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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 : 4810I
NMBZ Holdings Ld
22 March 2018
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED AUDITED CONSOLIDATED RESULTS
FOR THE YEARED 31 DECEMBER 2017
FINANCIAL SUMMARY
Hot Features
Premium
31 December 31 December
2017 2016
------------------------------------ ------------ ------------
Total income (US$) 53 606 281 51 520 403
------------------------------------ ------------ ------------
Operating profit before impairment
charge (US$) 16 870 839 14 268 630
------------------------------------ ------------ ------------
Total comprehensive income
(US$) 10 029 136 5 055 196
------------------------------------ ------------ ------------
Basic earnings per share (US
cents) 2.58 1.32
------------------------------------ ------------ ------------
260 550
Total deposits (US$) 348 956 385 383
------------------------------------ ------------ ------------
Total gross loans and advances 205 858
(US$) 211 005 418 392
------------------------------------ ------------ ------------
Total shareholders' funds
and shareholders' liabilities
(US$) 65 651 843 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
NMBZ HOLDINGS LIMITED
CHAIRMAN'S STATEMENT
INTRODUCTION
The country witnessed a leadership transition in November 2017 which ushered in a new political dispensation. This was followed by various re-engagement efforts with the international community and there has been a notable increase in interest from foreign investors raising prospects of an economic turnaround. This said, the 2017 operating environment was characterised by nostro funding challenges, cash shortages, job losses, inflationary pressures and company closures.. Despite the environment, the group recorded a positive set of results, largely driven by the banking subsidiary's decision to broaden its target market, migration to digital channels, stricter credit underwriting standards and concerted efforts to contain non-performing loans and operating expenditure.
The key financial highlights of the Group as at 31 December 2017, achieved under an exceedingly challenging operating environment are as depicted below:
Total assets stood at US$422 564 352 (US$320 984 926 - 2016);
Shareholders' funds and shareholders' liabilities stood at US$65 651 843 (US$55 600 406 - 2016);
Total comprehensive income for the year was US$10 029 136 (US$5 055 196 - 2016);
Basic earnings per share was 2.58 cents per share (1.32 cents - 2016).
GROUP RESULTS
Financial Performance
The profit before taxation was US$13 017 690 (2016 - US$6 208 904) during the period under review and this gave rise to total comprehensive income of US$10 029 136 (2016 - US$5 055 196). The Group achieved a basic earnings per share of 2.58 cents (2016 - 1.32 cents).
Operating expenses amounted to US$27 578 347 and these were up 5% from a prior year amount of US$26 176 706 as a net result of some staff and non-recurring expenditures incurred in the period.
Impairment losses on loans and advances amounted to US$3 853 149 for the current period from a prior year amount of US$8 059 726 and the decrease was mainly due to stricter credit underwriting standards and loan monitoring. The bank embarked on an aggressive loan collection process and strengthening of our credit systems over the last 3 years and this saw the progressive reduction of our NPL ratio to the current single digit figure. Loans and advances amounting to US$6 712 298 were written off during the year under review in line with regulatory provisions and recovery efforts will continue off balance sheet.
Financial position
The Group's total assets increased by 32% from US$320 984 926 as at 31 December 2016 to US$422 564 352 as at 31 December 2017 mainly due to a 273% increase in investment securities, an increase of 29% in cash and cash equivalents and a 34% increase in investment properties.
Gross loans and advances increased by 3% from US$205 858 392 as at 31 December 2016 to US$211 005 418 as at 31 December 2017 mainly due to the underwriting of new quality loans and advances under the Bank's tight credit sanctioning regime. The Bank's non-performing loans ratio reduced to 7.98% as at 31 December 2017 from 10.69% as at 31 December 2016.
Investment securities (Treasury Bills and Bonds) increased by 273% from US$24 744 752 as at 31 December 2016 to US$92 245 425 as at 31 December 2017 mainly due to some purchases from both the primary and secondary bond markets.
The deposits increased by 34% from US$260 550 383 as at 31 December 2016 to US$348 955 386 as at 31 December 2017 as a result of a significant improvement in market liquidity and deposit mobilization strategies. The Bank's liquidity ratio closed the period at 46.08% (2016 - 40.06%) and this was above the statutory requirement of 30%.
Capital
The banking subsidiary's capital adequacy ratio at 31 December 2017 calculated in accordance with the guidelines of the Reserve Bank of Zimbabwe (RBZ) was 24.26% (31 December 2016 - 23.32%). The minimum required by the RBZ is 12%. Our capitalisation level is adequate to support the underwriting of new business.
The Group's shareholders' funds and shareholders' liabilities have increased by 18% from US$55 600 406 as at 31 December 2016 to US$65 651 843 as at 31 December 2017 as a result of the current year's attributable profit.
The Bank's regulatory capital as at 31 December 2017 was US$61 135 389 and is above the minimum required regulatory capital of US$25 million.
DIVID
In light of the improved financial performance recorded in the year under review, the need to utilise retained earnings in the holding company and limit the utilization of retained earnings in the banking subsidiary, the Board has proposed a scrip dividend alternative to the cash dividend of 0.36 cents per share. The scrip dividend option was arrived at taking into account shareholders' expectations and value preservation and the need to ensure sustainable organic growth in view of the banking subsidiary's regulatory capitalization requirements.
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 Juluius 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 enhancement of youth enterprenurial skills through partnerships with other stakeholders, the disadvantaged, vulnerable groups, supporting environmental protection and conservation initiatives, the arts and various sporting disciplines during the twelve 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, several schools, HIFA, Birdlife Zimbabwe, St Monica Parish (Chitungwiza), as well as the Salvation Army Annual Fundraising Pro-AM golf day and many other charitable events.
CORPORATE DEVELOPMENTS
In the year under review, the bank's focus was on the promotion of e-channels in order to increase the customer touch points. The bank upgraded its core banking system and other electronic channels aimed at improving the processing capacity of our systems in an effort to enhance the customer experience and transactional convenience. The bank also launched a cheaper mobile point of sale device mPos in line with our drive to promote electronic payments and these are being rolled out to SMEs and the informal sector. We are in the process of putting finishing touches to a service centre in Bindura and the facility will be opened in the first quarter of 2018.
In terms of shareholder developments, FMO (of The Netherlands) and Norfund (of Norway) who jointly owned 17.98% of NMBZ Holdings Limited (NMBZ) joined forces with Rabo Development B.V (the holding company for Rabobank, the second largest bank in the Netherlands) and pooled their investments in financial services in African countries to form an investment company called Arise. The company was formed in 2016 and asset transfers were largely concluded during the year under review. NMBZ, which now counts Arise as a shareholder stands to benefit from capacity development support, access to a network of other African banks that are part of the partnership as well as equity participation.
OUTLOOK AND STRATEGY
The efforts to broaden the target market have continued to be accelerated with a nationwide blitz to acquire low cost accounts in an effort to promote the national financial inclusion agenda. The Bank also launched the Life and retirement products which are underwritten by Old Mutual. We will continue to promote our mortgages and leasing products as we assist our customers to own homes and for companies to retool. The bank will continue to leverage on its strong shareholder base to access the best technology platforms to accelerate our digital strategy and drive responsible inclusive growth and financial inclusion in Zimbabwe.
We will continue to drive the roll out of our low cost POS machines to both the formal and informal sectors. Recent political changes and a 'Zimbabwe is open for business' approach to the international community promises a more optimistic picture for the financial services sector and the country as a whole and NMBZ looks forward to playing its role in this economic renaissance.
APPRECIATION
My utmost appreciation goes to our clients, shareholders and regulatory authorities for their unwavering support in the period under review. I would also like to thank my fellow Board members, management and staff for their profound commitment, dedication and passion which have underpinned the achievement of the Group's notable results.
MR. B. A. CHIKWANHA
CHAIRMAN
14 March 2018
AUDITOR'S STATEMENT
These financial results should be read in conjunction with the complete set of financial statements for the year ended 31 December 2017, which have been audited by Ernst & Young Chartered Accountants (Zimbabwe) and an unmodified opinion issued thereon. The auditor's report, which includes key audit matters on the financial results, is available for inspection at the Holding Company's registered office. The key audit matters were valuation of properties, existence and impairment of loans and advances.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2017
31 December 31 December
2017 2016
---------------------------- ----- ----------------- -----------------
US$ US$
---------------------------- ----- ----------------- -----------------
Note
---------------------------- ----- ----------------- -----------------
Interest income 4 32 061 931 33 860 139
---------------------------- ----- ----------------- -----------------
Interest expense (9 157 095) (11 075 067)
---------------------------- ----- ----------------- -----------------
--------------- --------------
---------------------------- ----- ----------------- -----------------
Net interest income 22 904 836 22 785 072
---------------------------- ----- ----------------- -----------------
Fee and commission income 5.1 18 832 185 15 179 149
---------------------------- ----- ----------------- -----------------
Net foreign exchange
gains 1 583 164 743 255
---------------------------- ----- ----------------- -----------------
---------------- -------------
---------------------------- ----- ----------------- -----------------
Revenue 43 320 185 38 707 476
---------------------------- ----- ----------------- -----------------
Other income 5.2 1 129 001 1 737 860
---------------------------- ----- ----------------- -----------------
---------------- ----------------
---------------------------- ----- ----------------- -----------------
Operating income 44 449 186 40 445 336
---------------------------- ----- ----------------- -----------------
Operating expenditure 6 (27 578 347) (26 176 706)
---------------------------- ----- ----------------- -----------------
---------------- ----------------
---------------------------- ----- ----------------- -----------------
Operating income before
impairment charge 16 870 839 14 268 630
---------------------------- ----- ----------------- -----------------
Impairment losses on
loans and advances 16.3 (3 853 149) (8 059 726)
---------------------------- ----- ----------------- -----------------
--------------- ---------------
---------------------------- ----- ----------------- -----------------
Profit before taxation 13 017 690 6 208 904
---------------------------- ----- ----------------- -----------------
Taxation charge 7 (3 078 864) (1 150 738)
---------------------------- ----- ----------------- -----------------
--------------- ---------------
---------------------------- ----- ----------------- -----------------
Profit for the period 9 938 826 5 058 166
---------------------------- ----- ----------------- -----------------
Other comprehensive income
---------------------------- ----- ----------------- -----------------
Revaluations, net of
tax 90 310 (2 970)
---------------------------- ----- ----------------- -----------------
-------------- --------------
---------------------------- ----- ----------------- -----------------
Total comprehensive income
for the year 10 029 136 5 055 196
---------------------------- ----- ----------------- -----------------
========= =========
---------------------------- ----- ----------------- -----------------
Earnings per share (US
cents)
---------------------------- ----- ----------------- -----------------
- Basic 9.3 2.58 1.32
---------------------------- ----- ----------------- -----------------
- Diluted basic 9.3 2.43 1.23
---------------------------- ----- ----------------- -----------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2017
31 December 31 December
2017 2016
-------------------------------- ------- ----------------------------- ---------------------------
Note US$ US$
-------------------------------- ------- ----------------------------- ---------------------------
SHAREHOLDERS' FUNDS
-------------------------------- ------- ----------------------------- ---------------------------
Share capital 10.2.1 78 751 78 598
-------------------------------- ------- ----------------------------- ---------------------------
Capital reserves 18 119 337 17 585 247
-------------------------------- ------- ----------------------------- ---------------------------
Revaluation reserves 90 310 -
-------------------------------- ------- ----------------------------- ---------------------------
Retained earnings 31 612 288 22 185 818
-------------------------------- ------- ----------------------------- ---------------------------
-------------- -------------
-------------------------------- ------- ----------------------------- ---------------------------
Total equity 49 900 686 39 849 663
-------------------------------- ------- ----------------------------- ---------------------------
Redeemable ordinary shares 11 14 335 253 14 335 253
-------------------------------- ------- ----------------------------- ---------------------------
Subordinated term loan 12 1 415 904 1 415 490
-------------------------------- ------- ----------------------------- ---------------------------
-------------- --------------
-------------------------------- ------- ----------------------------- ---------------------------
Total shareholders' funds
and shareholders'
liabilities 65 651 843 55 600 406
-------------------------------- ------- ----------------------------- ---------------------------
-------------- --------------
-------------------------------- ------- ----------------------------- ---------------------------
LIABILITIES
-------------------------------- ------- ----------------------------- ---------------------------
Deposits and other liabilities 13.1 356 912 509 265 384 520
-------------------------------- ------- ----------------------------- ---------------------------
--------------- ----------------
-------------------------------- ------- ----------------------------- ---------------------------
Total shareholders' funds
and liabilities 422 564 352 320 984 926
-------------------------------- ------- ----------------------------- ---------------------------
========= ==========
-------------------------------- ------- ----------------------------- ---------------------------
ASSETS
-------------------------------- ------- ----------------------------- ---------------------------
Cash and cash equivalents 15 89 553 202 69 421 257
-------------------------------- ------- ----------------------------- ---------------------------
Current tax assets 231 007 368 445
-------------------------------- ------- ----------------------------- ---------------------------
Loans, advances and other
assets 16.1.1 210 483 221 199 617 095
-------------------------------- ------- ----------------------------- ---------------------------
Investment securities 14.1 92 245 425 24 744 752
-------------------------------- ------- ----------------------------- ---------------------------
Non-current assets held
for sale 17 36 000 2 261 300
-------------------------------- ------- ----------------------------- ---------------------------
Quoted and other investments 14.4.1 117 880 177 580
-------------------------------- ------- ----------------------------- ---------------------------
Investment properties 18 977 000 14 202 270
-------------------------------- ------- ----------------------------- ---------------------------
Intangible assets 18 2 380 180 1 647 034
-------------------------------- ------- ----------------------------- ---------------------------
Property and equipment 19 7 335 988 6 280 286
-------------------------------- ------- ----------------------------- ---------------------------
Deferred tax assets 1 204 449 2 264 907
-------------------------------- ------- ----------------------------- ---------------------------
---------------- -------------------
-------------------------------- ------- ----------------------------- ---------------------------
Total assets 422 564 352 320 984 926
-------------------------------- ------- ----------------------------- ---------------------------
========= ===========
-------------------------------- ------- ----------------------------- ---------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
Share Share Share Regulatory Revaluation Retained Total
Capital Premium Option Reserve Reserve Earnings
Reserve
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
US$ US$ US$ US$ US$ US$ US$
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Balances at 1
January 15 737 34 794
2016 78 598 548 62 563 3 746 729 2 970 15 166 059 467
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Profit for the 5 058
year - - - - - 5 058 166 166
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Other
comprehensive
income - - - - (2 970) - (2 970)
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Transfer from
regulatory (1 961
reserve - - - 593) - 1 961 593 -
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
--------------- ------------ ------------- -------------- ----------- -------------- -----------
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Balances at 31
December 15 737 39 849
2016 78 598 548 62 563 1 785 136 - 22 185 818 663
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Share based
payments
- share
options
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
exercised 153 21 734 - - - - 21 887
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Profit for the 9 938
year - - - - - 9 938 826 826
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Other
comprehensive
income - - - - 90 310 - 90 310
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Transfer to
regulatory
reserve - - - 512 356 - (512 356) -
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
--------------- ------------- ------------ ------------- --------------- ------------ -------------
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
Balances at 31
December 15 759 49 900
2017 78 751 282 62 563 2 297 492 90 310 31 612 288 686
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
======== ======== ======= ======== ========== ======== =========
--------------- ---------------- -------------- -------------- --------------- ---------------- --------------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
31 December 31 December
2017 2016
--------------------------------------- --------------- -----------------
US$ US$
--------------------------------------- --------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
--------------------------------------- --------------- -----------------
Profit before taxation 13 017 690 6 208 904
--------------------------------------- --------------- -----------------
Non-cash items:
--------------------------------------- --------------- -----------------
-Depreciation 1 136 810 1 319 396
--------------------------------------- --------------- -----------------
-Amortisation of intangible assets 832 567 532 768
--------------------------------------- --------------- -----------------
-Impairment losses on loans and
advances 3 853 149 8 059 726
--------------------------------------- --------------- -----------------
-Investment properties fair value
adjustment (302 255) (412 006)
--------------------------------------- --------------- -----------------
-Quoted and other investments
fair value adjustment (35 176) (31 554)
--------------------------------------- --------------- -----------------
-Profit on disposal of property
and equipment - (368 205)
--------------------------------------- --------------- -----------------
-Loss on disposal of property 56 637 -
and equipment (included in staff
costs)
--------------------------------------- --------------- -----------------
-Loss on disposal of non-current 75 300 -
asset held for sale
--------------------------------------- --------------- -----------------
-Profit on disposal of investment
properties (12 951) (50 000)
--------------------------------------- --------------- -----------------
-Non-current assets held for
sale fair value adjustments - 3 000
--------------------------------------- --------------- -----------------
-Interest capitalised on subordinated
loan 165 345 158 599
--------------------------------------- --------------- -----------------
-Impairment (reversal)/charge
on land and buildings (89 660) 51 600
--------------------------------------- --------------- -----------------
-------------- --------------
--------------------------------------- --------------- -----------------
Operating cash flows before changes
in operating assets
and liabilities 18 697 456 15 472 227
--------------------------------------- --------------- -----------------
Changes in operating assets and
liabilities
--------------------------------------- --------------- -----------------
Increase/(decrease) in deposits
and other liabilities 91 527 989 17 902 723
--------------------------------------- --------------- -----------------
(Increase)/decrease) in loans, (14 719
advances and other assets 275) 27 412 159
--------------------------------------- --------------- -----------------
-------------- ---------------
--------------------------------------- --------------- -----------------
Net cash generated from operations 95 506 170 24 981 663
--------------------------------------- --------------- -----------------
Taxation
--------------------------------------- --------------- -----------------
(1 842
Corporate tax paid (1 757 028) 635)
--------------------------------------- --------------- -----------------
Capital gains tax paid (155 265) (12 234)
--------------------------------------- --------------- -----------------
-------------- ----------------
--------------------------------------- --------------- -----------------
Net cash from operating activities 93 593 877 23 126 794
--------------------------------------- --------------- -----------------
-------------- ----------------
--------------------------------------- --------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
--------------------------------------- --------------- -----------------
Acquisition of property and equipment (1 565 713) (1 267 404)
--------------------------------------- --------------- -----------------
(67 500 (10 196
Acquisition of investment securities 670) 760)
--------------------------------------- --------------- -----------------
Proceeds on disposal of property
and equipment 1 076 581 414
--------------------------------------- --------------- -----------------
Acquisition of intangible assets (2 038 933) (490 417)
--------------------------------------- --------------- -----------------
Proceeds on disposal of investment
properties 322 951 180 000
--------------------------------------- --------------- -----------------
Acquisition of investment properties (4 792 476) (5 794 464)
--------------------------------------- --------------- -----------------
Proceeds on disposal of non-current 2 150 000 -
asset held for sale
--------------------------------------- --------------- -----------------
Proceeds on disposal of quoted 94 877 -
investments
--------------------------------------- --------------- -----------------
-------------- ----------------
--------------------------------------- --------------- -----------------
(73 318 (16 987
Net cash used in investing activities 888) 631)
--------------------------------------- --------------- -----------------
-------------- ----------------
--------------------------------------- --------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of interest on subordinated
term loan (164 931) (157 253)
---------------------------------------- -------------------- ---------------------------
Proceeds from share based payments 21 887 -
- share option exercised
---------------------------------------- -------------------- ---------------------------
----------- --------------
---------------------------------------- -------------------- ---------------------------
Net cash used in financing activities (143 044) (157 253)
---------------------------------------- -------------------- ---------------------------
---------- --------------
---------------------------------------- -------------------- ---------------------------
Net increase in cash and cash 20 131
equivalents 945 5 981 910
---------------------------------------- -------------------- ---------------------------
Cash and cash equivalents at beginning 69 421
of the year 257 63 439 347
---------------------------------------- -------------------- ---------------------------
-------------- --------------
---------------------------------------- -------------------- ---------------------------
Cash and cash equivalents at the 89 553
end of the year (Note 15) 202 69 421 257
---------------------------------------- -------------------- ---------------------------
======== ========
---------------------------------------- -------------------- ---------------------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 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
The condensed consolidated financial statements are prepared and presented on the basis that they reflect the information necessary to be a fair summary of the annual financial statements from which they are derived. This includes financial results that agree with or can be recalculated from the related information in the audited consolidated financial statements and that contain the information necessary so as not to be misleading in the circumstances. The information contained in these consolidated financial results does not contain all the disclosures required by International Financial Reporting Standards, the Companies Act (Chapter 24:03) of Zimbabwe and the Banking Act (Chapter 24:20) of Zimbabwe, which are disclosed in the full consolidated annual financial statements from which this set of condensed financial statements were derived. For a better understanding of the Group`s financial position, its financial performance and cash flows for the year, these condensed financial statements should be read in conjunction with the audited consolidated annual financial statements.
The condensed consolidated financial statements were approved by the Board of Directors on 14 March 2018.
2.1 Basis of preparation
The condensed consolidated financial statements have been prepared under the historical cost convention except for quoted and other investments, investment properties and non-current assets held for sale which are carried at fair value and land and buildings which are stated at revalued carrying amount. These condensed consolidated 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 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.
2.3 Comparative financial information
The comparative information covers a period of twelve months.
2.4 Use of estimates and judgements
In preparation of the Group financial statements, Directors have made judgments, 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.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 December 2017 is included in the following notes:
2.4.1 Deferred tax
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 an independent professional valuer. 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 property were valued by an independent professional valuer. 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 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 judgment in determining that the carrying amount approximates fair value. (refer to note 14.1).
2.4.5 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.
2.4.6 Non-current assets held for sale
Non-current assets were valued by an independent professional valuer. All non-current assets held for sale are measured at their fair values. 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 also not stable.
2.4.7 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 condensed 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 consolidated 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.
3.1.1 Classification (continued)
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 measured 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 registered 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 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 Group 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 Group 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 Group 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.
3.7 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.
3.8 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group 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.
3.9 Interest income
For all financial instruments measured 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.
3.10 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.
3.11 Shareholders' funds and shareholders' liabilities
Shareholders' funds and shareholders' liabilities refers to the investment made by the shareholders to the Group and it consists of share capital, share premium, share options reserve, retained earnings, revaluation reserve, redeemable ordinary shares and subordinated term loans.
4. INTEREST INCOME
31 December 31 December
2017 2016
--------------------------------- ---------------- ---------------
US$ US$
--------------------------------- ---------------- ---------------
Loans and advances to banks 1 139 233 1 245 664
--------------------------------- ---------------- ---------------
Loans and advances to customers 25 986 567 29 789 449
--------------------------------- ---------------- ---------------
Investment securities 4 936 131 2 825 026
--------------------------------- ---------------- ---------------
--------------- --------------
--------------------------------- ---------------- ---------------
32 061 931 33 860 139
--------------------------------- ---------------- ---------------
========= =========
--------------------------------- ---------------- ---------------
5. NON INTEREST INCOME
5.1 FEE AND COMMISSION income
31 December 31 December
2017 2016
----------------------------------- ----------------------- ------------------------
US$ US$
----------------------------------- ----------------------- ------------------------
Retail banking customer fees 16 156 939 13 287 237
----------------------------------- ----------------------- ------------------------
Corporate banking credit
related fees 1 906 408 1 029 037
----------------------------------- ----------------------- ------------------------
Financial guarantee fees 222 187 230 837
----------------------------------- ----------------------- ------------------------
International banking commissions 546 651 451 117
----------------------------------- ----------------------- ------------------------
Corporate finance fees - 180 921
----------------------------------- ----------------------- ------------------------
------------- --------------
----------------------------------- ----------------------- ------------------------
18 832 185 15 179 149
----------------------------------- ----------------------- ------------------------
======== =========
----------------------------------- ----------------------- ------------------------
5.2 OTHER income
31 December 31 December
2017 2016
------------------------------------- ------------------- --------------------------
US$ US$
------------------------------------- ------------------- --------------------------
Quoted and other investments
fair value adjustments 35 176 31 554
------------------------------------- ------------------- --------------------------
Fair value adjustment on non-
current assets held for sale - (3 000)
------------------------------------- ------------------- --------------------------
Fair value adjustment on investment
properties 302 255 412 006
------------------------------------- ------------------- --------------------------
Profit on disposal of investment
properties 12 951 50 000
------------------------------------- ------------------- --------------------------
Profit on disposal of property
and equipment - 368 205
------------------------------------- ------------------- --------------------------
Rental income 135 900 142 400
------------------------------------- ------------------- --------------------------
Bad debts recovered 580 295 675 006
------------------------------------- ------------------- --------------------------
Loss on disposal of non-current (75 300) -
asset held for sale
------------------------------------- ------------------- --------------------------
Other net operating income 137 724 61 689
------------------------------------- ------------------- --------------------------
----------- -------------
------------------------------------- ------------------- --------------------------
1 129 001 1 737 860
------------------------------------- ------------------- --------------------------
======== ========
------------------------------------- ------------------- --------------------------
6. Operating EXPITURE
31 December 31 December
2017 2016
------------------------------------ --------------- ---------------
US$ US$
------------------------------------ --------------- ---------------
The operating profit is after
recognising the following:
------------------------------------ --------------- ---------------
Administration costs 11 866 111 12 098 932
------------------------------------ --------------- ---------------
Audit fees:
------------------------------------ --------------- ---------------
- Current year 35 938 61 468
------------------------------------ --------------- ---------------
- Prior year 95 456 84 892
------------------------------------ --------------- ---------------
Impairment (reversal)/charge
on land and buildings (89 660) 51 600
------------------------------------ --------------- ---------------
Depreciation 1 136 810 1 319 396
------------------------------------ --------------- ---------------
Amortisation of intangible assets 832 567 532 768
------------------------------------ --------------- ---------------
Directors' remuneration 719 318 813 208
------------------------------------ --------------- ---------------
-Fees 233 102 252 827
------------------------------------ --------------- ---------------
-Expenses 9 393 58 603
------------------------------------ --------------- ---------------
-Services rendered 476 823 501 778
------------------------------------ --------------- ---------------
Staff costs - salaries, allowances
and related costs 12 981 807 11 214 442
------------------------------------ --------------- ---------------
-------------- --------------
------------------------------------ --------------- ---------------
27 578 347 26 176 706
------------------------------------ --------------- ---------------
========= ========
------------------------------------ --------------- ---------------
7. taxation
31 December 31 December
2017 2016
-------------------- -------------- --------------
Income tax expense US$ US$
-------------------- -------------- --------------
Current tax 1 930 812 1 497 265
-------------------- -------------- --------------
Deferred tax 1 029 133 (358 761)
-------------------- -------------- --------------
Capital gains tax 118 919 12 234
-------------------- -------------- --------------
------------- -------------
-------------------- -------------- --------------
3 078 864 1 150 738
-------------------- -------------- --------------
======== ========
-------------------- -------------- --------------
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 impairment allowance
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 impairment allowance
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 recognised 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 Suspended interest
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, statutory instrument, 2005 of 2000 issued by the RBZ.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of NMBZ Holdings Limited by the weighted average number of ordinary shares outstanding during the year.
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 dilutive 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
31 December 2017 31 December
2016
--------------------- ----------------- --------------------------------
US$ US$
--------------------- ----------------- --------------------------------
Profit for the year 9 938 826 5 058 166
--------------------- ----------------- --------------------------------
======== =======
--------------------- ----------------- --------------------------------
9.2 Number of shares
9.2.1 Basic earnings per share
31 December 31 December
2017 2016
--------------------------- ------------ ------------
Weighted average number
of ordinary shares for
basic earnings per share 384 746 646 384 427 351
--------------------------- ------------ ------------
9.2.2 Diluted earnings per share
31 December 31 December
2017 2016
------------------------------- --------------- ----------------
Number of shares at beginning
of period 384 427 351 384 427 351
------------------------------- --------------- ----------------
Effect of dilution:
------------------------------- --------------- ----------------
Share options exercised 547 191 -
------------------------------- --------------- ----------------
Share options granted
but not issued - 4 128 434
------------------------------- --------------- ----------------
Share options approved
but not granted 23 942 639 23 942 639
------------------------------- --------------- ----------------
-------------- ---------------
------------------------------- --------------- ----------------
408 917 181 412 498 424
------------------------------- --------------- ----------------
========= =========
------------------------------- --------------- ----------------
9.3 Earnings per share (US cents)
31 December 31 December
2017 2016
---------------------------- ------------ ------------
Basic earnings per share 2.58 1.32
---------------------------- ------------ ------------
Diluted earnings per share 2.43 1.23
---------------------------- ------------ ------------
10. SHARE CAPITAL
10.1 Authorised
31 December 31 December 31 December 31 December
2017 2016 2017 2016
----------------- ------------ ------------ ------------ -------------
Shares Shares US$ US$
million million
----------------- ------------ ------------ ------------ -------------
Ordinary shares
of US$0.00028
each 600 600 168 000 168 000
----------------- ------------ ------------ ------------ -------------
==== ==== ===== =====
----------------- ------------ ------------ ------------ -------------
10.2 Issued and fully paid
10.2.1 Ordinary shares
31 December 31 December 31 December 31 December
2017 2016 2017 2016
----------------- ------------ ------------ ------------ ------------
Shares Shares
million million US$ US$
----------------- ------------ ------------ ------------ ------------
Ordinary shares 282 281 78 751 78 598
----------------- ------------ ------------ ------------ ------------
==== ==== ===== =====
----------------- ------------ ------------ ------------ ------------
10.2.2 Redeemable ordinary shares
31 December 31 December 31 December 31 December
2017 2016 2017 2016
--------------------- ------------ ------------ ------------------- ------------------
Shares Shares US$ US$
million million
--------------------- ------------ ------------ ------------------- ------------------
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 Employee Share Option Scheme (ESOS) amount to 23 942 639 (2016 - 28 071 073) and as at 31 December 2017; 547 191 share options had been allocated from the Scheme.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03) of Zimbabwe, the unissued shares are under the control of the directors.
11. REDEEMABLE ORDINARY SHARES
31 December 31 December
2017 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 Group 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 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$100 million by 31 December 2020.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back agreement with Norfund, FMO and AfricInvest, where these three strategic investors have a right on their own discretion at any time after the 5(th) anniversary (30 June 2018) but before the 9(th) anniversary (30 June 2022) of its first subscription date, to request NMBZ to buy back all or part of its NMBZ shares at a price to be determined using the agreed terms as entailed in the share buy-back agreement. It is a condition precedent that at any point when the share buy-back is being considered, the proceeds used to finance the buy-back should come from the distributable reserves which are over and above the minimum regulatory capital requirements. Further, no buy-back option can be exercised by any investor after the 9(th) anniversary (30 June 2022) of the effective date.
The share buy-back agreement creates a potential obligation for NMBZ Holdings Limited to purchase its own instruments. The shares issued gave rise to a potential financial liability and are classified as redeemable ordinary shares.
12. SUBORDINATED TERM LOAN
31 December 31 December
2017 2016
---------------------- ----------------------------- ------------------------
US$ US$
---------------------- ----------------------------- ------------------------
At 1 January 1 415 490 1 414 144
---------------------- ----------------------------- ------------------------
Interest capitalised 165 345 158 599
---------------------- ----------------------------- ------------------------
Interest paid (164 931) (157 253)
---------------------- ----------------------------- ------------------------
------------- --------------
---------------------- ----------------------------- ------------------------
1 415 904 1 415 490
---------------------- ----------------------------- ------------------------
======== ========
---------------------- ----------------------------- ------------------------
In 2013, the Group received a subordinated term loan amounting to US$1.4 million from a Development Financial Institution which attracts an interest rate of LIBOR plus 10% and has a seven year maturity date (13 June 2020) from the first disbursement date.
The above liability would, in the event of the winding up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. The Group has not had any defaults on the principal and interest with respect to this subordinated loan during the year ended 31 December 2017. Furthermore, the Group had no breaches to the financial covenants with respect to the subordinated loan as at 31 December 2017.
13. DepositS and other LIABILITIES
13.1 Deposits and other liabilities
31 December 31 December
2017 2015
------------------------------- ------------------ -----------------
US$ US$
------------------------------- ------------------ -----------------
Deposits from banks and other
financial institutions** 17 213 617 50 002 468
------------------------------- ------------------ -----------------
Current and deposit accounts 331 742
from customers* 768 210 547 915
------------------------------- ------------------ -----------------
----------------- ----------------
------------------------------- ------------------ -----------------
348 956
Total deposits 385 260 550 383
------------------------------- ------------------ -----------------
Trade and other payables* 7 956 124 4 834 137
------------------------------- ------------------ -----------------
----------------- ----------------
------------------------------- ------------------ -----------------
356 912
509 265 384 520
------------------------------- ------------------ -----------------
========== =========
------------------------------- ------------------ -----------------
*The carrying amounts of current and deposit accounts and trade and other payables approximate the
related fair values due to their short term nature.
** Included in deposits from banks and other financial institutions are loan balances of US$5 000 000,
US$3 333 333, US$1 651 225 and US$3 157 843 due to Norsad, Nederlandse Financierings-
Maatschappij Voor Ontiwikkelingslanden (FMO), Swedfund and Societie de Promotion de Paticipation
Pour la Cooperation Economique SA (Proparco) respectively. FMO and Swedfund facilities will mature
on 16 October 2020, whilst the Proparco and Norsad facilities mature on 15 April 2019 and 14
April 2018 respectively. The Group has not had any defaults on the principal and interest with
respect to these loans during the period ended 31 December 2017. Furthermore, the Group had no
breaches to the financial covenants with respect to these loans as at 31 December 2017.
13.2 Maturity analysis
31 December 31 December
2017 2016
-------------------- ---------------- -----------------
US$ US$
-------------------- ---------------- -----------------
Less than 1 month 279 698 410 185 752 420
-------------------- ---------------- -----------------
1 to 3 months 37 746 638 35 339 615
-------------------- ---------------- -----------------
3 to 6 months 2 472 911 2 927 632
-------------------- ---------------- -----------------
6 months to 1 year 11 751 881 6 358 137
-------------------- ---------------- -----------------
1 to 5 years 17 094 715 29 980 749
-------------------- ---------------- -----------------
Over 5 years 191 830 191 830
-------------------- ---------------- -----------------
--------------- ----------------
-------------------- ---------------- -----------------
348 956 385 260 550 383
-------------------- ---------------- -----------------
========= ==========
-------------------- ---------------- -----------------
13.3 Sectoral analysis of deposits
31 December 31 December
2017 2016
---------------------------------- ---------------- --------- ---------------- -------
US$ % US$ %
---------------------------------- ---------------- --------- ---------------- -------
Agriculture 10 034 242 3 6 274 099 3
---------------------------------- ---------------- --------- ---------------- -------
Banks and other
financial institutions 17 213 617 5 50 002 468 19
---------------------------------- ---------------- --------- ---------------- -------
Distribution 38 540 570 11 24 098 216 9
---------------------------------- ---------------- --------- ---------------- -------
Individuals 29 133 379 8 21 782 045 8
---------------------------------- ---------------- --------- ---------------- -------
Manufacturing 62 426 525 18 39 033 359 15
---------------------------------- ---------------- --------- ---------------- -------
Mining companies 8 086 319 2 5 056 123 2
---------------------------------- ---------------- --------- ---------------- -------
Municipalities and
parastatals 25 633 695 7 16 027 950 6
---------------------------------- ---------------- --------- ---------------- -------
Other deposits 57 598 053 17 36 014 266 14
---------------------------------- ---------------- --------- ---------------- -------
Services 87 501 920 25 54 712 221 21
---------------------------------- ---------------- --------- ---------------- -------
Transport and telecommunications 12 788 065 4 7 549 636 3
---------------------------------- ---------------- --------- ---------------- -------
--------------- -------- --------------- ------
---------------------------------- ---------------- --------- ---------------- -------
260 550
348 956 385 100 383 100
---------------------------------- ---------------- --------- ---------------- -------
========= ===== ========= ===
---------------------------------- ---------------- --------- ---------------- -------
14. FINANCIAL INSTRUMENTS
14.1 Investment securities
31 December 31 December
2017 2016
----------------------- --------------- ----------------
US$ US$
----------------------- --------------- ----------------
Held to maturity 13 744 715 12 476 046
----------------------- --------------- ----------------
Loans and receivables 78 500 710 12 268 706
----------------------- --------------- ----------------
-------------- ---------------
----------------------- --------------- ----------------
92 245 425 24 744 752
----------------------- --------------- ----------------
========= =========
----------------------- --------------- ----------------
The Group holds treasury bills and government bonds amounting to US$92 245 425 with interest rates ranging from 2% to 10%. 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 observable active market for the treasury bills, the instruments are recorded at amortised cost. Of the total treasury bills balance, a total of US$35 886 406 has been pledged as security on interbank borrowings.
14.2 Maturity analysis of investment securities held to maturity
31 December 31 December
2017 2016
-------------------- --------------- ---------------
US$ US$
-------------------- --------------- ---------------
Less than 1 month - -
-------------------- --------------- ---------------
1 to 3 months - -
-------------------- --------------- ---------------
3 to 6 months - -
-------------------- --------------- ---------------
6 months to 1 year 2 424 461 -
-------------------- --------------- ---------------
1 year to 5 years - 2 424 461
-------------------- --------------- ---------------
Over 5 years 11 320 254 10 051 585
-------------------- --------------- ---------------
-------------- --------------
-------------------- --------------- ---------------
13 744 715 12 476 046
-------------------- --------------- ---------------
======== ========
-------------------- --------------- ---------------
14.3 Maturity analysis of investment securities - loans and receivables
31 December 31 December
2017 2016
-------------------- ------------------ ---------------
US$ US$
-------------------- ------------------ ---------------
Less than 1 month 6 150 000 -
-------------------- ------------------ ---------------
1 to 3 months 142 246 168 563
-------------------- ------------------ ---------------
3 to 6 months 722 972 48 341
-------------------- ------------------ ---------------
6 months to 1 year 6 138 889 266 785
-------------------- ------------------ ---------------
1 year to 5 years 65 346 603 11 785 017
-------------------- ------------------ ---------------
----------------- --------------
-------------------- ------------------ ---------------
78 500 710 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
31 Dec Level 1 Level 2 Level 3
2017
-------------------- --------------- -------------- ------------ -----------------
US$ US$ US$ US$
-------------------- --------------- -------------- ------------ -----------------
Trade investments 102 347 - - 102 347
-------------------- --------------- -------------- ------------ -----------------
Quoted investments 15 533 15 533 - -
-------------------- --------------- -------------- ------------ -----------------
-------------- ------------- ----------- ----------------
-------------------- --------------- -------------- ------------ -----------------
117 880 15 533 - 102 347
-------------------- --------------- -------------- ------------ -----------------
======== ======== ======= ===========
-------------------- --------------- -------------- ------------ -----------------
31 Dec Level 1 Level 2 Level 3
2016
-------------------- --------------- -------------- ------------ -----------------
US$ US$ US$ US$
-------------------- --------------- -------------- ------------ -----------------
Trade investments 88 930 - - 88 930
-------------------- --------------- -------------- ------------ -----------------
Quoted investments 88 650 88 650 - -
-------------------- --------------- -------------- ------------ -----------------
-------------- ------------- ----------- ----------------
-------------------- --------------- -------------- ------------ -----------------
177 580 88 650 - 88 930
-------------------- --------------- -------------- ------------ -----------------
======== ======== ======= =========
-------------------- --------------- -------------- ------------ -----------------
During the reporting periods ended 31 December 2017 and 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
31 December 2017
Trade investments
----------------------------------- ------------------
US$
----------------------------------- ------------------
Balance at 1 January 88 930
----------------------------------- ------------------
Gain recognised in profit or loss 13 417
----------------------------------- ------------------
-----------
----------------------------------- ------------------
Balance at 31 December 102 347
----------------------------------- ------------------
=======
----------------------------------- ------------------
31 December 2016
Trade investments
----------------------------------- ------------------
US$
----------------------------------- ------------------
Balance at 1 January 77 805
----------------------------------- ------------------
Gain recognised in profit or loss 11 125
----------------------------------- ------------------
-----------
----------------------------------- ------------------
Balance at 31 December 88 930
----------------------------------- ------------------
=======
----------------------------------- ------------------
14.4.2 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 2017
Level Level 2 Level Total carrying
3 amount
--------------------------- ------------ ------------------- ---------------- ------------------
Assets US$ US$ US$ US$
--------------------------- ------------ ------------------- ---------------- ------------------
89 553 89 553
Cash and cash equivalents - 202 - 202
--------------------------- ------------ ------------------- ---------------- ------------------
Loans, advances 210 483 210 483
and other accounts - - 221 221
--------------------------- ------------ ------------------- ---------------- ------------------
92 245 92 245
Investment securities - - 425 425
--------------------------- ------------ ------------------- ---------------- ------------------
---------- ----------------- --------------- -----------------
--------------------------- ------------ ------------------- ---------------- ------------------
89 553 302 728 392 281
- 202 646 848
---------------------------------------- ------------------- ---------------- ------------------
====== ========== ========= ==========
--------------------------- ------------ ------------------- ---------------- ------------------
Liabilities
--------------------------- ------------ ------------------- ---------------- ------------------
Deposits and other 356 912 356 912
liabilities - 509 - 509
--------------------------- ------------ ------------------- ---------------- ------------------
---------- ------------------ -------------- -----------------
--------------------------- ------------ ------------------- ---------------- ------------------
356 912 356 912
- 509 - 509
---------------------------------------- ------------------- ---------------- ------------------
====== =========== ========= ==========
---------------------------------------- ------------------- ---------------- ------------------
31 December 2016
Level Level 2 Level Total carrying
1 3 amount
--------------------------- ------------ ---------------- ---------------- ------------------
Assets US$ US$ US$ US$
--------------------------- ------------ ---------------- ---------------- ------------------
69 421
Cash and cash equivalents - 69 421 257 - 257
--------------------------- ------------ ---------------- ---------------- ------------------
Loans, advances and 199 617 199 617
other accounts - - 095 095
--------------------------- ------------ ---------------- ---------------- ------------------
24 744 24 744
Investment securities - - 752 752
--------------------------- ------------ ---------------- ---------------- ------------------
---------- --------------- --------------- -----------------
--------------------------- ------------ ---------------- ---------------- ------------------
224 361 293 783
- 69 421 257 847 104
---------------------------------------- ---------------- ---------------- ------------------
====== ========= ========= ==========
--------------------------- ------------ ---------------- ---------------- ------------------
Liabilities
--------------------------- ------------ ---------------- ---------------- ------------------
Deposits and other 265 384
liabilities - 265 384 520 - 520
--------------------------- ------------ ---------------- ---------------- ------------------
---------- --------------- -------------- -----------------
--------------------------- ------------ ---------------- ---------------- ------------------
265 384
- 265 384 520 - 520
---------------------------------------- ---------------- ---------------- ------------------
====== ========= ========= ==========
---------------------------------------- ---------------- ---------------- ------------------
The carrying amount of financial assets and liabilities not measured at fair approximate fair value.
15. CASH AND CASH EQUIVALENTS
31 December 31 December
2017 2016
--------------------------- --------------- ---------------
US$ US$
--------------------------- --------------- ---------------
Balances with the Central
Bank 79 876 937 36 166 732
--------------------------- --------------- ---------------
Current, nostro accounts
and cash 6 676 265 8 754 525
--------------------------- --------------- ---------------
Interbank placements 3 000 000 24 500 000
--------------------------- --------------- ---------------
-------------- --------------
--------------------------- --------------- ---------------
89 553 202 69 421 257
--------------------------- --------------- ---------------
======== =========
--------------------------- --------------- ---------------
*Nostro accounts are foreign domiciled bank accounts operated by the Bank for the facilitation of
offshore transactions on behalf of clients.
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 (ECOGAD8) 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$526 316 was pledged to Proparco as collateral for offshore lines of credit.
16. LOANS, ADVANCES AND OTHER ASSETS
16.1 Total loans, advances and other assets
16.1.1 Loans, advances and other assets
31 December 31 December
2017 2016
---------------------------- ---------------- ----------------
US$ US$
---------------------------- ---------------- ----------------
20 026 16 889
Fixed term loans 342 687
---------------------------- ---------------- ----------------
184 307 178 602
Local loans and overdrafts 585 573
---------------------------- ---------------- ----------------
--------------- ---------------
---------------------------- ---------------- ----------------
204 333 195 492
927 260
---------------------------- ---------------- ----------------
Other assets 6 149 294 4 124 835
---------------------------- ---------------- ----------------
-------------- --------------
---------------------------- ---------------- ----------------
210 483 199 617
221 095
---------------------------- ---------------- ----------------
========= =========
---------------------------- ---------------- ----------------
16.1.2 Maturity analysis
31 December 31 December
2017 2016
------------------------------------ ---------------- -----------------
US$ US$
------------------------------------ ---------------- -----------------
71 137 86 086
Less than one month 746 528
------------------------------------ ---------------- -----------------
10 680 9 247
1 to 3 months 845 720
------------------------------------ ---------------- -----------------
7 423
3 to 6 months 2 954 340 426
------------------------------------ ---------------- -----------------
11 024 16 327
6 months to 1 year 220 018
------------------------------------ ---------------- -----------------
80 804 63 528
1 to 5 years 577 043
------------------------------------ ---------------- -----------------
34 403 23 245
Over 5 years 690 657
------------------------------------ ---------------- -----------------
--------------- ----------------
------------------------------------ ---------------- -----------------
211 005 205 858
Total advances 418 392
------------------------------------ ---------------- -----------------
Allowances for impairment losses (5 445 (8 305
on loans and advances (note 16.3) 968) 117)
------------------------------------ ---------------- -----------------
(1 225 (2 061
Suspended interest 523) 015)
------------------------------------ ---------------- -----------------
--------------- --------------
------------------------------------ ---------------- -----------------
204 333 195 492
927 260
------------------------------------ ---------------- -----------------
4 124
Other assets 6 149 294 835
------------------------------------ ---------------- -----------------
--------------- ---------------
------------------------------------ ---------------- -----------------
210 483 199 617
221 095
------------------------------------ ---------------- -----------------
========= =========
------------------------------------ ---------------- -----------------
16.2 Sectoral analysis of utilizations
31 December % 31 December %
2017 2016
------------------ ------------------ --------- ---------------- ---------
Agriculture and
horticulture 28 531 460 14 22 172 296 11
------------------ ------------------ --------- ---------------- ---------
Conglomerates 9 210 926 4 8 149 399 4
------------------ ------------------ --------- ---------------- ---------
Distribution 28 737 726 14 22 957 893 11
------------------ ------------------ --------- ---------------- ---------
Food & beverages 10 417 745 5 7 016 516 4
------------------ ------------------ --------- ---------------- ---------
Individuals 82 589 355 39 90 381 441 44
------------------ ------------------ --------- ---------------- ---------
Manufacturing 8 565 178 4 14 562 333 7
------------------ ------------------ --------- ---------------- ---------
Mining 736 466 - 789 502 -
------------------ ------------------ --------- ---------------- ---------
Services 42 216 562 20 39 829 012 19
------------------ ------------------ --------- ---------------- ---------
----------------- -------- --------------- --------
------------------ ------------------ --------- ---------------- ---------
211 005 418 100 205 858 392 100
------------------ ------------------ --------- ---------------- ---------
========== ===== ========= =====
------------------ ------------------ --------- ---------------- ---------
The material concentration of loans and advances is with individuals at 39% (2016 - 44%) and services sector at 20% (2016 - 19%).
16.3 Allowance for impairment losses on loans and advances
31 December 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 519 3 853 1 089
profits 3 334 133 016 149 6 970 128 598 8 059 726
--------------- -------------- ------------------ -------------- --------------- ------------- -----------------
Bad debts (6 712
written off (6 712 298) - 298) (8 337 245) - (8 337 245)
--------------- -------------- ------------------ -------------- --------------- ------------- -----------------
------------- ----------- ------------- -------------- ------------ -------------
--------------- -------------- ------------------ -------------- --------------- ------------- -----------------
2 616 5 445 2 097
2 829 507 461 968 6 207 672 445 8 305 117
--------------- -------------- ------------------ -------------- --------------- ------------- -----------------
======== ======= ======== ========= ======== ========
--------------- -------------- ------------------ -------------- --------------- ------------- -----------------
16.4 Non-performing loans and advances
31 December 31 December
2017 2016
----------------------------- -------------- ----------------
US$ US$
----------------------------- -------------- ----------------
Gross non-performing loans
and advances 16 848 747 22 015 828
----------------------------- -------------- ----------------
Allowances for impairment
loss on loans and advances (2 829 507) (6 207 672)
----------------------------- -------------- ----------------
Retail loans insurance (1 457 059) (1 577 628)
----------------------------- -------------- ----------------
Suspended interest (1 225 523) (1 748 031)
----------------------------- -------------- ----------------
------------- ---------------
----------------------------- -------------- ----------------
Net non-performing loans
and advances 11 336 658 12 482 497
----------------------------- -------------- ----------------
======== ==========
----------------------------- -------------- ----------------
The net non-performing loans and advances on these accounts represents recoverable portions covered by realisable security, which includes guarantees, cessation of debtors, mortgages over properties, equities and promissory notes all fair valued at US$15 483 847 (2016 - US$17 573 875).
16.5 Loans to related parties (included under loans, advances and other assets)
31 December 31 December
2017 2016
------------------------ --------------- ---------------
US$ US$
------------------------ --------------- ---------------
Executive directors 201 084 240 705
------------------------ --------------- ---------------
Officers 7 566 669 7 381 115
------------------------ --------------- ---------------
-------------- --------------
------------------------ --------------- ---------------
7 767 753 7 621 820
------------------------ --------------- ---------------
Fair value adjustments (276 695) (381 887)
------------------------ --------------- ---------------
------------- --------------
------------------------ --------------- ---------------
7 491 058 7 239 933
------------------------ --------------- ---------------
======== =========
------------------------ --------------- ---------------
17. NON-CURRENT ASSETS HELD FOR SALE
31 December 31 December
2017 2016
----------------------- ------------------- ---------------
US$ US$
----------------------- ------------------- ---------------
At 1 January 2 261 300 2 264 300
----------------------- ------------------- ---------------
Fair value adjustment - (3 000)
----------------------- ------------------- ---------------
(2 225 300) -
----------------------- ------------------- ---------------
------------------ --------------
----------------------- ------------------- ---------------
36 000 2 261 300
----------------------- ------------------- ---------------
=========== =========
----------------------- ------------------- ---------------
During the year under review, the Group concluded the sale of a portion of land which was previously classified as held for sale at a price of US$2 150 000.
18. INTANGIBLE ASSETS
Work in Computer
-------------------------- ------------- ------------- ---------------
Progress* Software Total
-------------------------- ------------- ------------- ---------------
US$ US$ US$
-------------------------- ------------- ------------- ---------------
Cost
-------------------------- ------------- ------------- ---------------
Balance at 1 January 2 783
2016 228 595 2 554 709 304
-------------------------- ------------- ------------- ---------------
Acquisitions - 490 417 490 417
-------------------------- ------------- ------------- ---------------
------------ ------------ --------------
-------------------------- ------------- ------------- ---------------
Balance at 1 January 3 273
2017 228 595 3 045 126 721
-------------------------- ------------- ------------- ---------------
1 565
Acquisitions - 1 565 713 713
-------------------------- ------------- ------------- ---------------
------------ ------------ -------------
-------------------------- ------------- ------------- ---------------
Balance at 31 December 4 839
2017 228 595 4 610 839 434
-------------------------- ------------- ------------- ---------------
----------- ------------ ------------
-------------------------- ------------- ------------- ---------------
Accumulated amortisation
-------------------------- ------------- ------------- ---------------
Balance at 1 January 1 093
2016 - 1 093 919 919
-------------------------- ------------- ------------- ---------------
Amortisation for the
year - 532 768 532 768
-------------------------- ------------- ------------- ---------------
----------- ------------ ------------
-------------------------- ------------- ------------- ---------------
Balance at 1 January 1 626
2017 - 1 626 687 687
-------------------------- ------------- ------------- ---------------
Amortisation for the
year - 832 567 832 567
-------------------------- ------------- ------------- ---------------
------------ ----------- -----------
-------------------------- ------------- ------------- ---------------
Balance at 31 December 2 459
2017 - 2 459 254 254
-------------------------- ------------- ------------- ---------------
======= ----------- -----------
-------------------------- ------------- ------------- ---------------
Carrying amount
-------------------------- ------------- ------------- ---------------
2 380
At 31 December 2017 228 595 2 151 585 180
-------------------------- ------------- ------------- ---------------
======== ======= =========
-------------------------- ------------- ------------- ---------------
1 647
At 1 January 2017 228 595 1 418 439 034
-------------------------- ------------- ------------- ---------------
======== ======== =========
-------------------------- ------------- ------------- ---------------
1 689
At 1 January 2016 228 595 1 460 790 385
-------------------------- ------------- ------------- ---------------
======== ========= =========
-------------------------- ------------- ------------- ---------------
*The work in progress relates to a computer software whose development commenced in 2015 and is now expected to be fully deployed for its intended use in 2018. The Directors preformed an impairment assessment on the intangible asset and were satisfied that the asset had no signs of impairment as at 31 December 2017.
19. PROPERTY AND EQUIPMENT
Capital Computers Motor Vehicles Furniture Freehold Total
work in and equipment land and
progress buildings*
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
US$ US$ US$ US$ US$ US$
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Cost/Revaluation
amount
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
At 1 January 14 150
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
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Capitalisation (585 511) 173 827 180 000 64 348 167 336 -
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Revaluation loss - - - - (4 000) (4 000)
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Impairment loss - - - - (51 600) (51 600)
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
(2 799 (2 799
Disposals - - 390) - - 390)
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
--------------- -------------- -------------- -------------- -------------- --------------
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
At 1 January 12 562
2017 188 947 3 677 901 1 283 448 3 913 914 3 498 454 664
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Additions 268 310 1 598 813 52 454 115 296 4 060 2 038 933
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Capitalisations (163 541) 163 541 - - - -
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Revaluation gain - - - - 121 630 121 630
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Reversal of
impairment - - - - 89 660 89 660
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Disposals - (4 930) (80 000) - - (84 930)
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
----------- ------------- --------------- -------------- -------------- ---------------
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
At 31 December 14 727
2017 293 716 5 435 325 1 255 902 4 029 210 3 713 804 957
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
----------- ------------- -------------- ------------- ------------- ------------
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Accumulated
depreciation
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
At 1 January
2016 - 1 775 459 2 987 999 2 586 039 199 667 7 549 164
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Charge for the
year - 427 666 370 384 458 831 62 516 1 319 397
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
(2 586 (2 586
Disposals - - 183) - - 183)
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
-------------- -------------- -------------- -------------- -------------- -------------
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
At 1 January
2017 - 2 203 125 772 200 3 044 870 262 183 6 282 378
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Charge for the
year - 563 658 191 573 316 222 65 357 1 136 810
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Disposals - (2 219) (25 000) - - (27 219)
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
-------------- -------------- -------------- -------------- -------------- -----------
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
At 31 December
2017 - 2 764 564 938 773 3 361 092 327 540 7 391 969
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
-------------- -------------- -------------- -------------- -------------- ------------
------------------ ---------------- --------------- ---------------- --------------- --------------- ----------------
Carrying amount
----------------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 December
2017 293 716 2 670 761 317 129 668 118 3 386 264 7 335 988
----------------- ---------- ---------- ---------- ---------- ---------- ----------
========= ========= ========= ========= ========= =======
----------------- ---------- ---------- ---------- ---------- ---------- ----------
At 1 January
2017 188 947 1 474 776 511 248 869 044 3 236 271 6 280 286
----------------- ---------- ---------- ---------- ---------- ---------- ----------
========= ========= ========= ========= ========= =======
----------------- ---------- ---------- ---------- ---------- ---------- ----------
At 1 January
2016 585 511 1 186 878 722 726 1 047 811 3 058 160 6 601 086
----------------- ---------- ---------- ---------- ---------- ---------- ----------
========= ========= ========= ========= ========= =======
----------------- ---------- ---------- ---------- ---------- ---------- ----------
*Assets measured using the revaluation model.
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2017 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 5% on rental levels of between US$3 - US$7 per square metre.
Level 3
The fair value of immovable properties of US$3 386 264 (2016 - US$3 236 271) has been categorised under level 3 in the fair value hierarchy based on the inputs used for the valuation technique described below.
The following shows reconciliation between the opening and closing balances for level 3 fair values:
31 December 31 December
2017 2016
---------------------------- -------------- --------------
US$ US$
---------------------------- -------------- --------------
At 1 January 3 236 271 3 058 160
---------------------------- -------------- --------------
Additions 4 060 128 891
---------------------------- -------------- --------------
Transfers from work
in progress - 167 336
---------------------------- -------------- --------------
Revaluation gain/(loss) 121 630 (4 000)
---------------------------- -------------- --------------
Impairment reversal/(loss) 89 660 (51 600)
---------------------------- -------------- --------------
Depreciation (65 357) (62 516)
---------------------------- -------------- --------------
------------- -------------
---------------------------- -------------- --------------
3 386 264 3 236 271
---------------------------- -------------- --------------
======= ========
---------------------------- -------------- --------------
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
Technique Inputs between key unobservable
inputs and fair
value measurement
------------ ----------------------------------------------------------- ----------------------------------------------------------
The Direct The estimated
Comparison * Weighted average expected market rental growth (5%); fair value would
Method was and increase /(decrease)
applied if:
on all * expected market rental growth were higher/ (lower);
residential * Average market yield of 5%. and
properties
* the risk adjusted discount rates were lower/
(higher).
------------ ----------------------------------------------------------- ----------------------------------------------------------
20. CAPITAL COMMITMENTS
31 December 31 December
2017 2016
-------------------------------- -------------- --------------
US$ US$
-------------------------------- -------------- --------------
Capital expenditure contracted
for 607 736 69 315
-------------------------------- -------------- --------------
Capital expenditure authorised
but not yet
contracted for 10 502 287 5 379 915
-------------------------------- -------------- --------------
------------- -------------
-------------------------------- -------------- --------------
11 110 023 5 449 230
-------------------------------- -------------- --------------
======== ========
-------------------------------- -------------- --------------
The capital expenditure will be funded from the Group's own resources.
21. CONTINGENT LIABILITIES
31 December 31 December
2017 2016
------------------------------- -------------- ---------------
US$ US$
------------------------------- -------------- ---------------
Guarantees 8 195 056 2 159 937
------------------------------- -------------- ---------------
Facilities approved but
not drawn down 28 943 947 25 175 267
------------------------------- -------------- ---------------
Irrevocable Letters of Credit - 450 000
------------------------------- -------------- ---------------
------------- --------------
------------------------------- -------------- ---------------
37 139 003 27 785 204
------------------------------- -------------- ---------------
======== ========
------------------------------- -------------- ---------------
22. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States dollars at period end:-
Mid-rate Mid-rate
------------------------ ----- ------------ ------------
31 December 31 December
2017 2016
------------------------ ----- ------------ ------------
US$ US$
------------------------ ----- ------------ ------------
British Pound Sterling GBP 1.3525 1.2375
------------------------ ----- ------------ ------------
South African Rand ZAR 12.3250 13.7000
------------------------ ----- ------------ ------------
European Euro EUR 1.1994 1.0570
------------------------ ----- ------------ ------------
Botswana Pula BWP 9.8232 10.6838
------------------------ ----- ------------ ------------
DIVID DECLARATION NOTICE
Notice is hereby given that the board declared a scrip dividend alternative to the cash dividend of 0.36 cents per share for the year ended 31 December 2017 payable in respect of all the ordinary shares of the Company. This dividend will be payable in full to all Shareholders of the Company registered at the close of business on 6 April 2018.
The payment of the dividend will take place on or about 9 May 2018. The applicable shareholders' tax will be deducted from the Gross Dividends.
The shares of the Company will be traded cum-dividend on the Zimbabwe Stock Exchange up to the market day of 3 April 2018 and ex-dividend as from 4 April 2018.
The forms of election with the full details and terms of the scrip/cash dividend offer will be mailed to shareholders on 13 April 2018 and the last date of receiving the forms of election is 4 May 2018.
Shareholders are requested to submit / update their mailing and banking details to the Transfer Secretaries and also immediately contact the Transfer Secretary should they not have received their dividend election forms by 20 April 2018 on the following contacts.
First Transfer Secretaries (Pvt) Ltd
1 Armagh Avenue
Eastlea
Harare
Telephone: +263 4 782869/72 or 776628/49/59/69/74
Email: info@fts-net.com
BY ORDER OF THE BOARD
S. PASHAPA
Company Secretary
22 March 2018
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2017
31 December 31 December 2016
2017
---------------------------- ------ ----------------- -----------------
Note US$ US$
---------------------------- ------ ----------------- -----------------
Interest income 32 061 931 33 860 139
------------------------------------ ----------------- -----------------
Interest expense (9 157 095) (11 075 103)
------------------------------------ ----------------- -----------------
---------------- --------------
---------------------------- ------ ----------------- -----------------
Net interest income 22 904 836 22 785 036
------------------------------------ ----------------- -----------------
Fee and commissions income 18 832 185 15 179 149
------------------------------------ ----------------- -----------------
Net foreign exchange
gains 1 583 164 743 255
------------------------------------ ----------------- -----------------
---------------- --------------
---------------------------- ------ ----------------- -----------------
Revenue 43 320 185 38 707 440
------------------------------------ ----------------- -----------------
Other income a 1 107 241 1 717 672
---------------------------- ------ ----------------- -----------------
---------------- ---------------
---------------------------- ------ ----------------- -----------------
Operating income 44 427 426 40 425 112
------------------------------------ ----------------- -----------------
Operating expenditure b (27 578 347) (26 176 706)
---------------------------- ------ ----------------- -----------------
-------------- --------------
---------------------------- ------ ----------------- -----------------
Operating income before
impairment charge 16 849 079 14 248 406
------------------------------------ ----------------- -----------------
Impairment losses on
loans and advances (3 853 149) (8 059 726)
------------------------------------ ----------------- -----------------
-------------- --------------
---------------------------- ------ ----------------- -----------------
Profit before taxation 12 995 930 6 188 680
------------------------------------ ----------------- -----------------
Taxation (3 078 579) (1 149 769)
------------------------------------ ----------------- -----------------
-------------- -------------
---------------------------- ------ ----------------- -----------------
Profit for the period 9 917 351 5 038 911
------------------------------------ ----------------- -----------------
-------------- --------------
---------------------------- ------ ----------------- -----------------
Other comprehensive income
---------------------------- ------ ----------------- -----------------
Revaluations, net of
tax c 90 310 (2 970)
---------------------------- ------ ----------------- -----------------
------------- ------------
---------------------------- ------ ----------------- -----------------
Total comprehensive income
for the period 10 007 661 5 035 941
------------------------------------ ----------------- -----------------
======= ========
---------------------------- ------ ----------------- -----------------
Earnings per share (US
cents)
---------------------------- ------ ----------------- -----------------
-Basic d 60.08 30.53
---------------------------- ------ ----------------- -----------------
STATEMENT OF FINANCIAL POSITION
as at 31 December 2017
31 December 31 December
2017 2016
--------------------------- ------ ------------------- -------------------
Note US$ US$
--------------------------- ------ ------------------- -------------------
SHAREHOLDER'S FUNDS
--------------------------- ------ ------------------- -------------------
Share capital e 16 506 16 506
--------------------------- ------ ------------------- -------------------
Share premium 31 474 502 31 474 502
----------------------------------- ------------------- -------------------
Regulatory Reserve 2 297 492 1 785 136
----------------------------------- ------------------- -------------------
Revaluation reserve 90 310 -
--------------------------- ------ ------------------- -------------------
Retained earnings 30 842 252 21 437 257
----------------------------------- ------------------- -------------------
--------------- ---------------
--------------------------- ------ ------------------- -------------------
Total shareholder's
funds 64 721 062 54 713 401
----------------------------------- ------------------- -------------------
--------------- ---------------
--------------------------- ------ ------------------- -------------------
LIABILITIES
--------------------------- ------ ------------------- -------------------
Deposits and other
liabilities 356 977 472 265 354 607
----------------------------------- ------------------- -------------------
Subordinated term loan 1 415 904 1 415 490
----------------------------------- ------------------- -------------------
----------------- ----------------
--------------------------- ------ ------------------- -------------------
Total liabilities 358 393 376 266 770 097
----------------------------------- ------------------- -------------------
---------------- ---------------
--------------------------- ------ ------------------- -------------------
Total shareholder's
funds and liabilities 423 114 438 321 483 498
----------------------------------- ------------------- -------------------
========== =========
--------------------------- ------ ------------------- -------------------
ASSETS
--------------------------- ------ ------------------- -------------------
Cash and cash equivalents f 89 553 202 69 421 257
--------------------------- ------ ------------------- -------------------
Current tax assets 155 488 292 926
----------------------------------- ------------------- -------------------
Loans, advances and
other assets 210 475 836 199 672 558
----------------------------------- ------------------- -------------------
Investment securities 92 245 425 24 744 752
----------------------------------- ------------------- -------------------
Amount owing from Holding
Company 651 564 610 604
----------------------------------- ------------------- -------------------
Non-current assets
held for sale 36 000 2 261 300
----------------------------------- ------------------- -------------------
Unquoted investments 102 347 88 930
----------------------------------- ------------------- -------------------
Investment properties g 18 977 000 14 202 270
--------------------------- ------ ------------------- -------------------
Intangible assets 2 380 180 1 647 034
----------------------------------- ------------------- -------------------
Property and equipment 7 335 988 6 280 286
----------------------------------- ------------------- -------------------
Deferred tax assets 1 201 408 2 261 581
----------------------------------- ------------------- -------------------
------------------ ------------------
--------------------------- ------ ------------------- -------------------
Total assets 423 114 438 321 483 498
----------------------------------- ------------------- -------------------
=========== ===========
---------------------------------- ------------------- -------------------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
Share Share Revaluation Regulatory Retained
Capital Premium Reserve Reserve Earnings Total
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
US$ US$ US$ US$ US$ US$
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Balances at 1
January 31 474 14 436 49 677
2016 16 506 502 2 970 3 746 729 753 460
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Profit for the 5 038
year - - - - 5 038 911 911
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Other
comprehensive
income - - (2 970) - - (2 970)
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Transfer from
retained (1 961
earnings - - - 593) 1 961 593 -
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
-------- ------------- --------------- -------------- ---------------- --------------
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Balances at 31
December 31 474 21 437 54 713
2016 16 506 502 - 1 785 136 257 401
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Profit for the 9 917
year - - - - 9 917 351 351
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Other
comprehensive
income - - 90 310 - - 90 310
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Transfer to
retained
earnings - - - 512 356 (512 356) -
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
-------- -------------- --------------- -------------- ------------- --------------
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
Balances at 31
December 31 474 30 842 64 721
2016 16 506 502 90 310 2 297 492 252 062
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
===== ======== ========= ======== ======== ========
------------------- --------- --------------- ---------------- --------------- ----------------- ---------------
STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
31 December 31 December
2017 2016
---------------------------------------- ----------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES US$ US$
---------------------------------------- ----------------- ----------------
Profit before taxation 12 995 930 6 188 680
---------------------------------------- ----------------- ----------------
Non-cash items
---------------------------------------- ----------------- ----------------
-Impairment losses on loans and
advances 3 853 149 8 059 726
---------------------------------------- ----------------- ----------------
-Non-current assets held for sale
fair value adjustment - 3 000
---------------------------------------- ----------------- ----------------
-Investment properties fair value
adjustment (302 255) (412 006)
---------------------------------------- ----------------- ----------------
-Profit on disposal of property
and equipment - (368 205)
---------------------------------------- ----------------- ----------------
-Loss on disposal of property and 56 637 -
equipment (included in staff costs)
---------------------------------------- ----------------- ----------------
-Loss on disposal of non current 75 300 -
asset held for sale
---------------------------------------- ----------------- ----------------
-Profit on disposal of investment
properties (12 951) (50 000)
---------------------------------------- ----------------- ----------------
-Quoted and other investments fair
value adjustment (13 417) (11 125)
---------------------------------------- ----------------- ----------------
-Impairment (reversal)/charge on
land and buildings (89 660) 51 600
---------------------------------------- ----------------- ----------------
-Depreciation 1 136 810 1 319 396
---------------------------------------- ----------------- ----------------
-Interest capitalised on subordinated
term loan 165 345 158 599
---------------------------------------- ----------------- ----------------
-Amortisation of intangible assets 832 567 532 768
---------------------------------------- ----------------- ----------------
---------------- --------------
---------------------------------------- ----------------- ----------------
Operating cash flows before changes
in operating
assets and liabilities 18 697 455 15 472 433
---------------------------------------- ----------------- ----------------
Changes in operating assets and
liabilities
---------------------------------------- ----------------- ----------------
Increase/(decrease) in deposits
and other liabilities 91 622 865 (17 902 928)
---------------------------------------- ----------------- ----------------
(Increase)/decrease in loans, advances (14 656
and other assets 426) 27 412 159
---------------------------------------- ----------------- ----------------
--------------- ---------------
---------------------------------------- ----------------- ----------------
Net cash generated from operations 95 663 894 24 981 664
---------------------------------------- ----------------- ----------------
--------------- ---------------
---------------------------------------- ----------------- ----------------
Taxation
---------------------------------------- ----------------- ----------------
Corporate tax paid (1 757 028) (1 842 636)
---------------------------------------- ----------------- ----------------
Capital gains tax paid (155 265) (12 234)
---------------------------------------- ----------------- ----------------
-------------- ---------------
---------------------------------------- ----------------- ----------------
Net cash inflow from operating
activities 93 751 601 23 126 794
---------------------------------------- ----------------- ----------------
-------------- ---------------
---------------------------------------- ----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
---------------------------------------- ----------------- ----------------
Proceeds on disposal of property
and equipment 1 076 581 414
---------------------------------------- ----------------- ----------------
Acquisition of intangible assets (1 565 713) (490 417)
---------------------------------------- ----------------- ----------------
Acquisition of property and equipment (2 038 933) (1 267 404)
---------------------------------------- ----------------- ----------------
Acquistion of investment properties (4 792 475) (5 794 464)
---------------------------------------- ----------------- ----------------
Proceeds or disposal of non-current 2 150 000 -
asset held for sale
---------------------------------------- ----------------- ----------------
(67 500
Acquisition of investment securities 670) (10 196 760)
---------------------------------------- ----------------- ----------------
Increase in amount owing from Holding (40 961) -
Company
---------------------------------------- ----------------- ----------------
Proceeds on disposal of investment
properties 332 951 180 000
---------------------------------------- ----------------- ----------------
---------------- ---------------
---------------------------------------- ----------------- ----------------
Net cash outflow from investing (73 454
activities 725) (16 987 631)
---------------------------------------- ----------------- ----------------
---------------- ---------------
---------------------------------------- ----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES US$ US$
-------------------------------------- --------------- ----------------
Payment of interest on subordinated
term loan (164 931) (157 253)
-------------------------------------- --------------- ----------------
-------------- ---------------
-------------------------------------- --------------- ----------------
Net cash inflow from financing
activities (164 931) (157 253)
-------------------------------------- --------------- ----------------
-------------- ---------------
-------------------------------------- --------------- ----------------
Net increase in cash and cash
equivalents 20 131 945 5 981 910
-------------------------------------- --------------- ----------------
Cash and cash equivalents at
beginning of the year 69 421 257 63 439 347
-------------------------------------- --------------- ----------------
-------------- ---------------
-------------------------------------- --------------- ----------------
Cash and cash equivalents at
the end of the year (note f) 89 553 202 69 421 257
-------------------------------------- --------------- ----------------
======== ========
-------------------------------------- --------------- ----------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 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. OTHER income
31 December 31 December
2017 2016
---------------------------------- --------------- ----------------
US$ US$
---------------------------------- --------------- ----------------
Loss on disposal of non-current (75 300) -
assets held for sale
---------------------------------- --------------- ----------------
Quoted and other investments
fair value adjustments 13 416 11 125
---------------------------------- --------------- ----------------
Profit on disposal of investment
properties 12 951 50 000
---------------------------------- --------------- ----------------
Profit on disposal of property
and equipment - 368 205
---------------------------------- --------------- ----------------
Fair value adjustment on
non-current assets held for
sale - (3 000)
---------------------------------- --------------- ----------------
Fair value adjustment on
investment properties 302 255 412 006
---------------------------------- --------------- ----------------
Rental income 135 900 142 400
---------------------------------- --------------- ----------------
Bad debts recovered 580 295 675 006
---------------------------------- --------------- ----------------
Other operating income 137 724 61 930
---------------------------------- --------------- ----------------
-------------- ------------
---------------------------------- --------------- ----------------
1 107 241 1 717 672
---------------------------------- --------------- ----------------
======== =======
---------------------------------- --------------- ----------------
b. Operating EXPITURE
31 December 31 December
2017 2016
------------------------------------ --------------- ----------------
US$ US$
------------------------------------ --------------- ----------------
The operating profit is after
recognising the following:
------------------------------------ --------------- ----------------
Administration costs 11 866 111 12 098 932
------------------------------------ --------------- ----------------
Audit fees:
------------------------------------ --------------- ----------------
- Current year 35 938 61 468
------------------------------------ --------------- ----------------
- Prior year 95 456 84 892
------------------------------------ --------------- ----------------
Impairment (reversal)/charge
on land and buildings (89 660) 51 600
------------------------------------ --------------- ----------------
Depreciation 1 136 810 1 319 396
------------------------------------ --------------- ----------------
Amortisation of intangible
assets 832 567 532 768
------------------------------------ --------------- ----------------
Directors' remuneration 719 318 813 208
------------------------------------ --------------- ----------------
- Fees for services as directors 233 102 252 827
------------------------------------ --------------- ----------------
- Other emoluments 9 393 58 03
------------------------------------ --------------- ----------------
- services rendered 476 823 501 778
------------------------------------ --------------- ----------------
Staff costs - salaries, allowances
and related costs 12 981 807 11 214 442
------------------------------------ --------------- ----------------
-------------- ---------------
------------------------------------ --------------- ----------------
27 578 347 26 176 706
------------------------------------ --------------- ----------------
======== =========
------------------------------------ --------------- ----------------
c. OTHER COMPREHENSIVE INCOME/(LOSS)
31 December 31 December
2017 2016
------------------------- ------------ -------------
US$ US$
------------------------- ------------ -------------
Revaluation gain/(loss)
on land and buildings 121 630 (4 000)
------------------------- ------------ -------------
Tax effect 31 320 1 030
------------------------- ------------ -------------
----------- ------------
------------------------- ------------ -------------
90 310 (2 970)
------------------------- ------------ -------------
====== ======
------------------------- ------------ -------------
d. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
d.1 Earnings
31 December 31 December
2017 2016
--------------------- ------------ ------------
US$ US$
--------------------- ------------ ------------
Profit for the year 9 917 351 5 038 911
--------------------- ------------ ------------
d.2 Number of shares
Weighted average shares
in issue 16 506 050 16 506 050
------------------------- ----------- -----------
d.3 Earnings per share (US cents)
Basic 60.08 30.53
------- ------ ------
e. SHARE CAPITAL
e.1 Authorised
The authorised ordinary share capital at 31 December 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.
e.2 Issued and fully paid
The issued share capital at 31 December 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$0.001 each.
f. CASH AND CASH EQUIVALENTS
31 December 31 December
2017 2016
--------------------------- -------------- ----------------
US$ US$
--------------------------- -------------- ----------------
Balances with the Central
Bank 79 876 937 36 166 732
--------------------------- -------------- ----------------
Current, nostro accounts
and cash 6 676 265 8 754 525
--------------------------- -------------- ----------------
Interbank placements 3 000 000 24 500 000
--------------------------- -------------- ----------------
------------- ---------------
--------------------------- -------------- ----------------
89 553 202 69 421 257
--------------------------- -------------- ----------------
======== =========
--------------------------- -------------- ----------------
g. INVESTMENT PROPERTIES
31 December 31 December
2017 2016
------------------------ -------------- --------------
US$ US$
------------------------ -------------- --------------
At 1 January 14 202 270 8 125 800
------------------------ -------------- --------------
Acquisitions 4 792 475 5 794 464
------------------------ -------------- --------------
Disposals (320 000) (130 000)
------------------------ -------------- --------------
Fair value adjustments 302 255 412 006
------------------------ -------------- --------------
------------- -------------
------------------------ -------------- --------------
At 31 December 18 977 000 14 202 270
------------------------ -------------- --------------
======== ========
------------------------ -------------- --------------
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$135 900 (2016 - US$142 400) 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 property is a property which was acquired as part of the foreclosure process with marketability restrictions measured at US$10 225 000 as at 31 December 2017. 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 fair value of the Bank's investment properties as at 31 December 2017 has been 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.
Level 2
The fair value for investment properties of US$8 722 000 (2016 - US$7 382 270) has been categorised under level 2 in the fair value hierarchy based on the inputs used for the valuation technique described below.
The following shows reconciliation between the opening and closing balances for level 2 fair values:
31 December 31 December
2017 2016
------------------------ ---------------- --------------
US$ US$
------------------------ ---------------- --------------
At 1 January 7 382 270 2 830 800
------------------------ ---------------- --------------
Acquisitions 1 740 158 3 988 019
------------------------ ---------------- --------------
Disposals (320 000) -
------------------------ ---------------- --------------
Fair value adjustments (80 428) 563 451
------------------------ ---------------- --------------
--------------- -------------
------------------------ ---------------- --------------
Balance at 31 December 8 722 000 7 382 270
------------------------ ---------------- --------------
========= ========
------------------------ ---------------- --------------
Level 3
The fair value for investment properties of US$10 225 000 (2016 - US$6 820 000) has been categorised under level 3 in the fair value hierarchy based on the inputs used for the valuation technique described below.
The following shows reconciliation between the opening and closing balances for level fair values:
31 December 31 December
2017 2016
------------------------ ---------------- --------------
US$ US$
------------------------ ---------------- --------------
At 1 January 6 820 000 5 295 000
------------------------ ---------------- --------------
Acqisitions 3 052 317 1 806 445
------------------------ ---------------- --------------
Disposals - (130 000)
------------------------ ---------------- --------------
Fair value adjustments 382 683 (151 445)
------------------------ ---------------- --------------
--------------- -------------
------------------------ ---------------- --------------
Balance at 31 December 10 225 000 6 820 000
------------------------ ---------------- --------------
========= ========
------------------------ ---------------- --------------
The values were arrived at by applying yield rates of 5% on rental values of between US$4 - US$7 per square metre. 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
technique inputs between key unobservable
inputs and fair
value measurement
------------ ----------------------------------------------------------- ----------------------------------------------------------
The The estimated fair
investment * Weighted average expected market rental growth (5%); value would increase
method /(decrease) if:
Discounted * expected market rental growth were higher/ (lower);
cash flows * Void period (average 3 months after the end of each
was lease);
used to * void periods were shorter/(longer);
value all
income * Occupancy rate (55%); and
producing * the occupancy rates were higher /(lower); and
properties.
* Average market yield of 10%.
The direct * the risk adjusted discount rates were lower/
comparison (higher).
method was
applied
on all
residential
properties.
------------ ----------------------------------------------------------- ----------------------------------------------------------
h. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These financial statements are the responsibility of the directors. This responsibility includes the setting up of internal controls and risk management processes, which are monitored independently. The information contained in these financial statements has been prepared on the going concern basis and is in accordance with the provisions of the Companies Act (Chapter 24:03) of Zimbabwe, the Banking Act (Chapter 24:20) of Zimbabwe 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 (NMB Bank Limited Board is the same as the NMBZ Holdings Limited Board)
Human
Asset and Resources,
Liability Remuneration
Management Loans and
Board Audit Risk Committee Review Nominations Credit
of Committee Management (ALCO) Committee Committee Committee
Directors & Finance
Committee
-------------- ------------- ------------- --------------- -------------- ------------- --------------- -------------
Mr. B. A.
Chikwanha 4 4 4 4 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Mr. B.
Ndachena (E) 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Mr. E.
Sandersen 4 4 4 4 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Mr. B. P.
Washaya (E) 4 4 4 4 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Ms. S.
Chitehwe 4 4 4 3 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Mr. J.
Tichelaar
(alternate
Mr B.
Zwinkels*) 4 4 4 4 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Mr. J. de la
Fargue 4 3 4 4 4 3 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
Ms. J.
Maguranyanga 4 4 4 4 4 4 4 4
-------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------ Mr. C. Chikaura 4 4 4 4 4 4 4 4 4 4 4 4 -------------- ---- ------- ----- ------ ---- --------- ----- ------- ----- ------ ----- -------- ----- ------
KEY
Meetings planned ------------------- Meetings attended -----------
(E) Executive.
*The alternate Director attended one meeting and hence AfricInvest was represented at all meetings during the year.
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established the Board Asset and Liability Management Committee (ALCO) and Board Risk Committee, which are responsible for defining the Group's risk universe, developing policies and monitoring implementation. The Board also has the Board Credit Committee (BCC) which is responsible for sanctioning credits and the Board Loans Review Committee (LRC), which is responsible for monitoring asset quality and adherence to the credit risk management policy.
Risk management is linked logically from the level of individual transactions to the Group 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 Group'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 organisation 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 Group'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 independency 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 Group has in place a Board Loans Review Committee responsible for reviewing the quality of the loan book and adequacy of loan loss provisions.
The Group has an 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 group's move into the mass market, retail credit has become a key area of focus. The group has put in place robust personal loan monitoring systems and structures to mitigate retail loan delinquencies. This includes a rigorous scheme assessment and a dedicated pre-delinquency team and a separate recoveries team.
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 Group adheres to limits, mandates and its credit policy.
-- Ensure adherence to facility covenants and conditions of sanction e.g. annual audits, gearing levels, management accounts.
-- Manage trends in asset and portfolio composition, quality and growth and non-performing loans.
-- Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits.
Credit Monitoring and Financial Modelling
-- Independent credit risk management. -- Independent on-going monitoring of individual credit and portfolios.
-- Triggers remedial actions to protect the interests of the Group, if appropriate (e.g. in relation to deteriorated credits).
-- Monitors the on-going development and enhancement of credit risk management across the Group.
-- Reviews the Internal Credit Rating System. -- On-going championing of the Basel II methodologies across the Group.
-- 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 Group maximises recoveries from Non-Performing Loans (NPLs) and loans and advances written off.
4.2 Market risk
This is the exposure of the Group'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 Group has in
place a Management Asset and Liability Committee (ALCO) which monitors market risk and
recommends the appropriate levels to which the Group 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
Group's ability to withstand stressed market conditions. On foreign exchange risk, the bank monitors
currency mismatches and make adjustments depending on exchange rate movement forecast. The
mismatches per currency are contained within 5% of the Group'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 Group to fund asset increases
or meet obligations as they fall due without incurring unacceptable costs or losses. The Group 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 Group also actively monitors its loans to deposit ratio against a set threshold in
a bid to monitor and limit funding risk. The group 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 reports produced by the Risk Management department.
This is augmented by a monthly management ALCO and a quarterly board ALCO meetings.
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 Group utilises monthly Key Risk Indicators to monitor operational risk in all units. Further to this, the Group has an elaborate Operational Loss reporting system in which all incidents with a material impact on the well-being of the Group are reported to risk management. The risk department conducts periodic risk assessments on all the units within the Group aimed at identifying the top risks and ways to minimise their impact. There is a Board Risk Committee whose function is to ensure that this risk is minimised. The Risk Committee with the assistance of the internal audit function and the Risk Management department assesses the adequacy of the internal controls and makes the necessary recommendations to the Board.
4.5 Legal and compliance risk
Legal risk is risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations. Legal risk may entail such issues as contract formation, capacity and contract frustration. Compliance risk is the risk arising from non - compliance with laws and regulations. To manage this risk, permanent relationships are maintained with firms of legal practitioners and access to legal advice is readily available to all departments. The Group has an independent compliance function which is responsible for identifying and monitoring all compliance issues and ensures the Group 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 Group conducts its business. To manage this risk, the Group
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 Group 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 Group'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 Group 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 Group's banking subsidiary on 24 November 2016. Below are the final ratings from the onsite examination.
4.8.1.1 CAMELS* Ratings
Latest Previous Previous RBS
CAMELS Component RBS** Ratings RBS Ratings Ratings
24/11/2016 30/06/2013 31/01/2008
-------------------- --------------- ------------- -------------
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*** Previous Previous
RAS Component Ratings RAS Ratings RAS Ratings
24/11/2016 30/06/2013 31/01/2008
------------------------ -------------- ------------- -------------
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 Overall Composite Direction
Type of Risk Inherent of 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
------------------- ---------- -------------------- ------------------ ------------
Strategic Moderate Acceptable Moderate Stable
Risk
------------------- ---------- -------------------- ------------------ ------------
Operational Moderate Acceptable Moderate Stable
Risk
------------------- ---------- -------------------- ------------------ ------------
Legal & Compliance Moderate Acceptable Moderate Stable
------------------- ---------- -------------------- ------------------ ------------
Reputation 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 2017 2016
Long term BB+ BB+
The current rating expires in August 2018.
4.9 Regulatory Compliance
The Bank was fined by the regulator for eassigning 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 31 December was as follows:
31 December 2017 31 December
2016
------------------------------------ ----------------------- ---------------
US$ US$
------------------------------------ ----------------------- ---------------
Share capital 16 506 16 506
------------------------------------ ----------------------- ---------------
Share premium 31 474 502 31 474 502
------------------------------------ ----------------------- ---------------
Retained earnings 30 842 252 21 437 257
------------------------------------ ----------------------- ---------------
Fair value gain on investment
properties (1 197 871) (1 797 022)
------------------------------------ ----------------------- ---------------
--------------- --------------
------------------------------------ ----------------------- ---------------
61 135 389 51 131 243
------------------------------------ ----------------------- ---------------
Less: capital allocated for
market
------------------------------------ ----------------------- ---------------
and operational risk (2 918 935) (980 355)
------------------------------------ ----------------------- ---------------
Credit to insiders - -
------------------------------------ ----------------------- ---------------
-------------- --------------
------------------------------------ ----------------------- ---------------
Tier 1 capital 58 216 454 50 150 888
------------------------------------ ----------------------- ---------------
Tier 2 capital (subject to
limit as per Banking Regulations) 5 183 773 5 691 960
------------------------------------ ----------------------- ---------------
Fair value gain on investment
properties 1 197 871 1 797 022
------------------------------------ ----------------------- ---------------
Revaluation of property and 90 310 -
equipment
------------------------------------ ----------------------- ---------------
Subordinated debt 477 782 849 294
------------------------------------ ----------------------- ---------------
Regulatory reserve (limited
to 1.25% of risk weighted
assets) 2 297 492 1 785 136
------------------------------------ ----------------------- ---------------
Portfolio provisions (limited
to 1.25% of risk weighted
assets) 1 120 318 1 260 508
------------------------------------ ----------------------- ---------------
--------------- --------------
------------------------------------ ----------------------- ---------------
Total Tier 1 & 2 capital 63 400 227 55 842 848
------------------------------------ ----------------------- ---------------
Tier 3 capital (sum of market
and operational risk capital) 2 918 935 980 355
------------------------------------ ----------------------- ---------------
--------------- --------------
------------------------------------ ----------------------- ---------------
Total capital base 66 319 162 56 823 203
------------------------------------ ----------------------- ---------------
========= =========
------------------------------------ ----------------------- ---------------
Total risk weighted assets 273 424 840 243 651 546
------------------------------------ ----------------------- ---------------
========= =========
------------------------------------ ----------------------- ---------------
Tier 1 ratio 21.29% 20.58%
------------------------------------ ----------------------- ---------------
Tier 2 ratio 1.90% 2.34%
------------------------------------ ----------------------- ---------------
Tier 3 ratio 1.07% 0.40%
------------------------------------ ----------------------- ---------------
Total capital adequacy ratio 24.26% 23.32%
------------------------------------ ----------------------- ---------------
RBZ minimum required 12.00% 12.00%
------------------------------------ ----------------------- ---------------
6. SEGMENT INFORMATION
For management purposes, the Bank is organised into four 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.
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 and profit and certain asset and liability information regarding the bank's operating segments and service units:
Retail Corporate Treasury International Corporate
Banking Banking Banking Banking Finance Other Total
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
For the year
ended US$ US$ US$ US$ US$ US$ US$
31 December
2017
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Third party 29 721 14 340 7 658 1 317 53 584
income 100 614 528 546 651 - 628 521
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Interest and
similar (1 950 (3 392 (3 814 (9 157
expense 582) 090) 423) - - - 095)
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
------------- -------------- ------------ ------------- ------------- -------------- -------------
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Net operating 27 770 10 948 3 844 1 317 44 427
income 518 524 105 546 651 - 628 426
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
-------------- -------------- ------------ ------------- -------------- --------------- --------------
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Other material
non-cash
items:
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Impairment
losses
on loans and 1 599 2 254 3 853
advances 035 114 - - - - 149
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Depreciation
of property 1 136
and equipment 963 415 15 069 9 566 6 127 - 142 633 810
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Amortisation
of intangible
assets - - - - - 832 567 832 567
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Segment
profit/ 5 622 3 372 2 774 1 317 12 995
(loss) 404 984 647 (91 733) - 628 930
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Income tax (3 078 (3 078
charge - - - - - 579) 579)
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
-------------- -------------- ------------- ------------ ------------ -------------- -------------
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Profit/(loss)
for 5 622 3 372 2 774 (1 760 9 917
the year 404 984 647 (91 733) - 951) 351
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
------------- -------------- --------------- ------------- ------------ -------------- ---------------
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
At 31 December
2017
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Assets and
liabilities
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Capital 1 386 2 211 3 604
expenditure 270 2 388 1 958 2 873 - 157 646
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
108 656 152 311 118 870 3 612 39 663 423 114
Total assets 867 200 271 619 - 481 438
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
Total 109 755 128 928 96 952 15 052 7 705 358 393
liabilities 085 542 318 401 - 030 376
--------------- --------------- --------------- ---------------- -------------- --------------- ---------------- ----------------
The following table presents income and profit and certain asset and liability information regarding the bank's operating segments and service units:
Retail Corporate Treasury International Corporate
Banking Banking Banking Banking Finance Other Total
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
For the year US$ US$ US$ US$ US$ US$ US$
ended
31 December
2016
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Third party 29 011 14 595 4 813 1 967 51 500
income 529 952 944 451 117 660 345 328 215
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Interest and
similar (5 021 (4 580 (1 417 (11 075
expense 782 040) 555) - (55 726) - 103)
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
------------- -------------- ------------ ------------- ------------- -------------- -------------
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Net operating 23 989 10 015 3 396 1 967 40 425
income 747 912 389 451 117 604 619 328 112
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
-------------- -------------- ------------ ------------- ------------- --------------- --------------
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Other material
non-cash
items
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Impairment
losses on
loans and 4 527 8 059
advances 156 3 496 994 - - 35 576 - 726
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Depreciation
of property 1 002 1 319
and equipment 084 48 765 31 329 26 261 22 665 188 292 396
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Amortisation
of intangible
assets - - - - - 532 768 532 768
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Segment
profit/ 3 182 1 967 6 188
(loss) 466 829 1 197 243 690 (800 014) 174 604 328 680
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Income tax (1 149 (1 149
charge - - - - - 769) 769)
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
------------- -------------- ------------- -------------- ------------ --------------- ------------
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Profit/(loss)
for the 3 182 5 038
year 466 829 1 197 243 690 (800 014) 174 604 817 559 911
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
======== ======== ======== ======== ======== ======== =======
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
As at 31
December 2016
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Assets and
liabilities
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Capital 1 757
expenditure 997 785 36 759 - 236 - 723 041 821
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
84 579 125 687 87 613 23 351 321 483
Total assets 341 660 797 10 137 240 957 606 498
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
Total 61 017 101 110 97 437 7 203 266 770
liabilities 973 952 938 - - 234 097
--------------- --------------- --------------- -------------- --------------- -------------- ---------------- ---------------
6.1 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 759651-7 +263 9 70169 Facsimile +263 4 759648 +263 9 882068 Website: http://www.nmbz.co.zw Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Investor Services PLC
1 Armagh Avenue The Pavilions
(Off Enterprise Road) Bridgewater Road
Eastlea Bristol P.O. Box 11 BS99 9ZZ
Harare United Kingdom
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
END
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