.
Investment securities (Treasury Bills and Bonds) marginally declined from US$24 744 752 as at 31 December 2016 to US$24 570 139 as at 30 June 2017.
Financial position
The deposits increased by 5% from US$260 550 383 as at 31 December 2016 to US$273 478 790 as at 30 June 2017 as a result of the broadening of the bank's market segment and the non - availability of nostro funding.
The Bank's liquidity ratio closed the period at 35.7% and this was above the statutory requirement of 30%.
Capital
The banking subsidiary's capital adequacy ratio at 30 June 2017 calculated in accordance with the guidelines of the Reserve Bank of Zimbabwe (RBZ) was 23.88% (31 December 2016 - 23.32%). The minimum required by the RBZ is 12%. We consider the level of our capitalisation to be adequate to support our growth strategy.
The Group's shareholders' funds have increased by 6% from US$55 600 406 as at 31 December 2016 to US$59 178 793 as at 30 June 2017 as a result of the current period's total comprehensive income.
The Bank's regulatory capital as at 30 June 2017 was US$52 096 551 and was above the minimum regulatory capital of US$25 million.
DIVID
In view of the need to retain cash in the business in order to fund growth initiatives as well as to strengthen the statutory capital requirements for the banking subsidiary, the Board resolved not to pay a dividend.
DIRECTORATE
There were no changes to the directorate during the period under review. The directors of both NMBZ Holdings Limited and NMB Bank Limited boards remain as follows: Mr Benedict A. Chikwanha (Board Chairman), Mr Benefit P. Washaya (Chief Executive Officer), Mr Benson Ndachena (Chief Finance Officer), Mr Charles Chikaura (Independent Non-Executive Director), Mr Erik Sandersen (Non-Executive Director), Mr James de la Fargue (Non-Executive Director), Ms Jean Maguranyanga (Independent Non-Executive Director), Mr Julius Tichelaar (Non-Executive Director) and Ms Sabinah Chitehwe (Independent Non-Executive Director).
CORPORATE SOCIAL INVESTMENTS
The Group made social investments into the country's educational system, the disadvantaged, vulnerable groups, the arts and various sporting disciplines during the six months under review. The activities and charities supported during the year included the Zimbabwe National Paralympic Games, Tokwe Mukosi Flood victims, Enactus BOOST Fellowship programme for universities, Dominican Convent School, HIFA, Birdlife Zimbabwe, St Monica Parish (Chitungwiza), as well as the Salvation Army Annual Fundraising Pro-AM golf day and many other charity golf tournaments.
CORPORATE DEVELOPMENTS
The Bank's focus was centred on the promotion of digital channels and this saw an increase in the POS devices footprint and the enhancement of the e-banking channels during the period under review.
OUTLOOK AND STRATEGY
The Bank will continue to accelerate the deployment of POS machines throughout the country and enhance all the e-channels for the convenience of our transacting customers. The Group will continue to broaden its target market by widening its catchment area to include segments of the mass market previously not catered for, thereby contributing to the financial inclusion agenda. The Bank will be rolling out its agency banking model in the second half of the year.
APPRECIATION
I remain sincerely grateful to our valued clients, depositors, shareholders and regulatory authorities who have continued to render their unwavering support to the Group. To my fellow board members, management and staff, I extend my heartfelt gratitude for their diligence, dedication and steadfast commitment which have culminated in the Group's remarkable results in the face of an increasingly challenging operating environment.
B. A. CHIKWANHA
CHAIRMAN
17 August 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2017
Note 30 June 2017 30 June 2016
------------------------ ------------------ ----------------------------------- ---------------------
US$ US$
------------------------ ------------------ ----------------------------------- ---------------------
Unaudited Unaudited
------------------------ ------------------ ----------------------------------- ---------------------
Interest income 4 15 251 859 17 451 237
------------------------ ------------------ ----------------------------------- ---------------------
Interest expense (4 563 464) (5 809 346)
------------------------ ------------------ ----------------------------------- ---------------------
--------------- ---------------
------------------------ ------------------ ----------------------------------- ---------------------
Net interest income 10 688 395 11 641 891
------------------------ ------------------ ----------------------------------- ---------------------
Net foreign exchange
gains 571 892 353 209
------------------------ ------------------ ----------------------------------- ---------------------
Fee and commission
income 5.1 7 892 196 7 584 529
------------------------ ------------------ ----------------------------------- ---------------------
--------------- ---------------
------------------------ ------------------ ----------------------------------- ---------------------
Revenue 19 152 483 19 579 629
------------------------ ------------------ ----------------------------------- ---------------------
Other income 5.2 191 307 707 950
------------------------ ------------------ ----------------------------------- ---------------------
-------------- --------------
------------------------ ------------------ ----------------------------------- ---------------------
Operating income 19 343 790 20 287 579
------------------------ ------------------ ----------------------------------- ---------------------
Operating expenditure 6 (13 627 312) (13 537 382)
------------------------ ------------------ ----------------------------------- ---------------------
Impairment losses on
loans
and advances (878 304) (3 191 396)
------------------------ ------------------ ----------------------------------- ---------------------
-------------- --------------
------------------------ ------------------ ----------------------------------- ---------------------
Profit before taxation 4 838 174 3 558 801
------------------------ ------------------ ----------------------------------- ---------------------
Taxation charge 7 (1 281 259) (918 527)
------------------------ ------------------ ----------------------------------- ---------------------
------------- -------------
------------------------ ------------------ ----------------------------------- ---------------------
Profit for the period 3 556 915 2 640 274
------------------------ ------------------ ----------------------------------- ---------------------
Other comprehensive
income, net of tax - -
------------------------ ------------------ ----------------------------------- ---------------------
------------- -------------
------------------------ ------------------ ----------------------------------- ---------------------
Total comprehensive
income
for the period 3 556 915 2 640 274
------------------------ ------------------ ----------------------------------- ---------------------
======== ========
------------------------ ------------------ ----------------------------------- ---------------------
Earnings per share
(US cents)
------------------------ ------------------ ----------------------------------- ---------------------
-Basic 9.3 0.93 0.69
------------------------ ------------------ ----------------------------------- ---------------------
-Diluted 9.3 0.87 0.64
------------------------ ------------------ ----------------------------------- ---------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
30 June 2017 31 December 2016
-------------------------------- ----- ------------------- ---------------------------
Note US$ US$
-------------------------------- ----- ------------------- ---------------------------
Unaudited Audited
-------------------------------- ----- ------------------- ---------------------------
SHARHOLDERS' FUNDS
-------------------------------- ----- ------------------- ---------------------------
Share capital 10 78 751 78 598
-------------------------------- ----- ------------------- ---------------------------
Capital reserves 18 422 814 17 585 247
-------------------------------- ----- ------------------- ---------------------------
Retained earnings 24 926 900 22 185 818
-------------------------------- ----- ------------------- ---------------------------
-------------- --------------
-------------------------------- ----- ------------------- ---------------------------
Total equity 43 428 465 39 849 663
-------------------------------- ----- ------------------- ---------------------------
Redeemable ordinary
shares 11 14 335 253 14 335 253
-------------------------------- ----- ------------------- ---------------------------
Subordinated term loan 12 1 415 075 1 415 490
-------------------------------- ----- ------------------- ---------------------------
------------- --------------
-------------------------------- ----- ------------------- ---------------------------
Total shareholders'
funds 59 178 793 55 600 406
-------------------------------- ----- ------------------- ---------------------------
======== ========
-------------------------------- ----- ------------------- ---------------------------
LIABILITIES
-------------------------------- ----- ------------------- ---------------------------
Deposits and other liabilities 13 278 575 354 265 384 520
-------------------------------- ----- ------------------- ---------------------------
--------------- ---------------
-------------------------------- ----- ------------------- ---------------------------
Total shareholders'
funds and
liabilities 337 754 147 320 984 926
-------------------------------- ----- ------------------- ---------------------------
========= =========
-------------------------------- ----- ------------------- ---------------------------
ASSETS
-------------------------------- ----- ------------------- ---------------------------
Cash and cash equivalents 15 85 960 349 69 421 257
-------------------------------- ----- ------------------- ---------------------------
Current tax assets 285 961 368 445
-------------------------------- ----- ------------------- ---------------------------
Investment securities 14 24 570 139 24 744 752
-------------------------------- ----- ------------------- ---------------------------
Loans, advances and
other
assets 16 198 651 838 199 617 095
-------------------------------- ----- ------------------- ---------------------------
Non - current assets
held for
sale 36 000 2 261 300
-------------------------------- ----- ------------------- ---------------------------
Quoted and other investments 209 170 177 580
-------------------------------- ----- ------------------- ---------------------------
Deferred tax assets 1 563 270 2 264 907
-------------------------------- ----- ------------------- ---------------------------
Investment properties 17 828 884 14 202 270
-------------------------------- ----- ------------------- ---------------------------
Intangible assets 17 2 166 060 1 647 034
-------------------------------- ----- ------------------- ---------------------------
Property and equipment 18 6 482 476 6 280 286
-------------------------------- ----- ------------------- ---------------------------
---------------- ---------------
-------------------------------- ----- ------------------- ---------------------------
Total assets 337 754 147 320 984 926
-------------------------------- ----- ------------------- ---------------------------
========= =========
-------------------------------- ----- ------------------- ---------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2017
Capital
Reserves
--------------- ------------ ------------------------------------------------------------- --------------------- --------------
Share Share Share Regulatory Revaluation Retained
Capital Premium Option Reserve Reserve Earnings Total
Reserve
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
US$ US$ US$ US$ US$ US$ US$
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Balances at 1
January
2016 78 598 15 737 548 62 563 3 746 729 2 970 15 166 059 34 794 467
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Profit for the
six
months - - - - - 2 640 274 2 640 274
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Transfer to
regulatory
reserve - - - 284 741 - (284 741) -
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
---------- ------------- --------- ----------- ------------ ------------- -------------
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Balances at 30
June
2016 78 598 15 737 548 62 563 4 031 470 2 970 17 521 592 37 434 741
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Profit for the
six
months - - - - - 2 417 892 2 417 892
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Other
comprehensive
income for
the six
months - - - - (2 970) - (2 970)
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Transfer from
regulatory
reserve - - - (2 246 334) - 2 246 334 -
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
---------- ------------- ---------- ------------- ------------ --------------- -------------
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Balances at 31
December
2016 78 598 15 737 548 62 563 1 785 136 - 22 185 818 39 849 663
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Share based
payments
- share
options
exercised 153 21 734 - - - - 21 887
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Profit for the
six
months - - - - - 3 556 915 3 556 915
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Transfer to
regulatory
reserve - - - 815 833 - (815 833) -
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
----------- ------------- ---------- ------------ ------------- ------------- -------------
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
Balances at 30
June
2017 78 751 15 759 282 62 563 2 600 969 - 24 926 900 43 428 465
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
======= ======== ====== ======= ======== ======== ========
--------------- ------------ -------------- ----------- -------------- ---------------- --------------------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2017
30 June 2017 30 June 2016
----------------------------------------------- ------------------ -----------------
US$ US$
----------------------------------------------- ------------------ -----------------
Unaudited Unaudited
----------------------------------------------- ------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
----------------------------------------------- ------------------ -----------------
Profit before taxation 4 838 174 3 558 801
----------------------------------------------- ------------------ -----------------
Non-cash items:
----------------------------------------------- ------------------ -----------------
- Amortisation of intangible assets 352 162 259 253
----------------------------------------------- ------------------ -----------------
-Depreciation 560 129 700 047
----------------------------------------------- ------------------ -----------------
-Impairment losses on loans and advances 878 304 3 191 396
----------------------------------------------- ------------------ -----------------
-Quoted and other investments fair value
adjustment (31 590) (10 002)
----------------------------------------------- ------------------ -----------------
-Loss/(profit) on disposal of property
and equipment 56 639 (37 514)
----------------------------------------------- ------------------ -----------------
-Loss on disposal of non current asset 75 300 -
held for sale
----------------------------------------------- ------------------ -----------------
-Profit on disposal of investment property (12 951) -
----------------------------------------------- ------------------ -----------------
-Interest capitalised on subordinated
term loan 75 110 74 848
----------------------------------------------- ------------------ -----------------
------------- --------------
----------------------------------------------- ------------------ -----------------
Operating cash flows before changes in
operating assets
----------------------------------------------- ------------------ -----------------
and liabilities 6 791 277 7 736 829
----------------------------------------------- ------------------ -----------------
Changes in operating assets and liabilities
----------------------------------------------- ------------------ -----------------
Increase/(decrease) in deposits and other
liabilities 13 190 835 (25 052 298)
----------------------------------------------- ------------------ -----------------
Decrease in loans, advances and other
accounts 86 953 14 429 925
----------------------------------------------- ------------------ -----------------
-------------- -------------
----------------------------------------------- ------------------ -----------------
Net cash generated/(utilised) from operations 20 069 065 (2 885 544)
----------------------------------------------- ------------------ -----------------
--------------- --------------
----------------------------------------------- ------------------ -----------------
Taxation
----------------------------------------------- ------------------ -----------------
Corporate tax paid (453 139) (710 213)
----------------------------------------------- ------------------ -----------------
Capital gains tax paid (44 000) -
----------------------------------------------- ------------------ -----------------
----------------- --------------
----------------------------------------------- ------------------ -----------------
Net cash inflow/(outflow) from operating
activities 19 571 926 (3 595 757)
----------------------------------------------- ------------------ -----------------
----------------- ---------------
----------------------------------------------- ------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
----------------------------------------------- ------------------ -----------------
Acquisition of intangible assets (871 188) (108 560)
----------------------------------------------- ------------------ -----------------
Acquisition of investment properties (3 946 615) (800 000)
----------------------------------------------- ------------------ -----------------
Acquisition of property and equipment (820 030) (799 981)
----------------------------------------------- ------------------ -----------------
Proceeds on disposal of property and
equipment 1 073 41 309
----------------------------------------------- ------------------ -----------------
Disposals/(acquisition) of investment
securities 174 613 (10 552 622)
----------------------------------------------- ------------------ -----------------
Proceeds on disposal of non-current asset 2 150 000 -
held for sale
----------------------------------------------- ------------------ -----------------
Proceeds on disposal of investment properties 332 951 -
----------------------------------------------- ------------------ -----------------
--------------- ---------------
----------------------------------------------- ------------------ -----------------
Net cash outflow from investing activities (2 979 196) (12 219 854)
----------------------------------------------- ------------------ -----------------
-------------- ---------------
----------------------------------------------- ------------------ -----------------
Net cash inflow/(outflow) before financing
activities 16 592 730 (15 815 611)
----------------------------------------------- ------------------ -----------------
-------------- ---------------
----------------------------------------------- ------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
----------------------------------------------- ------------------ -----------------
Proceeds from share options exercised 21 887 -
----------------------------------------------- ------------------ -----------------
Payment of interest on subordinated term
loan (75 525) (74 331)
----------------------------------------------- ------------------ -----------------
------------- ---------------
----------------------------------------------- ------------------ -----------------
Net cash outflow from financing activities (53 638) (74 331)
----------------------------------------------- ------------------ -----------------
--------------- --------------
----------------------------------------------- ------------------ -----------------
Net increase/(decrease) in cash and cash
equivalents 16 539 093 (15 889 942)
----------------------------------------------- ------------------ -----------------
Cash and cash equivalents at beginning
of the period 69 421 257 63 439 347
----------------------------------------------- ------------------ -----------------
--------------- --------------
----------------------------------------------- ------------------ -----------------
Cash and cash equivalents at the end
of the period 85 960 349 47 549 405
----------------------------------------------- ------------------ -----------------
========= ========
----------------------------------------------- ------------------ -----------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2017
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe and is an investment holding company. Its registered office address is 64 Kwame Nkrumah Avenue, Harare. Its principal operating subsidiary is engaged in commercial and retail banking.
2. ACCOUNTING CONVENTION
Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (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 2016. 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 17 August 2017.
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 and its subsidiaries. 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.
Comparative financial information
The interim financial statements comprise consolidated statements of financial position, comprehensive income, changes in equity and cash flows. The comparative information covers a period of six months.
2.4 Use of estimates and judgements
The preparation of the interim financial statements requires Directors 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 2016.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.
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 recognised 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.
2.4.2 Land and buildings
The properties were valued by directors. The determined fair value of land and buildings is most sensitive to significant unobservable inputs. In addition, the property market is currently not stable due to liquidity constraints and hence comparable values are also not readily available.
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 readily available.
2.4.4 Property and equipment
The directors exercised their judgment in determining the residual values of the other property and equipment which have been determined as nil. If the residual value of an asset increases by an amount equal to or greater than the asset's carrying amount, then depreciation of the asset ceases. Depreciation will only resume when the residual value decreases to an amount below the asset's carrying amount.
2.4.5 Investment securities
The Group has treasury bills and government bonds for which there is currently no market information to facilitate the application of fair value principles, in determining fair value disclosures. Directors have made a significant judgement in determining that the carrying amount approximates fair value. Refer to Note 14.1.
2.4.6 Intangible assets
Intangible assets are initially recognised at cost. Subsequently the assets are measured at cost less accumulated amortisation and any impairment loss.
2.4.7 Impairment losses on loan and advances
The Group reviews its individually significant 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 impairment loss on loans and advances is disclosed in more detail under note 8 and note 16.3 below.
2.4.8 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. The determined fair value of non - current assets held for sale is most sensitive to significant unobservable inputs. In addition, the property market is currently not stable due to liquidity constraints and hence comparable values are not stable.
2.4.9 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.
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 initially measured at fair value and subsequently 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 recognised in the statement of comprehensive income. The fair value is determined at the end of each reporting period by a professional valuer.
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
The residual value and the useful life of property and equipment are 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 refer 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.
3.7 Taxation
Income tax
Income tax expenses comprise current and deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current
Current tax comprises expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using rates enacted or substantively enacted at the reporting date in the country where the Bank operates and generates taxable income and any adjustment to tax payable in respect of previous years.
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities.
Deferred taxation
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Bank expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Bank has not rebutted this presumption.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Additional taxes that arise from the distribution of dividends by the Bank are recognised at the same time as the liability to pay the related dividend is recognised. These amounts are generally recognised in profit or loss because they generally relate to income arising from transactions that were originally recognised in profit or loss.
3.8 Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances, and short term highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are measured at amortised cost in the statement of financial position.
3.9 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The specific recognition criteria described below must also be met before revenue is recognised.
3.10 Interest income
For all financial instruments measured at amortised cost and financial instruments designated at fair value through profit or loss, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
Interest income includes income arising out of the banking activities of lending and investing.
3.11 Interest expense
Interest expense arises from deposit taking. The expense is recognised in profit or loss as it accrues, taking into account the effective interest cost of the liability.
2. INTEREST INCOME
30 June 2017 30 June 2016
----------------------- -------------------------------- ------------------
US$ US$
----------------------- -------------------------------- ------------------
Loans and advances to
banks 699 288 660 355
----------------------- -------------------------------- ------------------
Loans and advances to
customers 12 518 050 16 058 121
----------------------- -------------------------------- ------------------
Investment securities 2 034 521 732 761
----------------------- -------------------------------- ------------------
--------------- -----------------
----------------------- -------------------------------- ------------------
15 251 859 17 451 237
----------------------- -------------------------------- ------------------
========= ==========
----------------------- -------------------------------- ------------------
5. non-interest income
5.1 FEE AND COMMISSION INCOME
30 June 2017 30 June 2016
----------------------------------- -------------- ---------------
US$ US$
----------------------------------- -------------- ---------------
Retail banking customer fees 6 870 362 6 414 627
----------------------------------- -------------- ---------------
Corporate banking credit related
fees 642 446 618 055
----------------------------------- -------------- ---------------
Financial guarantee income 101 215 133 762
----------------------------------- -------------- ---------------
International banking commissions 278 173 237 164
----------------------------------- -------------- ---------------
Corporate finance fees - 180 921
----------------------------------- -------------- ---------------
------------- --------------
----------------------------------- -------------- ---------------
7 892 196 7 584 529
----------------------------------- -------------- ---------------
======== ========
----------------------------------- -------------- ---------------
5.2 OTHER INCOME
30 June 2017 30 June 2016
--------------------------------------- -------------- ---------------
US$ US$
--------------------------------------- -------------- ---------------
Net gain from quoted and other
investments 31 590 10 002
--------------------------------------- -------------- ---------------
(Loss)/profit on disposal of property
and equipment (56 639) 37 514
--------------------------------------- -------------- ---------------
Profit on disposal of investment 12 951 -
properties
--------------------------------------- -------------- ---------------
Loss on disposal of non-current (75 300) -
asset held for sale
--------------------------------------- -------------- ---------------
Insurance claims and recoveries 12 740 5 744
--------------------------------------- -------------- ---------------
Rental income 68 954 73 300
--------------------------------------- -------------- ---------------
Bad debts recovered 187 377 561 945
--------------------------------------- -------------- ---------------
Other net operating income 9 634 19 445
--------------------------------------- -------------- ---------------
------------- --------------
--------------------------------------- -------------- ---------------
191 307 707 950
--------------------------------------- -------------- ---------------
====== ======
--------------------------------------- -------------- ---------------
6. Operating EXPITURE
30 June 2017 30 June 2016
---------------------------------------- --------------- ---------------
US$ US$
---------------------------------------- --------------- ---------------
The operating profit is after charging
the following:
---------------------------------------- --------------- ---------------
Administration costs 5 949 243 6 279 928
---------------------------------------- --------------- ---------------
Staff costs -salaries, allowances
and related costs 5 990 454 5 929 169
---------------------------------------- --------------- ---------------
-termination costs 413 695 -
---------------------------------------- --------------- ---------------
Directors' remuneration: 361 629 368 985
---------------------------------------- --------------- ---------------
-Fees 134 854 106 133
---------------------------------------- --------------- ---------------
-Expenses 7 455 8 437
---------------------------------------- --------------- ---------------
-Services rendered 219 320 254 415
---------------------------------------- --------------- ---------------
Amortisation of intangible assets 352 162 259 253
---------------------------------------- --------------- ---------------
Depreciation 560 129 700 047
---------------------------------------- --------------- ---------------
-------------- --------------
---------------------------------------- --------------- ---------------
13 627 312 13 537 382
---------------------------------------- --------------- ---------------
======== ========
---------------------------------------- --------------- ---------------
7. taxation
30 June 2017 30 June 2016
-------------------- -------------- -------------
US$ US$
-------------------- -------------- -------------
Income tax expense
-------------------- -------------- -------------
Current tax 464 472 1 255 580
-------------------- -------------- -------------
Deferred tax 701 637 (337 053)
-------------------- -------------- -------------
Capital gains tax 115 150 -
-------------------- -------------- -------------
------------- ------------
-------------------- -------------- -------------
1 281 259 918 527
-------------------- -------------- -------------
======== =======
-------------------- -------------- -------------
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 2017 30 June 2016
----------------------- ------------- -------------
US$ US$
----------------------- ------------- -------------
Profit for the period 3 556 915 2 640 274
----------------------- ------------- -------------
9.2 Number of shares
30 June 2017 30 June 2016
------------------------------------------------- ----------------- -----------------
US$ US$
------------------------------------------------- ----------------- -----------------
9.2.1 Basic earnings per share
------------------------------------------------- ----------------- -----------------
Weighted average number of ordinary
shares for
------------------------------------------------- ----------------- -----------------
basic earnings per share 384 518 549 384 427 351
------------------------------------------------- ----------------- -----------------
9.2.2 Diluted earnings per share
------------------------------------------------- ----------------- -----------------
Number of shares at beginning of
period 384 427 351 384 427 351
------------------------------------------------- ----------------- -----------------
Shares issued - share options 547 191 -
------------------------------------------------- ----------------- -----------------
Effect of dilution:
------------------------------------------------- ----------------- -----------------
Share options granted but not exercised - 4 128 434
------------------------------------------------- ----------------- -----------------
Share options approved but not
yet granted 23 942 639 23 942 639
------------------------------------------------- ----------------- -----------------
---------------- ----------------
------------------------------------------------- ----------------- -----------------
408 917 181 412 498 424
------------------------------------------------- ----------------- -----------------
========= =========
------------------------------------------------- ----------------- -----------------
9.3 Earnings per share (US cents)
30 June 2017 30 June 2016
--------------- ------------- -------------
Basic 0.93 0.69
--------------- ------------- -------------
Diluted basic 0.87 0.64
--------------- ------------- -------------
10. SHARE CAPITAL
10.1 Authorised
30 June 2017 31 December 30 June 2017 31 December
2016 2016
----------------- --------------- --------------- ------------- ------------
Shares million Shares million US$$ US$
----------------- --------------- --------------- ------------- ------------
Ordinary shares
of US$0.00028
each 600 600 168 000 168 000
----------------- --------------- --------------- ------------- ------------
==== ==== ====== ======
----------------- --------------- --------------- ------------- ------------
10.2 Issued and fully paid
10.2.1 Ordinary shares
30 June 2017 31 December 30 June 2017 31 December
2016 2016
----------------- --------------- --------------- ------------- ------------
Shares million Shares million US$$ US$
----------------- --------------- --------------- ------------- ------------
Ordinary shares 282 281 78 751 78 598
----------------- --------------- --------------- ------------- ------------
==== === ====== ======
----------------- --------------- --------------- ------------- ------------
10.2.2 Redeemable ordinary shares
30 June 2017 31 December 30 June 2017 31 December
2016 2016
------------ --------------- --------------- ------------- ------------
Shares million Shares million US$$ US$
------------ --------------- --------------- ------------- ------------
Redeemable
ordinary
shares 104 104 29 040 29 040
------------ --------------- --------------- ------------- ------------
==== === ====== ======
------------ --------------- --------------- ------------- ------------
Of the unissued ordinary shares of 214 million shares (2016 - 215 million), options which may be granted in terms of the 2012 ESOS amount to 28 071 073 and as at 30 June 2017, 4 128 434 share options had been issued and of those options 547 191 were exercised.
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
30 June 2017 31 December 2016
----------------------------- --------------- -----------------
US$ US$
----------------------------- --------------- -----------------
Nominal value (note 10.2.2) 29 040 29 040
----------------------------- --------------- -----------------
Share premium 14 306 213 14 306 213
----------------------------- --------------- -----------------
-------------- ---------------
----------------------------- --------------- -----------------
14 335 253 14 335 253
----------------------------- --------------- -----------------
======== ========
----------------------------- --------------- -----------------
On 30 June 2013 the Company received 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$100 million by 31 December 2020.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back agreement with Norfund, FMO and AfricInvest, where these three strategic investors have a right on their own discretion at any time after the 5(th) anniversary (30 June 2018) but before the 9(th) anniversary (30 June 2022) of its first subscription date, to request NMBZ to buy back all or part of its NMBZ shares at a price to be determined using the agreed terms as entailed in the share buy-back agreement. It is a condition precedent that at any point when the share buy-back is being considered, the proceeds used to finance the buy-back should come from the distributable reserves which are over and above the minimum regulatory capital requirements. Further, no buy-back option can be exercised by any investor after the 9(th) anniversary (30 June 2022) of the effective date.
The share buy-back agreement creates a potential obligation for NMBZ Holdings Limited to purchase its own instruments. Thus shares issued gave rise to a potential financial liability and are classified as redeemable ordinary shares.
12. SUBORDINATED TERM LOAN
30 June 2017 31 December 2016
---------------------- --------------- ------------------
US$ US$
---------------------- --------------- ------------------
At 1 January 1 415 490 1 414 144
---------------------- --------------- ------------------
Interest capitalised 75 110 158 599
---------------------- --------------- ------------------
Interest paid (75 525) (157 253)
---------------------- --------------- ------------------
-------------- -----------------
---------------------- --------------- ------------------
1 415 075 1 415 490
---------------------- --------------- ------------------
========= ==========
---------------------- --------------- ------------------
In 2013, the Bank received a subordinated term loan amounting to US$1.4 million from a Development Financial Institution which attracts an interest rate of LIBOR plus 10% and has a seven year maturity date (13 June 2020) from the first disbursement date.
The above liability would, in the event of the winding up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. The Group has not had any defaults of the principal and interest and other breaches with respect to this subordinated loan during the six months period ended 30 June 2017.
13. DepositS and other accounts
13.1 Deposits and other accounts
30 June 2017 31 December 2016
------------------------------- ---------------- ------------------
US$ US$
------------------------------- ---------------- ------------------
Deposits from banks and other
financial
institutions** 19 186 219 50 002 468
------------------------------- ---------------- ------------------
Current and deposit accounts 254 292 571 210 547 915
------------------------------- ---------------- ------------------
--------------- -----------------
------------------------------- ---------------- ------------------
Total deposits* 273 478 790 260 550 383
------------------------------- ---------------- ------------------
Trade and other payables* 5 096 564 4 834 137
------------------------------- ---------------- ------------------
--------------- -----------------
------------------------------- ---------------- ------------------
278 575 354 265 384 520
------------------------------- ---------------- ------------------
========= ==========
------------------------------- ---------------- ------------------
`
*Deposits and other payables approximate the related carrying amount due to their short term nature.
**Included in deposits from banks and other financial institutions are loan balances of US$4 178 313 and US$5 015 157 due to Societe de Promotion de Participation Pour la Cooperation Economique SA (Proparco) and Norsard Finance Ltd respectively. The Group has not had any defaults on the principal and interest with respect to these loans during the period ended 30 June 2017. However, there were breaches to the Proparco financial covenants regarding the following ratios:
-- Cost to income ratio - 70.5% (instead of a maximum of 65%). -- Open credit exposure - 28.9% (instead of a maximum of 25%). -- Non-performing loans ratio - 10.98% (instead of a maximum of 8%).
The Bank will apply for a waiver of the non - compliant ratios by 30 September 2017.
13.2 Maturity analysis
30 June 2017 31 December 2016
--------------------- ---------------- -----------------
US$ US$
--------------------- ---------------- -----------------
Less than one month 203 007 636 185 752 420
--------------------- ---------------- -----------------
1 to 3 months 43 710 261 35 339 615
--------------------- ---------------- -----------------
3 to 6 months 10 873 825 2 927 632
--------------------- ---------------- -----------------
6 months to 1 year 6 407 638 6 358 137
--------------------- ---------------- -----------------
1 to 5 years 9 287 600 29 980 749
--------------------- ---------------- -----------------
Over 5 years 191 830 191 830
--------------------- ---------------- -----------------
--------------- ---------------
--------------------- ---------------- -----------------
273 478 790 260 550 383
--------------------- ---------------- -----------------
========== =========
--------------------- ---------------- -----------------
13.3 Sectoral analysis of deposits
30 June 2017 31 December
2016
---------------------------------- ---------------- --------- ---------------- -----
US$ % US$ %
---------------------------------- ---------------- --------- ---------------- -----
Agriculture 7 835 622 3 6 274 099 3
---------------------------------- ---------------- --------- ---------------- -----
Banks and financial institutions 19 186 219 7 50 002 468 19
---------------------------------- ---------------- --------- ---------------- -----
Distribution 31 040 394 11 24 098 216 9
---------------------------------- ---------------- --------- ---------------- -----
Individuals 21 232 835 8 21 782 045 8
---------------------------------- ---------------- --------- ---------------- -----
Manufacturing 45 059 462 16 39 033 359 15
---------------------------------- ---------------- --------- ---------------- -----
Mining companies 6 253 804 2 5 056 123 2
---------------------------------- ---------------- --------- ---------------- -----
Municipalities and parastatals 18 356 145 7 16 027 950 6
---------------------------------- ---------------- --------- ---------------- -----
Other deposits 46 818 175 17 36 014 266 14
---------------------------------- ---------------- --------- ---------------- -----
Services 64 851 327 24 54 712 221 21
---------------------------------- ---------------- --------- ---------------- -----
Transport and telecommunication
companies 12 844 807 5 7 549 636 3
---------------------------------- ---------------- --------- ---------------- -----
--------------- -------- --------------- ----
---------------------------------- ---------------- --------- ---------------- -----
273 478 790 100 260 550 383 100
---------------------------------- ---------------- --------- ---------------- -----
========= ==== ========= ===
---------------------------------- ---------------- --------- ---------------- -----
14. FINANCIAL INSTRUMENTS
14.1 Investment securities
30 June 2017 31 December 2016
--------------------------------- -------------- -----------------
US$ US$
--------------------------------- -------------- -----------------
Investment securities held to
maturity 12 476 046 12 476 046
--------------------------------- -------------- -----------------
Investment securities available
for sale 12 094 093 12 268 706
--------------------------------- -------------- -----------------
------------- --------------
--------------------------------- -------------- -----------------
24 570 139 24 744 752
--------------------------------- -------------- -----------------
======== ========
--------------------------------- -------------- -----------------
The Group holds treasury bills and government bonds totalling US$24 570 139 with interest rates ranging from 2% to 5%. Liquidity induced trades have occurred in the secondary market and there is industry consensus that these trades do not represent free market activity. In light of the absence of an active market for the treasury bills and bonds, the instruments are recorded at amortised cost. Of the total treasury bills and government bonds balance, a total of US$13 700 132 was pledged as security against interbank borrowings.
14.2 Maturity analysis of investment securities held to maturity
30 June 2016 31 December 2016
-------------------- --------------- -----------------
US$ US$
-------------------- --------------- -----------------
Less than 1 month - -
-------------------- --------------- -----------------
1 to 3 months - -
-------------------- --------------- -----------------
3 to 6 months - -
-------------------- --------------- -----------------
6 months to 1 year - -
-------------------- --------------- -----------------
1 to 5 years 2 424 461 2 424 461
-------------------- --------------- -----------------
Over 5 years 10 051 585 10 051 585
-------------------- --------------- -----------------
-------------- --------------
-------------------- --------------- -----------------
12 476 046 12 476 046
-------------------- --------------- -----------------
======== ========
-------------------- --------------- -----------------
14.3 Maturity analysis of investment securities available for sale
30 June 2017 31 December 2016
-------------------- --------------- -----------------
US$ US$
-------------------- --------------- -----------------
Less than 1 month - -
-------------------- --------------- -----------------
3 to 6 months - 168 563
-------------------- --------------- -----------------
6 months to 1 year 266 785 48 341
-------------------- --------------- -----------------
1 to 5 years 735 470 266 785
-------------------- --------------- -----------------
Over 5 years 11 091 838 11 785 017
-------------------- --------------- -----------------
-------------- --------------
-------------------- --------------- -----------------
12 094 093 12 268 706
-------------------- --------------- -----------------
======== ========
-------------------- --------------- -----------------
14.4 Fair values of financial instruments
The fair values of financial assets and financial liabilities that
are traded in active markets are based on quoted market prices or
dealer price quotations. For all other financial instruments, the
Group determines fair values using other valuation techniques.
For financial instruments that trade infrequently and have little
price transparency, fair value is less objective, and requires varying
degrees of judgement depending on liquidity, concentration, uncertainty
of market factors, pricing assumptions and other risks affecting
the specific instrument.
Valuation models
The Group measures fair values using the following fair value hierarchy,
which reflects the significance of the inputs used in making the
measurements.
--Level 1: inputs that are quoted market prices (unadjusted) in active
markets for identical instruments.
--Level 2: inputs other than quoted prices included within Level
1 that are observable either directly (i.e. as prices) or indirectly
(i.e. derived from prices). This category includes instruments valued
using: quoted market prices in active markets for similar instruments;
quoted prices for identical or similar instruments in markets that
are considered less than active; or other valuation techniques in
which all significant inputs are directly or indirectly observable
from market data.
--Level 3: inputs that are unobservable. This category includes all
instruments for which the valuation technique includes inputs not
based on observable data and the unobservable inputs have a significant
effect on the instrument's valuation. This category includes instruments
that are valued based on quoted prices for similar instruments for
which significant unobservable adjustments or assumptions are required
to reflect differences between the instruments.
The objective of valuation techniques is to arrive at a fair value
measurement that reflects the price that would be received to sell
the asset or paid to transfer the liability in an orderly transaction
between market participants at the measurement date.
14.4.1 Financial instruments measured at fair value - fair value hierarchy
30 June 2017 Level 1 Level 2 Level 3
-------------------- ------------- ------------ -------------- ---------------
US$ 2013 US$ US$
-------------------- ------------- ------------ -------------- ---------------
Trade investments 101 443 - - 101 443
-------------------- ------------- ------------ -------------- ---------------
Quoted investments 107 727 107 727 - -
-------------------- ------------- ------------ -------------- ---------------
------------ ----------- ------------- --------------
-------------------- ------------- ------------ -------------- ---------------
209 170 107 727 - 101 443
-------------------- ------------- ------------ -------------- ---------------
======= ======= ======== ========
-------------------- ------------- ------------ -------------- ---------------
During the reporting period ended 30 June 2017, 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
2016 Level 1 Level 2 Level 3
-------------------- ------------ ------------ -------------- ---------------
US$ 2013 US$ US$
-------------------- ------------ ------------ -------------- ---------------
Trade investments 88 930 - - 88 930
-------------------- ------------ ------------ -------------- ---------------
Quoted investments 88 650 88 650 - -
-------------------- ------------ ------------ -------------- ---------------
----------- ----------- ------------- --------------
-------------------- ------------ ------------ -------------- ---------------
177 580 88 650 - 88 930
-------------------- ------------ ------------ -------------- ---------------
======= ======= ======== ========
-------------------- ------------ ------------ -------------- ---------------
During the reporting period ended 31 December 2016, 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 2017 31 December 2016
--------------------------- ------------- -----------------
US$ US$
--------------------------- ------------- -----------------
Opening balance 88 930 77 805
--------------------------- ------------- -----------------
Gain recognized in profit
or loss 12 513 11 125
--------------------------- ------------- -----------------
---------- ----------
--------------------------- ------------- -----------------
Closing balance 101 443 88 930
--------------------------- ------------- -----------------
====== =====
--------------------------- ------------- -----------------
14.4.2 Financial 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 2017 Total carrying
--------------------------- ------------------ ----------------- ------------------- ------------------
Level 1 Level 2 Level 3 Amount
--------------------------- ------------------ ----------------- ------------------- ------------------
US$ US$ US$ US$
--------------------------- ------------------ ----------------- ------------------- ------------------
Assets
--------------------------- ------------------ ----------------- ------------------- ------------------
Cash and cash equivalents - 85 960 349 - 85 960 349
--------------------------- ------------------ ----------------- ------------------- ------------------
Loans, advances
and other
accounts - - 198 651 838 198 651 838
--------------------------- ------------------ ----------------- ------------------- ------------------
Investment securities - - 24 570 139 24 570 139
--------------------------- ------------------ ----------------- ------------------- ------------------
---------------- ---------------- ----------------- -----------------
--------------------------- ------------------ ----------------- ------------------- ------------------
Total - 85 960 349 223 221 977 309 182 326
--------------------------- ------------------ ----------------- ------------------- ------------------
========== ========== =========== ==========
--------------------------- ------------------ ----------------- ------------------- ------------------
Liabilities
--------------------------- ------------------ ----------------- ------------------- ------------------
Deposits and other
liabilities - 278 575 354 - 278 575 354
--------------------------- ------------------ ----------------- ------------------- ------------------
--------------- ---------------- ------------------ ---------------
--------------------------- ------------------ ----------------- ------------------- ------------------
- 278 575 354 - 278 575 354
---------------------------------------------- ----------------- ------------------- ------------------
======== ========== =========== ==========
---------------------------------------------- ----------------- ------------------- ------------------
Financial instruments not measured at fair value
The below table 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.
31 December Total carrying
2016
--------------------------- ------------------ ----------------- ------------------- ------------------
Level 1 Level 2 Level 3 Amount
--------------------------- ------------------ ----------------- ------------------- ------------------
US$ US$ US$ US$
--------------------------- ------------------ ----------------- ------------------- ------------------
Assets
--------------------------- ------------------ ----------------- ------------------- ------------------
Cash and cash equivalents - 69 421 257 - 69 421 257
--------------------------- ------------------ ----------------- ------------------- ------------------
Loans, advances
and other
accounts - - 199 617 095 199 617 095
--------------------------- ------------------ ----------------- ------------------- ------------------
Investment securities - - 24 744 752 24 744 752
--------------------------- ------------------ ----------------- ------------------- ------------------
---------------- ---------------- ----------------- -----------------
--------------------------- ------------------ ----------------- ------------------- ------------------
Total - 69 421 257 224 361 847 293 783 104
--------------------------- ------------------ ----------------- ------------------- ------------------
========== ========== =========== ==========
--------------------------- ------------------ ----------------- ------------------- ------------------
Liabilities
--------------------------- ------------------ ----------------- ------------------- ------------------
Deposits and other 265 384
liabilities - 520 - 265 384 520
--------------------------- ------------------ ----------------- ------------------- ------------------
--------------- ---------------- ------------------ ---------------
--------------------------- ------------------ ----------------- ------------------- ------------------
265 384
- 520 - 265 384 520
---------------------------------------------- ----------------- ------------------- ------------------
======== ========== =========== ==========
---------------------------------------------- ----------------- ------------------- ------------------
The carrying amount of financial assets and liabilities not measured at fair approximate fair value.
15. CASH AND CASH EQUIVALENTS
30 June 2017 31 December 2016
------------------------------ -------------- -----------------
US$ US$
------------------------------ -------------- -----------------
Balances with Central Bank 52 650 647 36 166 732
------------------------------ -------------- -----------------
Current, nostro accounts and
cash 2 309 702 8 754 525
------------------------------ -------------- -----------------
Interbank placements 31 000 000 24 500 000
------------------------------ -------------- -----------------
------------- --------------
------------------------------ -------------- -----------------
85 960 349 69 421 257
------------------------------ -------------- -----------------
======== ========
------------------------------ -------------- -----------------
Balances with the Central Bank, other banks and cash are used to facilitate customer transactions which include payments and cash withdrawals. During the year, the Central Bank through Exchange Control Operational Guide 8 (ECOGAD 8) introduced prioritisation criteria which have to be followed when making foreign payments on behalf of customers. After prioritisation, foreign payments are then made subject to availability of bank balances with foreign correspondent banks, resulting in possible delay of payment of telegraphic transfers. However, no delay is expected in the settlement of local transactions through the Real Time Gross Settlement (RTGS) system.
Of the cash and cash equivalents balance, an amount of US$526 316 was pledged to Proparco as collateral for offshore lines of credit.
16. LOANS, ADVANCES AND OTHER ACCOUNTS
16. 1 Total loans, advances and other accounts
30 June 2017 31 December 2016
---------------------- --------------- -----------------
16.1.1 Advances US$ US$
---------------------- --------------- -----------------
Fixed term loans 16 969 962 16 889 687
---------------------- --------------- -----------------
Loans and overdrafts 176 165 218 178 602 573
---------------------- --------------- -----------------
-------------- ---------------
---------------------- --------------- -----------------
193 135 180 195 492 260
---------------------- --------------- -----------------
Other accounts 5 516 658 4 124 835
---------------------- --------------- -----------------
-------------- ---------------
---------------------- --------------- -----------------
198 651 838 199 617 095
---------------------- --------------- -----------------
========= =========
---------------------- --------------- -----------------
16.1.2 Maturity analysis
--------------------------- ----------------- ------------------
30 June 2017 31 December 2016
--------------------------- ----------------- ------------------
US$ US$
--------------------------- ----------------- ------------------
Less than one month 69 399 527 86 086 528
--------------------------- ----------------- ------------------
1 to three months 21 592 429 9 247 720
--------------------------- ----------------- ------------------
3 to 6 months 4 982 712 7 423 426
--------------------------- ----------------- ------------------
6 months to 1 year 4 568 299 16 327 018
--------------------------- ----------------- ------------------
1 to 5 years 77 978 287 63 528 044
--------------------------- ----------------- ------------------
Over 5 years 23 086 659 23 245 656
--------------------------- ----------------- ------------------
--------------- ---------------
--------------------------- ----------------- ------------------
Total advances 201 607 913 205 858 392
--------------------------- ----------------- ------------------
Allowance for impairment
losses on
loans and advances (6 233 330) (8 305 117)
--------------------------- ----------------- ------------------
Suspended interest (2 239 403) (2 061 015)
--------------------------- ----------------- ------------------
--------------- ---------------
--------------------------- ----------------- ------------------
193 135 180 195 492 260
--------------------------- ----------------- ------------------
Other accounts 5 516 658 4 124 835
--------------------------- ----------------- ------------------
---------------- ----------------
--------------------------- ----------------- ------------------
198 651 838 199 617 095
--------------------------- ----------------- ------------------
========== ==========
--------------------------- ----------------- ------------------
16.2 Sectoral analysis of utilizations
30 June 31 December
2017 2016
------------------ ---------------- -------- ---------------- ---------
US$ % US$ %
------------------ ---------------- -------- ---------------- ---------
Agriculture and
horticulture 25 991 965 13 22 172 296 11
------------------ ---------------- -------- ---------------- ---------
Conglomerates 8 665 685 4 8 149 399 4
------------------ ---------------- -------- ---------------- ---------
Distribution 28 904 175 15 22 957 893 11
------------------ ---------------- -------- ---------------- ---------
Food & beverages 7 983 020 4 7 016 516 4
------------------ ---------------- -------- ---------------- ---------
Individuals 84 355 808 42 90 381 441 44
------------------ ---------------- -------- ---------------- ---------
Manufacturing 12 413 924 6 14 562 333 7
------------------ ---------------- -------- ---------------- ---------
Mining 759 883 - 789 502 -
------------------ ---------------- -------- ---------------- ---------
Services 32 533 453 16 39 829 012 19
------------------ ---------------- -------- ---------------- ---------
--------------- ------- --------------- --------
------------------ ---------------- -------- ---------------- ---------
201 607
913 100 205 858 392 100
------------------ ---------------- -------- ---------------- ---------
========= ==== ========= =====
------------------ ---------------- -------- ---------------- ---------
The material concentration of loans and advances are to individuals at 42% (2016 - 44%) and the services sector at 16% (2016 - 19%).
16.3 Allowance for impairment losses on loans, advances and debentures
30 June 2017 31 December 2016
-------------- ---------------------------------------------- ----------------------------------------------------
Specific Portfolio Total Specific Portfolio Total
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
US$ US$ US$ US$ US$ US$
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
2 097 8 305 1 007
At 1 January 6 207 672 445 117 7 574 789 847 8 582 636
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
Charge
against 1 089
profits 630 664 247 640 878 304 6 970 128 598 8 059 726
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
Bad debts
written (2 950 (2 950 (8 337
off 091) - 091) (8 337 245) - 245)
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
------------- ------------ -------------- --------------- ------------ ---------------
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
2 345 6 233 2 097
Balance 3 888 245 085 330 6 207 672 445 8 305 117
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
======== ======= ======== ========= ======= =========
-------------- -------------- ------------- --------------- ---------------- ---------------- ----------------
16.4 Non-performing loans and advances
30 June 2017 31 December
2016
----------------------------------------- ------------------------- ---------------------
US$ US$
----------------------------------------- ------------------------- ---------------------
Total non-performing loans and advances 21 585 685 22 015 828
----------------------------------------- ------------------------- ---------------------
Allowance for impairment losses on
loans and advances (3 888 245) (6 207 672)
----------------------------------------- ------------------------- ---------------------
Retail loans insurance (1 550 140) (1 577 628)
----------------------------------------- ------------------------- ---------------------
Suspended interest (2 239 403) (1 748 031)
----------------------------------------- ------------------------- ---------------------
--------------- ---------------
----------------------------------------- ------------------------- ---------------------
Net non-performing loans and advances 13 907 897 12 482 497
----------------------------------------- ------------------------- ---------------------
========= =========
----------------------------------------- ------------------------- ---------------------
The net non-performing loans and advances of these accounts represents recoverable portions covered by realisable security, which includes guarantees, cession of debtors, mortgages over properties, equities and promissory notes all fair valued at US$17 762 125 (2016 - US$17 573 875).
16.5 Loans to related parties (Included under loans, advances and other assets)
30 June 2017 31 December
2016
-------------------------- --------------- ---------------
US$ US$
-------------------------- --------------- ---------------
Non- executive directors - -
-------------------------- --------------- ---------------
Executive directors 222 627 240 705
-------------------------- --------------- ---------------
Officers 7 477 121 7 381 115
-------------------------- --------------- ---------------
Directors' companies - -
-------------------------- --------------- ---------------
Officers' companies - -
-------------------------- --------------- ---------------
-------------- --------------
-------------------------- --------------- ---------------
7 699 748 7 621 820
-------------------------- --------------- ---------------
Fair value adjustments (337 256) (381 887)
-------------------------- --------------- ---------------
------------- --------------
-------------------------- --------------- ---------------
7 362 492 7 239 933
-------------------------- --------------- ---------------
======== =========
-------------------------- --------------- ---------------
17. INTANGIBLE ASSETS
Work in progress Computer software Total
-------------------------- ----------------- ------------------ ---------------
US$ US$ US$
-------------------------- ----------------- ------------------ ---------------
Cost
-------------------------- ----------------- ------------------ ---------------
Balance at 1 January
2016 228 595 2 554 709 2 783 304
-------------------------- ----------------- ------------------ ---------------
Acquisitions - 490 417 490 417
-------------------------- ----------------- ------------------ ---------------
---------- ---------- ------------
-------------------------- ----------------- ------------------ ---------------
Balance at 31 December
2016 228 595 3 045 126 3 273 721
-------------------------- ----------------- ------------------ ---------------
Acquisitions - 871 188 871 188
-------------------------- ----------------- ------------------ ---------------
---------- ------------ -------------
-------------------------- ----------------- ------------------ ---------------
Balance at 30 June
2017 228 595 3 916 314 4 144 909
-------------------------- ----------------- ------------------ ---------------
====== ======= ========
-------------------------- ----------------- ------------------ ---------------
Accumulated amortisation
-------------------------- ----------------- ------------------ ---------------
Balance at 1 January
2016 - 1 093 919 1 093 919
-------------------------- ----------------- ------------------ ---------------
Amortisation for the
year - 532 768 532 768
-------------------------- ----------------- ------------------ ---------------
--------- ------------- -----------
-------------------------- ----------------- ------------------ ---------------
Balance at 31 December
2016 - 1 626 687 1 626 687
-------------------------- ----------------- ------------------ ---------------
Amortisation for the
period - 352 162 352 162
-------------------------- ----------------- ------------------ ---------------
--------- ------------ --------------
-------------------------- ----------------- ------------------ ---------------
Balance at 30 June
2017 - 1 978 849 1 978 849
-------------------------- ----------------- ------------------ ---------------
===== ======== ========
-------------------------- ----------------- ------------------ ---------------
Carrying amount
-------------------------- ----------------- ------------------ ---------------
At 30 June 2017 228 595 1 937 465 2 166 060
-------------------------- ----------------- ------------------ ---------------
======= ======== ========
-------------------------- ----------------- ------------------ ---------------
At 31 December 2016 228 595 1 418 439 1 647 034
-------------------------- ----------------- ------------------ ---------------
======= ======== ========
-------------------------- ----------------- ------------------ ---------------
18. PROPERTY AND EQUIPMENT
Capital work Computers Motor vehicles Furniture and Freehold buildings Total
in progress equipment
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
US$ US$ US$ US$ US$ US$
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Cost
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Balance at 1 14 150
January 2016 585 511 2 962 337 3 710 725 3 633 850 3 257 827 250
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Additions 188 947 541 737 192 113 215 716 128 891 1 267 404
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Revaluation loss - - - - (55 600) (55 600)
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Capitalisations (585 511) 173 827 180 000 64 348 167 336 -
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
(2 799
Disposals - - (2 799 390) - - 390)
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
------------- ------------ ----------- ------------- -------------- -------------
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
At 31 December 12 562
2016 188 947 3 677 901 1 283 448 3 913 914 3 498 454 664
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Additions 280 639 492 404 - 46 987 - 820 030
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Capitalisations (163 541) 163 541 - - - -
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Disposals - (4 930) (80 000) - - (84 930)
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
------------- ------------ ------------ ------------ ------------ -------------
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Balance at 30 13 297
June 2017 306 045 4 328 916 1 203 448 3 960 901 3 498 454 764
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
------------- ------------ ------------ ------------ ------------ ========
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Accumulated
depreciation
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
At 1 January
2016 - 1 775 459 2 987 999 2 586 039 199 667 7 549 164
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Charge for the
year - 427 666 370 383 458 831 62 516 1 319 396
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
(2 586
Disposals - - (2 586 182) - - 182)
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
-------------- -------------- -------------- ------------ ------------- ------------
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Balance at 31
December
2016 - 2 203 125 772 200 3 044 870 262 183 6 282 378
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Charge for the
period - 263 847 101 491 162 119 32 672 560 129
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Disposals - (2 219) (25 000) - - (27 219)
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
----------- ------------ ------------ ------------- ------------ ------------
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Balance at 30
June 2017 - 2 464 753 848 691 3 206 989 294 855 6 815 288
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
======= ======= ======== ======= ======= =======
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Carrying amount
at 30
June 2017 306 045 1 864 163 354 757 753 912 3 203 599 6 482 476
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
======= ======= ======= ======= ======== =======
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
Carrying amount
at 31
December 2016 188 947 1 474 776 511 248 869 044 3 236 271 6 280 286
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
======= ======= ======= ======= ======= =======
----------------- --------------- --------------- --------------- -------------- -------------------- --------------
18. PROPERTY AND EQUIPMENT (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2017
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2016 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 10% on rental levels of between US$5 - US$10 per square metre.
As there were no professional valuations done as at 30 June 2017, the land and buildings are recorded at the fair values obtained by the professional valuers as at 31 December 2016.
Level 3
The fair value of immovable properties of US$3 203 599 has been categorised under Level 3 in the fair value hierarchy based on the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening and closing balances for Level 3 fair values:
30 June 2017 31 December 2016
--------------------------------- -------------- -------------------------------------
US$ S$
--------------------------------- -------------- -------------------------------------
At 1 January 3 236 271 3 058 160
--------------------------------- -------------- -------------------------------------
Additions - 128 891
--------------------------------- -------------- -------------------------------------
Transfers from work in progress - 167 336
--------------------------------- -------------- -------------------------------------
Revaluation gain - (55 600)
--------------------------------- -------------- -------------------------------------
Depreciation (32 672) (62 516)
--------------------------------- -------------- -------------------------------------
------------- -------------
--------------------------------- -------------- -------------------------------------
Balance 3 203 599 3 236 271
--------------------------------- -------------- -------------------------------------
======== ========
--------------------------------- -------------- -------------------------------------
19. CAPITAL COMMITMENTS
30 June 2017 31 December
2016
------------------------------------ --------------- -----------------
US$ US$
------------------------------------ --------------- -----------------
Capital expenditure contracted for 736 827 69 315
------------------------------------ --------------- -----------------
Capital expenditure authorised but
not yet
contracted for 3 021 185 5 379 915
------------------------------------ --------------- -----------------
-------------- ----------------
------------------------------------ --------------- -----------------
3 758 012 5 449 230
------------------------------------ --------------- -----------------
======== =========
------------------------------------ --------------- -----------------
The capital expenditure will be funded from internal resources.
20. CONTINGENT LIABILITIES
30 June 2017 31 December
2016
--------------------------------- ----------------- -----------------
US$ US$
--------------------------------- ----------------- -----------------
Guarantees 3 808 000 2 159 937
--------------------------------- ----------------- -----------------
Facilities approved but not yet
drawn down 21 931 733 25 175 267
--------------------------------- ----------------- -----------------
Irrevocable letters of credit - 450 000
--------------------------------- ----------------- -----------------
---------------- ----------------
--------------------------------- ----------------- -----------------
25 739 733 27 785 204
--------------------------------- ----------------- -----------------
========= =========
--------------------------------- ----------------- -----------------
21. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States of America dollars (US$) at period end:-
Mid-rate Mid-rate
------------------------ ----- ------------- ------------
30 June 2017 31 December
2016
------------------------ ----- ------------- ------------
US$ US$
------------------------ ----- ------------- ------------
British Pound Sterling GBP 1.2970 1.2375
------------------------ ----- ------------- ------------
South African Rand ZAR 13.1300 13.7000
------------------------ ----- ------------- ------------
European Euro EUR 1.1414 1.0570
------------------------ ----- ------------- ------------
Botswana Pula BWP 10.2669 10.6838
------------------------ ----- ------------- ------------
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2017
30 June 2017 30 June 2016
------------------------------- ------ ------------------ ------------------
US$ US$
------------------------------- ------ ------------------ ------------------
Unaudited Unaudited
------------------------------- ------ ------------------ ------------------
Note
------------------------------- ------ ------------------ ------------------
Interest income 15 251 859 17 451 237
--------------------------------------- ------------------ ------------------
Interest expense (4 563 480) (5 809 362)
--------------------------------------- ------------------ ------------------
----------------- -----------------
------------------------------- ------ ------------------ ------------------
Net interest income 10 688 379 11 641 875
--------------------------------------- ------------------ ------------------
Net foreign exchange gains 571 892 353 209
--------------------------------------- ------------------ ------------------
Fee and commission income 7 892 196 7 584 529
--------------------------------------- ------------------ ------------------
----------------- -----------------
------------------------------- ------ ------------------ ------------------
Revenue 19 152 467 19 579 613
--------------------------------------- ------------------ ------------------
Non-interest income a 172 349 714 128
------------------------------- ------ ------------------ ------------------
Operating income 19 324 816 20 293 741
--------------------------------------- ------------------ ------------------
Operating expenditure b (13 627 312) (13 537 382)
------------------------------- ------ ------------------ ------------------
Impairment losses on loans
and advances (878 304) (3 191 396)
--------------------------------------- ------------------ ------------------
--------------- ---------------
------------------------------- ------ ------------------ ------------------
Profit before taxation 4 819 200 3 564 963
--------------------------------------- ------------------ ------------------
Taxation (1 280 332) (918 856)
--------------------------------------- ------------------ ------------------
------------- -------------
------------------------------- ------ ------------------ ------------------
Profit for the period 3 538 868 2 646 107
--------------------------------------- ------------------ ------------------
Other comprehensive income - -
net of tax
------------------------------- ------ ------------------ ------------------
-------------- --------------
------------------------------- ------ ------------------ ------------------
Total comprehensive income
for the
period 3 538 868 2 646 107
--------------------------------------- ------------------ ------------------
======= =======
------------------------------- ------ ------------------ ------------------
Earnings per share (US cents)
------------------------------- ------ ------------------ ------------------
-Basic c 21.44 16.03
------------------------------- ------ ------------------ ------------------
STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
30 June 2017 31 December 2016
--------------------------- ------ ----------------- -------------------
US$ US$
--------------------------- ------ ----------------- -------------------
Unaudited Audited
--------------------------- ------ ----------------- -------------------
EQUITY Note
--------------------------- ------ ----------------- -------------------
Share capital d 16 506 16 506
--------------------------- ------ ----------------- -------------------
Share premium 31 474 502 31 474 502
----------------------------------- ----------------- -------------------
Regulatory reserve 2 600 969 1 785 136
----------------------------------- ----------------- -------------------
Retained earnings 24 160 292 21 437 257
----------------------------------- ----------------- -------------------
---------------- --------------
--------------------------- ------ ----------------- -------------------
Total shareholder's
funds 58 252 269 54 713 401
----------------------------------- ----------------- -------------------
LIABILITIES
--------------------------- ------ ----------------- -------------------
Deposits and other
accounts 278 545 338 265 354 607
----------------------------------- ----------------- -------------------
Subordinated term loan 1 415 075 1 415 490
----------------------------------- ----------------- -------------------
---------------- ---------------
--------------------------- ------ ----------------- -------------------
Total liabilities 279 960 413 266 770 097
----------------------------------- ----------------- -------------------
--------------- --------------
--------------------------- ------ ----------------- -------------------
Total shareholder's
funds and
liabilities 338 212 682 321 483 498
----------------------------------- ----------------- -------------------
========= =========
--------------------------- ------ ----------------- -------------------
ASSETS
--------------------------- ------ ----------------- -------------------
Cash and cash equivalents e 85 960 349 69 421 257
--------------------------- ------ ----------------- -------------------
Current tax assets 210 441 292 926
----------------------------------- ----------------- -------------------
Investment securities 24 570 139 24 744 752
----------------------------------- ----------------- -------------------
Amount owing from Holding
Company 588 716 610 604
----------------------------------- ----------------- -------------------
Loans, advances and
other assets 198 707 301 199 672 558
----------------------------------- ----------------- -------------------
Non - current assets
held for sale g 36 000 2 261 300
--------------------------- ------ ----------------- -------------------
Unquoted investments 101 443 88 930
----------------------------------- ----------------- -------------------
Deferred tax assets 1 560 873 2 261 581
----------------------------------- ----------------- -------------------
Investment properties f 17 828 884 14 202 270
--------------------------- ------ ----------------- -------------------
Intangible assets 2 166 060 1 647 034
----------------------------------- ----------------- -------------------
Property and equipment 6 482 476 6 280 286
----------------------------------- ----------------- -------------------
---------------- -----------------
--------------------------- ------ ----------------- -------------------
Total assets 338 212 682 321 483 498
----------------------------------- ----------------- -------------------
========== ==========
---------------------------------- ----------------- -------------------
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2017
Capital Reserves
--------------- ----------- ------------------------------------------------ ---------------- ---------------------
Share Share Premium Revaluation Regulatory Retained Total
Capital Reserve Reserve Earnings
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
US$ US$ US$ US$ US$ US$
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Balances at 1
January
2016 16 506 31 474 502 2 970 3 746 729 14 436 753 49 677 460
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Profit for the
six months - - - - 2 646 107 2 646 107
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Transfer to
regulatory
reserve - - - 284 741 (284 741)
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
---------- ------------- -------------- -------------- --------------- --------------
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Balances at 30
June
2016 16 506 31 474 502 2 970 4 031 470 16 798 119 52 323 567
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Profit for the
six months - - - - 2 392 804 2 392 804
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Other
comprehensive
income - - (2 970) - - (2 970)
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Transfer from
regulatory
reserve - - - (2 246 334) 2 246 334
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
--------- ------------- ----------- -------------- ------------ --------------
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Balances at 31
December
2016 16 506 31 474 502 - 1 785 136 21 437 257 54 713 401
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Profit for the
six months - - - - 3 538 868 3 538 868
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Transfer to
regulatory
reserve - - - 815 833 (815 833)
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
--------- ------------- ----------- ------------- ------------- --------------
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
Balances at 30
June
2017 16 506 31 474 502 - 2 600 969 24 160 292 58 252 269
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
====== ======== ======= ======= ======== ========
--------------- ----------- -------------- --------------- --------------- ---------------- ---------------------
STATEMENT OF CASH FLOWS
for the six months ended 30 June 2017
30 June 2017 30 June 2016
----------------------------------------------- ---------------- ----------------
US$ US$
----------------------------------------------- ---------------- ----------------
Unaudited Unaudited
----------------------------------------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
----------------------------------------------- ---------------- ----------------
Profit before taxation 4 819 200 3 564 963
----------------------------------------------- ---------------- ----------------
Non-cash items
----------------------------------------------- ---------------- ----------------
-Impairment losses on loans and advances 878 304 3 191 396
----------------------------------------------- ---------------- ----------------
-Loss/(profit) on disposal of property
and equipment 56 639 (37 514)
----------------------------------------------- ---------------- ----------------
-Profit on disposal of investment (12 951) -
property
----------------------------------------------- ---------------- ----------------
-Loss on disposal of non-current assets 75 300 -
held for sale
----------------------------------------------- ---------------- ----------------
-Amortisation of intangible assets 352 162 259 253
----------------------------------------------- ---------------- ----------------
-Depreciation 560 129 700 047
----------------------------------------------- ---------------- ----------------
-Quoted and other investments fair
value adjustment (12 513) (16 060)
----------------------------------------------- ---------------- ----------------
-Interest capitalised on subordinated
loan 75 110 74 848
----------------------------------------------- ---------------- ----------------
-------------- ---------------
----------------------------------------------- ---------------- ----------------
Operating cash flows before changes
in operating
assets and liabilities 6 791 380 7 736 933
----------------------------------------------- ---------------- ----------------
Changes in operating assets and liabilities
----------------------------------------------- ---------------- ----------------
Increase/(decrease) in deposits and
other liabilities 13 190 731 (25 052 402)
----------------------------------------------- ---------------- ----------------
Decrease in loans, advances and other
accounts 86 953 14 429 925
----------------------------------------------- ---------------- ----------------
-------------- --------------
----------------------------------------------- ---------------- ----------------
Net cash generated from/(utilised in)
operations 20 069 064 (2 885 544)
----------------------------------------------- ---------------- ----------------
-------------- --------------
----------------------------------------------- ---------------- ----------------
Taxation
----------------------------------------------- ---------------- ----------------
Corporate tax paid (453 139) (710 213)
----------------------------------------------- ---------------- ----------------
Capital gains tax paid (44 000) -
----------------------------------------------- ---------------- ----------------
-------------- --------------
----------------------------------------------- ---------------- ----------------
Net cash inflow/(outflow) inflow from
operating activities 19 571 925 (3 595 757)
----------------------------------------------- ---------------- ----------------
--------------- ---------------
----------------------------------------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
----------------------------------------------- ---------------- ----------------
Proceeds on disposal of property and
equipment 1 073 41 309
----------------------------------------------- ---------------- ----------------
Acquisition of intangible assets (871 188) (108 560)
----------------------------------------------- ---------------- ----------------
Acquisition of property and equipment (820 030) (799 981)
----------------------------------------------- ---------------- ----------------
Acquisition of investment properties (3 946 615) (800 000)
----------------------------------------------- ---------------- ----------------
Disposal/(acquisition)of investment
securities 174 613 (10 552 622)
----------------------------------------------- ---------------- ----------------
Proceeds on disposal of non-current 2 150 000 -
asset held for sale
----------------------------------------------- ---------------- ----------------
Proceeds on disposal of investment 332 951 -
property
----------------------------------------------- ---------------- ----------------
Decrease in amount owing from holding 21 888 -
company
----------------------------------------------- ---------------- ----------------
--------------- ---------------
----------------------------------------------- ---------------- ----------------
Net cash outflow from investing activities (2 957 308) (12 219 854)
----------------------------------------------- ---------------- ----------------
-------------- ---------------
----------------------------------------------- ---------------- ----------------
Net cash (inflow)/outflow before financing
activities 16 614 617 (15 815 611)
----------------------------------------------- ---------------- ----------------
-------------- ---------------
----------------------------------------------- ---------------- ----------------
CASHFLOWS FROM FINANCING ACTIVITIES
----------------------------------------------- ---------------- ----------------
Payment of interest on subordinated
term loan (75 525) (74 331)
----------------------------------------------- ---------------- ----------------
-------------- --------------
----------------------------------------------- ---------------- ----------------
Net cash outflow from financing activities (75 525) (74 331)
----------------------------------------------- ---------------- ----------------
-------------- ---------------
----------------------------------------------- ---------------- ----------------
Net increase/(decrease) in cash and
cash equivalents 16 539 092 (15 889 942)
----------------------------------------------- ---------------- ----------------
Cash and cash equivalents at beginning
of the period 69 421 257 63 439 347
----------------------------------------------- ---------------- ----------------
--------------- ---------------
----------------------------------------------- ---------------- ----------------
Cash and cash equivalents at the end
of the period 85 960 349 47 549 405
----------------------------------------------- ---------------- ----------------
========= =========
----------------------------------------------- ---------------- ----------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2017
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 where applicable.
a. NON-INTEREST income
30 June 2017 30 June 2016
--------------------------------------- ------------------------------- ------------------
US$ US$
--------------------------------------- ------------------------------- ------------------
Quoted and other investments fair
value adjustments 12 514 16 060
--------------------------------------- ------------------------------- ------------------
Rental income 68 954 73 300
--------------------------------------- ------------------------------- ------------------
Insurance claims and recoveries 12 740 5 744
--------------------------------------- ------------------------------- ------------------
(Loss)/profit on disposal of property
and equipment (56 639) 37 514
--------------------------------------- ------------------------------- ------------------
Profit on disposal of investment 12 951 -
property
--------------------------------------- ------------------------------- ------------------
Loss on disposal of non-current asset (75 300) -
held for sale
--------------------------------------- ------------------------------- ------------------
Bad debts recovered 187 377 561 945
--------------------------------------- ------------------------------- ------------------
Other net operating income 9 752 19 565
--------------------------------------- ------------------------------- ------------------
----------- -----------
--------------------------------------- ------------------------------- ------------------
172 349 714 128
--------------------------------------- ------------------------------- ------------------
====== ======
--------------------------------------- ------------------------------- ------------------
b. Operating EXPITURE
30 June 2017 30 June 2016
---------------------------------------- --------------- ---------------
US$ US$
---------------------------------------- --------------- ---------------
The operating profit is after charging
the following:-
---------------------------------------- --------------- ---------------
Administration costs 5 949 243 6 279 928
---------------------------------------- --------------- ---------------
Staff costs - salaries, allowances
and related costs 5 990 454 5 929 169
---------------------------------------- --------------- ---------------
-termination costs 413 695 -
---------------------------------------- --------------- ---------------
Directors' remuneration: 361 629 368 985
---------------------------------------- --------------- ---------------
-Fees 134 854 106 133
---------------------------------------- --------------- ---------------
-Expenses 7 455 8 437
---------------------------------------- --------------- ---------------
-Services rendered 219 320 254 415
---------------------------------------- --------------- ---------------
Amortisation of intangible assets 352 162 259 253
---------------------------------------- --------------- ---------------
Depreciation 560 129 700 047
---------------------------------------- --------------- ---------------
-------------- --------------
---------------------------------------- --------------- ---------------
13 627 312 13 537 382
---------------------------------------- --------------- ---------------
======== ========
---------------------------------------- --------------- ---------------
c. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
c.1 Earnings
30 June 2017 30 June 2016
----------------------- ------------- -------------
US$ US$
----------------------- ------------- -------------
Profit for the period 3 538 868 2 646 107
----------------------- ------------- -------------
c.2 Number of shares
Weighted average shares in issue 16 506 050 16 506 050
---------------------------------- ----------- -----------
c.3 Earnings per share (US cents)
Basic 21.44 16.03
------- ------ ------
d. SHARE CAPITAL
d.1 Authorised
The authorised ordinary share capital at 30 June 2017 is at the historical cost figure of US$25 000 (2016 - 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 2017 is at the historical cost figure of US$16 506 (2016 - US$16 506) comprising 16 506 050 (2016 - 16 506 050) ordinary shares of US$0.001 each.
e. CASH AND CASH EQUIVALENTS
30 June 2017 31 December 2016
------------------------------ ---------------- -----------------
US$ US$
------------------------------ ---------------- -----------------
Balances with the Central
Bank 52 650 647 36 166 732
------------------------------ ---------------- -----------------
Current, nostro accounts and
cash 2 309 702 8 754 525
------------------------------ ---------------- -----------------
Interbank placements 31 000 000 24 500 000
------------------------------ ---------------- -----------------
--------------- --------------
------------------------------ ---------------- -----------------
85 960 349 69 421 257
------------------------------ ---------------- -----------------
========= =========
------------------------------ ---------------- -----------------
f. INVESTMENT PROPERTIES
30 June 2017 31 December 2016
------------------------ --------------- -----------------
US$ US$
------------------------ --------------- -----------------
Opening balance 14 202 270 8 125 800
------------------------ --------------- -----------------
Additions 3 946 614 5 794 464
------------------------ --------------- -----------------
Fair value adjustments - 412 006
------------------------ --------------- -----------------
Disposals (320 000) (130 000)
------------------------ --------------- -----------------
-------------- ---------------
------------------------ --------------- -----------------
Closing balance 17 828 884 14 202 270
------------------------ --------------- -----------------
========= =========
------------------------ --------------- -----------------
f. INVESTMENT PROPERTIES
Investment properties comprise commercial and residential properties that are leased out to third parties and land held for future development. No properties were encumbered.
Rental income amounting to US$68 954 (2016 - US$73 300) was received and no operating expenses were incurred on the investment properties in the current year due to the net leasing arrangement on the properties.
Included in investment properties are properties measured at US$7 962 202 as at 30 June 2017 which were acquired as part of the foreclosure process with marketability restrictions. The Bank has no restrictions on the realisability of all the remaining investment properties and no contractual obligations to purchase, construct or develop the investment properties or for repairs, maintenance and enhancements.
Measurement of fair value
Fair value hierarchy
The Bank has no restrictions on the realisability of all investment properties (except those amounting to US$7 962 202) and no contractual obligations to purchase, construct or develop the investment properties or for repairs, maintenance and enhancements.
Rental income amounting to US$68 954 (2016 - US$73 300) 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.
The fair value of the Bank's investment properties as at 31 December 2016 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.
As there were no professional valuations done as at 30 June 2017, the investment properties are recorded at the fair values as obtained by the professional valuers as at 31 December 2016.
Level 2
The fair value for investment properties of US$7 628 808 has been categorised under Level 2 in fair value hierarchy based on the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening and closing balances for Level 2 fair values:
30 June 2017 31 December 2016
------------------------ ---------------- -----------------
US$ US$
------------------------ ---------------- -----------------
At 1 January 7 382 270 2 830 800
------------------------ ---------------- -----------------
Additions 246 538 3 988 019
------------------------ ---------------- -----------------
Fair value adjustments - 563 451
------------------------ ---------------- -----------------
--------------- --------------
------------------------ ---------------- -----------------
Closing balance 7 628 808 7 382 370
------------------------ ---------------- -----------------
========= ========
------------------------ ---------------- -----------------
Level 3
The fair value for investment properties of US$10 200 076 has been categorised under Level 3 in the fair value hierarchy based on the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening and closing balances for Level 3 fair values:
30 June 2017 31 December 2016
------------------------ ---------------- -----------------
US$ US$
------------------------ ---------------- -----------------
At 1 January 6 820 000 5 295 000
------------------------ ---------------- -----------------
Additions 3 700 076 1 806 445
------------------------ ---------------- -----------------
Fair value adjustments - (151 445)
------------------------ ---------------- -----------------
Disposals (320 000) (130 000)
------------------------ ---------------- -----------------
--------------- --------------
------------------------ ---------------- -----------------
Balance 10 200 076 6 820 000
------------------------ ---------------- -----------------
========= ========
------------------------ ---------------- -----------------
The values were arrived at by applying yield rates of 10% on rental values of between US$5 - US$10 per square metre. Some of the properties are leased out under operating lease to various tenants.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment properties, as well as the significant unobservable inputs used.
Valuation Significant unobservable Inter-relationship between
technique inputs key unobservable inputs
and fair value measurement
------------- ------------------------------------------------------------ ----------------------------------------------------------
The The estimated fair value
investment * Weighted average expected market rental growth (20%); would increase /(decrease)
method if:
Discounted * expected market rental growth were higher/ (lower);
Cash Flows * Void period (average 3 months after the end of each
was used to lease);
value all * void periods were shorter/(longer);
income
producing * Occupancy rate (55%); and
properties. * the occupancy rates were higher /(lower); and
* Average market yield of 8%.
* the risk adjusted discount rates were lower/
(higher).
The direct
comparison
method was
applied
on all
residential
properties.
------------- ------------------------------------------------------------ ----------------------------------------------------------
g. NON-CURRENT ASSETS HELD FOR SALE
30 June 2017 31 December 2016
--------------------------------- ---------------- -----------------
US$ US$
--------------------------------- ---------------- -----------------
Carrying amount as at 1 January 2 261 300 2 264 300
--------------------------------- ---------------- -----------------
Disposals (2 225 300) (3 000)
--------------------------------- ---------------- -----------------
--------------- --------------
--------------------------------- ---------------- -----------------
36 000 2 261 300
--------------------------------- ---------------- -----------------
========= ========
--------------------------------- ---------------- -----------------
The Bank was in possession of land with a fair value of US$2 225 300 as at 31 December 2016. The Bank entered into a sale agreement for that piece of land in 2012 (at a price of US$2 150 000), finalisation of the sale under this contract was concluded during the six months under review.
h. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These condensed 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 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 Bank adheres to principles of corporate governance derived from the King III Report, the United Kingdom Combined Code and RBZ corporate governance guidelines. The Bank 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
Board of Audit Risk Asset and Loans Human Credit
Directors Committee Management Liability Review Resources, Committee
Management Committee Remuneration
Committee and
(ALCO) & Nominations
Finance Committee
Committee
-------------- ------------ ------------- -------------- -------------- ------------ --------------- -------------
Mr. B. A.
Chikwanha 2 2 2 2 2 2 2 2
-------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- --------
Mr. B. P.
Washaya 2 2 2 2 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Mr. J. de la Fargue 2 1 2 2 2 1 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Mr. C. Chikaura 2 2 2 2 2 2 2 2 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Mr. J. Tichelaar* 2 2 2 2 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Mr. B. Ndachena 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Ms. S. Chitehwe 2 2 2 2 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Mr. E. Sandersen 2 2 2 2 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Ms. J. Maguranyanga 2 2 2 2 2 2 2 2 -------------- ----- ----- --- -------- ---- -------- --- --------- ---- ------ ---- --------- --- -------- Meetings planned -----------------
KEY
*Appointed on 1 January 2017.
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 and Compliance Committee, which are responsible for defining the Group's risk universe, developing policies and monitoring implementation.
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'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 and adequacy or loan loss provisions.
The Bank has automated credit processes from loan origination, appraisal, monitoring and collections. The system has a robust loan monitoring and reporting module which is critical in managing credit risk. In view of the Bank's move into the mass market, retail credit has become a key area of focus. The Bank has put in place robust personal loan monitoring systems and structures to mitigate retail loan delinquencies.
4.1 Credit risk 4.1 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 Bank 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 makes adjustments depending on exchange rate movement forecast. The mismatches per currency are contained within 5% 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.
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 to customers. The Bank also actively monitors its loans to deposit ratio against a set threshold in a bid to monitor and limit funding risk. The Bank monitors funding concentration risk by reviewing the ratio of top 20 depositors to the total funding. Funding mix is also monitored by monitoring the contribution of wholesale and demand deposits to the total funding for the bank. Liquidity risk is monitored through a daily liquidity meeting. This is augmented by a monthly management ALCO and a quarterly 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 monitors its liquidity ratio in compliance with Banking Regulations to ensure that it is not less than 30% of the liabilities to the public. Liquid assets consist of cash and cash equivalents, short term bank deposits and unencumbered liquid investment securities available for immediate sale.
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 and Compliance Committee whose function is to ensure that this risk is minimized. The 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.
4.6 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 minimisation of losses arising from risky exposures.
4.7 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.
4.8 Risk Ratings 4.8.1 Reserve Bank of Zimbabwe Ratings
The Reserve Bank of Zimbabwe conducted an onsite inspection on the Bank in the last quarter of 2016 and detailed below were the final ratings.
4.8.1.1 CAMELS* Ratings
Latest RBS** Latest RBS Previous RAS Ratings
CAMELS Component Ratings Ratings 31/01/2008
24/11/2016 30/06/2013
----------------------- ------------- ------------ ---------------------
Capital Adequacy 2 2 4
----------------------- ------------- ------------ ---------------------
Asset Quality 3 4 2
----------------------- ------------- ------------ ---------------------
Management 3 3 3
----------------------- ------------- ------------ ---------------------
Earnings 2 2 3
----------------------- ------------- ------------ ---------------------
Liquidity 3 2 3
----------------------- ------------- ------------ ---------------------
Sensitivity to Market
Risk 2 2 3
----------------------- ------------- ------------ ---------------------
Composite Rating 3 3 3
----------------------- ------------- ------------ ---------------------
*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
4.8.1.2 Summary RAS ratings
Latest RAS*** Latest RAS Previous RBS Ratings
RAS Component Ratings Ratings 31/01/2008
24/11/2016 30/06/2013
------------------------ -------------- ------------ ---------------------
Overall Inherent High Moderate Moderate
Risk
------------------------ -------------- ------------ ---------------------
Overall Risk Management Acceptable Acceptable Acceptable
Systems
------------------------ -------------- ------------ ---------------------
Overall Composite Moderate Moderate Moderate
Risk
------------------------ -------------- ------------ ---------------------
Direction of Overall Stable Stable Stable
Composite Risk
------------------------ -------------- ------------ ---------------------
*** RAS stands for Risk Assessment System
4.8.1.3 Summary risk matrix - 24 November 2016 on - site examination
Level of Adequacy of Overall Composite Direction
Type of Risk Inherent Risk Management Risk of Overall
Risk Systems Composite
Risk
------------------- ---------- ----------------- ------------------ ------------
Credit High Acceptable High Stable
------------------- ---------- ----------------- ------------------ ------------
Liquidity High Acceptable High Stable
------------------- ---------- ----------------- ------------------ ------------
Interest Rate Moderate Acceptable Moderate Stable
------------------- ---------- ----------------- ------------------ ------------
Foreign Exchange Low Acceptable Low Stable
------------------- ---------- ----------------- ------------------ ------------
Operational Risk Moderate Acceptable Moderate Stable
------------------- ---------- ----------------- ------------------ ------------
Legal & Compliance Moderate Acceptable Moderate Stable
------------------- ---------- ----------------- ------------------ ------------
Reputation Moderate Acceptable Moderate Stable
------------------- ---------- ----------------- ------------------ ------------
Strategic Risk High Acceptable Moderate Stable
------------------- ---------- ----------------- ------------------ ------------
Overall High 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 recognized 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 organization.
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.
4.8.2 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 2016 2015
Long term BB+ BB+
The current rating expires in August 2017.
4.9 Regulatory Compliance
The Bank was fined by the regulator for reassigning a principal officer before regulatory appraisal requirements were fully met. The reassignment has since been regularised with the regulator. The Bank remains committed to complying with and adhering to all regulatory requirements.
5. 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 2017 was as follows:
30 June 2017 31 December
2016
----------------------------------------------------------- ------------------------- --------------------------
US$ US$
----------------------------------------------------------- ------------------------- --------------------------
Share capital 16 506 16 506
----------------------------------------------------------- ------------------------- --------------------------
Share premium 31 474 502 34 474 502
----------------------------------------------------------- ------------------------- --------------------------
Retained earnings 24 160 292 21 437 257
----------------------------------------------------------- ------------------------- --------------------------
Fair value gain on investment property (1 797 022) (1 797 022)
----------------------------------------------------------- ------------------------- --------------------------
------------- -------------
----------------------------------------------------------- ------------------------- --------------------------
53 854 278 51 131 243
----------------------------------------------------------- ------------------------- --------------------------
Less: capital allocated for market and
operational risk (1 757 727) (980 355)
----------------------------------------------------------- ------------------------- --------------------------
Credit to insiders - -
----------------------------------------------------------- ------------------------- --------------------------
------------- -------------
----------------------------------------------------------- ------------------------- --------------------------
Tier 1 capital 52 096 551 50 150 888
----------------------------------------------------------- ------------------------- --------------------------
Tier capital (subject to limit as per
Banking regulations) 5 754 134 5 691 960
----------------------------------------------------------- ------------------------- --------------------------
Revaluation Reserve 1 797 022 1 797 022
----------------------------------------------------------- ------------------------- --------------------------
Subordinated debt 835 723 849 294
----------------------------------------------------------- ------------------------- --------------------------
Regulatory reserve (limited to 1.25%
of risk
weighted assets) 2 600 969 1 785 136
----------------------------------------------------------- ------------------------- --------------------------
Portfolio provisions (limited to 1.25%
of risk
weighted assets) 520 420 1 260 508
----------------------------------------------------------- ------------------------- --------------------------
Total Tier 1 & 2 capital 57 850 685 55 842 848
----------------------------------------------------------- ------------------------- --------------------------
Tier 3 capital (sum of market and operational
risk capital) 1 757 727 980 355
----------------------------------------------------------- ------------------------- --------------------------
------------ -------------
----------------------------------------------------------- ------------------------- --------------------------
Total capital base 59 608 412 56 823 203
----------------------------------------------------------- ------------------------- --------------------------
========= =========
----------------------------------------------------------- ------------------------- --------------------------
Total risk weighted assets 249 711 107 243 651 546
----------------------------------------------------------- ------------------------- --------------------------
========= =========
----------------------------------------------------------- ------------------------- --------------------------
Tier 1 ratio 20.88% 20.58%
----------------------------------------------------------- ------------------------- --------------------------
Tier 2 ratio 2.30% 2.34%
----------------------------------------------------------- ------------------------- --------------------------
Tier 3 ratio 0.70% 0.40%
----------------------------------------------------------- ------------------------- --------------------------
Total capital adequacy ratio 23.88% 23.32%
----------------------------------------------------------- ------------------------- --------------------------
RBZ minimum required capital adequacy
ratio 12% 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 customer's deposits and consumer
overdrafts, credit card facilities and
funds transfer facilities.
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.
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 2017 and 2016.
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2017
Retail Corporate International Corporate
---------------
Banking Banking Treasury Banking Finance Other Total
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
US$ US$ US$ US$ US$ US$ US$
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Income
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Third party 13 649 826 6 423 079 3 323 829 278 173 - 213 389 23 888 296
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Impairment
losses on
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
financial
investments (386 633) (491 671) - - - - (878 304)
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
------------ ------------ ------------ ------------ ------------- ------------- ----------------
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Net operating
income 13 263 193 5 931 408 3 323 829 278 173 - 213 389 23 009 992
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
------------ ------------ ------------ ------------ ------------- ------------- --------------
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Results
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Interest and
similar 15 251
income 6 733 643 5 725 237 2 751 937 - - 41 042 859
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Interest and
similar (1 380
expense (994 627) 011) (2 188 842) - - - (4 563 480)
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
------------ ------------ ------------ ------------ -------------- -------------- --------------
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Net interest
income 5 739 016 4 345 226 563 095 - - 41 042 10 688 379
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
------------- ------------ ------------ ------------ ------------- ------------- -------------
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Fee and
commission
income 6 870 362 743 661 - 278 173 - - 7 892 196
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Depreciation
of property
and
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
equipment 484 699 8 140 7 074 3 029 - 57 187 560 129
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Amortisation
of intangible
assets - - - - - 352 162 352 162
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Segment
profit/
(loss) 2 064 734 1 687 824 1 142 198 (288 946) - 213 390 4 819 200
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Income tax (1 280 (1 280
expense - - - - - 332) 332)
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
-------------- ------------ ------------ ------------- ------------- ------------- ------------
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
Profit/(loss)
for the (1 066
year 2 064 734 1 687 824 1 142 198 (288 946) - 942) 3 538 868
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
======== ======= ======= ======= ======= ======== =======
--------------- ------------------- ------------- ------------- -------------- --------------- ------------------ -----------------
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2017
Retail Corporate International Corporate
-------------
Banking Banking Treasury Banking Finance Other Total
------------- ----------- ------------ ----------- ----------------------- --------------------- -------------- ----------
31 December US$ US$ US$ US$ US$ US$ US$
2017
------------- ----------- ------------ ----------- ----------------------- --------------------- -------------- ----------
Assets and
Liabilities
------------- ----------- ------------ ----------- ----------------------- --------------------- -------------- ----------
Capital
expenditure 38 938 144 - - - 1 652 136 1 691 218
------------- ----------- ------------ ----------- ----------------------- --------------------- -------------- ----------
338 212
Total assets 89 458 669 135 956 869 75 864 280 3 379 - 36 929 485 682
------------- ----------- ------------ ----------- ----------------------- --------------------- -------------- ----------
Total 279 960
liabilities 65 186 775 107 698 546 99 266 986 - - 7 808 106 413
------------- ----------- ------------ ----------- ----------------------- --------------------- -------------- ----------
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2016
Retail Corporate International Corporate
---------------
Banking Banking Treasury Banking Finance Other Total
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
US$ US$ US$ US$ US$ US$ US$
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Income
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Third party 14 426 255 8 717 248 1 836 021 237 164 427 275 459 140 26 103 103
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Impairment
losses
on
financial
investments (1 511 975) (1 658 188) - - (21 233) - (3 191 396)
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
------------ ------------ ------------ ------------ ------------- ------------- ----------------
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Net operating
income 12 914 280 7 059 060 1 836 021 237 164 406 042 459 140 22 911 707
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
------------ ------------ ------------ ------------ ------------- ------------- --------------
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Results
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Interest and
similar 17 451
income 7 896 019 7 576 400 1 482 812 - 246 354 249 652 237
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Interest and
similar
expense (2 686 981) (2 259 791) (822 504) - (40 086) - (5 809 362)
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
------------ ------------ ------------ ------------ -------------- -------------- --------------
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Net interest
income 5 209 038 5 316 609 660 308 - 206 268 249 652 11 641 875
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
------------- ------------ ------------ ------------ ------------- ------------- -------------
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Fee and
commission
income 6 530 233 636 211 - 237 164 180 921 - 7 584 529
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Depreciation
of property
and
equipment 518 706 27 973 16 708 20 307 11 873 104 480 700 047
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Amortisation
of intangible
assets - - - - - 259 253 259 253
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Segment
profit/
(loss) 583 086 1 835 371 1 062 905 (468 200) 92 659 459 142 3 564 963
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Income tax
expense - - - - - (918 856) (918 856)
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
-------------- ------------ ------------ ------------- ------------- ------------ ------------
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
Profit/(loss)
for
the year 583 086 1 835 371 1 062 905 (468 200) 92 659 (459 714) 2 646 107
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
======= ======= ======= ======= ====== ======= =======
--------------- --------------- -------------- ------------- -------------- --------------- ---------------- -----------------
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2016
Retail Corporate International
------------------------
Banking Banking Treasury Banking Leasing Other Total
------------------------ ----------- ------------ ----------- -------------- -------- ----------- ----------
31 December 2016 US$ US$ US$ US$ US$ US$ US$
------------------------ ----------- ------------ ----------- -------------- -------- ----------- ----------
Assets and Liabilities
------------------------ ----------- ------------ ----------- -------------- -------- ----------- ----------
Capital expenditure 997 785 36 759 - 236 - 723 041 1 757 821
------------------------ ----------- ------------ ----------- -------------- -------- ----------- ----------
321 483
Total assets 84 579 341 125 687 660 87 613 797 10 137 240 957 23 351 606 498
------------------------ ----------- ------------ ----------- -------------- -------- ----------- ----------
266 770
Total liabilities 61 017 973 101 110 952 97 437 938 - - 7 203 234 097
------------------------ ----------- ------------ ----------- -------------- -------- ----------- ----------
8. GEOGRAPHICAL INFORMATION
The Bank operates in one geographical market, Zimbabwe.
Registered Offices
4(th) 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 The Pavilions (Off Enterprise Road) Bridgewater Road Eastlea Bristol P O Box 11 BS 999 ZZ
Harare United Kingdom
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
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