Share Name Share Symbol Market Type Share ISIN Share Description
Nmbz Hldgs Uk 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 $0.00 $0.00 - - - 0 -
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 43.0 7.9 1.4 0.0 0.00

NMBZ Holdings Ld Final Results

27/03/2017 7:00am

UK Regulatory (RNS & others)


Nmbz Hldgs Uk (LSE:NMB)
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1 Year : From Jan 2017 to Jan 2018

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TIDMNMB

RNS Number : 4614A

NMBZ Holdings Ld

27 March 2017

NMBZ HOLDINGS LIMITED

Holding company of

NMB BANK LIMITED (Registered Commercial Bank)

CONDENSED AUDITED CONSOLIDATED RESULTS

FOR THE YEARED 31 DECEMBER 2016

FINANCIAL SUMMARY

 
                                       31 December 2016   31 December 2015 
------------------------------------  -----------------  ----------------- 
 Total income (US$)                          51 520 403         59 396 619 
------------------------------------  -----------------  ----------------- 
 Operating profit before impairment 
  charge (US$)                               14 268 630         17 405 739 
------------------------------------  -----------------  ----------------- 
 Total comprehensive income (US$)             5 055 196          5 490 068 
------------------------------------  -----------------  ----------------- 
 Basic earnings per share (US 
  cents)                                           1.32               1.43 
------------------------------------  -----------------  ----------------- 
 Total deposits (US$)                       260 550 383        277 216 769 
------------------------------------  -----------------  ----------------- 
 Total gross loans and advances 
  (US$)                                     205 858 392        243 241 018 
------------------------------------  -----------------  ----------------- 
 Total shareholders' funds (US$)             55 600 406         50 543 864 
------------------------------------  -----------------  ----------------- 
 

Enquiries:

NMBZ HOLDINGS LIMITED

Benefit P Washaya, Chief Executive Officer, NMBZ Holdings Limited benefitw@nmbz.co.zw

Benson Ndachena, Chief Finance Officer, NMBZ Holdings Limited bensonn@nmbz.co.zw

Website: http://www.nmbz.co.zw

Email: enquiries@nmbz.co.zw

Telephone: +263-4-759 651/9

CHAIRMAN'S STATEMENT

INTRODUCTION

The Group has continued to make progress towards attaining its short and medium term goals despite an increasingly challenging operating environment. The economy has continued to be dogged by nostro funding challenges, cash shortages, job losses, deflationary pressures and company closures and these have continued to worsen default risk. The operating results were largely underpinned by the banking subsidiary's decision to broaden its target market, stricter credit underwriting standards and concerted efforts to contain non-performing loans and operating costs.

The key financial highlights of the Group's only operating banking subsidiary as at 31 December 2016, achieved under an exceedingly challenging operating environment are:

   -     Shareholder's funds stood at US$54.7 million; 
   -     Capital adequacy ratio of 23.32% against the RBZ's minimum requirement of 12%; and 
   -     Liquidity ratio of 40.06% versus RBZ's minimum requirement of 30%. 

GROUP RESULTS

Financial performance

The profit before taxation was US$6 208 904 during the period under review and this gave rise to total comprehensive income of US$5 055 196. The Group achieved an earnings per share of 1.32 cents (2015 - 1.43 cents).

Operating expenses amounted to US$26 176 706 and these were down 3% from a prior year amount of US$26 872 649 as a net result of cost cutting and containment measures.

Impairment losses on loans and advances amounted to US$8 059 726 for the current period from a prior year amount of US$9 496 601 and the decrease was mainly due to stricter credit underwriting on the back of a deteriorating economic environment. The Board took a decision to write off loans and advances amounting to US$8 337 245 during the year under review after recovery efforts had not yielded the desired results.

Financial position

The Group's total assets decreased by 4% from US$333 831 107 as at 31 December 2015 to US$320 984 926 as at 31 December 2016 mainly due to a decrease of 15% in loans, advances and other assets and this was partly offset by increases of 9% in cash and cash equivalents, 70% in investments securities and 75% in investment properties.

Gross loans and advances decreased by 15% from US$243 241 018 as at 31 December 2015 to US$205 858 392 as at 31 December 2016 mainly due to constrained lending as a result of the challenging operating environment. The Bank surrendered loans amounting to US$12 667 259 to ZAMCO since ZAMCO's inception up to 31 December 2016 and ZAMCO has acquired loans from the market amounting to US$812.52 million.

Investment securities (Treasury Bills and Bonds) increased by 70% from US$14 547 992 as at 31 December 2015 to US$24 744 752 as at 31 December 2016 mainly due to Bills received from ZAMCO for loans surrendered during the year.

The deposits decreased by 6% from US$277 216 769 as at 31 December 2015 to US$260 550 383 as at 31 December 2016 as a result of restricted funding opportunities.

The Bank's liquidity ratio closed the period at 40.06% and this was above the statutory requirement of 30%.

Capital

The banking subsidiary's capital adequacy ratio at 31 December 2016 calculated in accordance with the guidelines of the Reserve Bank of Zimbabwe (RBZ) was 23.32% (31 December 2015 - 19.26%). The minimum required by the RBZ is 12%. We consider the level of our capitalisation to be adequate to support our underwriting pipeline business.

The Group's shareholders' funds have increased by 10% from US$50 543 864 as at 31 December 2015 to US$55 600 406 as at 31 December 2016 as a result of the current year's attributable profit.

The Bank's regulatory capital as at 31 December 2016 was US$50 150 888 and is above the minimum regulatory capital of US$25 million.

DIVID

In view of the need to retain cash in the business and to strengthen the statutory capital requirements for the banking subsidiary, the Board resolved not to pay a dividend.

DIRECTORATE

Mr Jonathan Chenevix - Trench resigned as a director of NMBZ Holdings Limited and NMB Bank Limited with effect from 21 March 2016. Mr Khalid Qurashi and Ms Maureen R Svova resigned from both the boards of NMBZ Holdings Limited and NMB Bank Limited with effect from 20 May 2016. Mr Cheikh I F Ndiaye resigned from the NMBZ Holdings Limited and the NMB Bank Limited boards on 17 November 2016. I would like to thank the four former board members for their invaluable contributions to both NMBZ Holdings Limited and NMB Bank Limited during their tenure.

Mr James de la Fargue was appointed to both boards of NMBZ Holdings Limited and NMB Bank Limited with effect from 4 May 2016. Ms. Sabinah N Chitehwe and Mr Benson Ndachena were appointed to the boards of NMBZ Holdings Limited and NMB Bank Limited with effect from 19 September 2016. I would like to wish the new board members a fruitful tenure on the Board.

Subsequent to year end, Mr Benardus A M Zwinkels, who represented AfricInvest, resigned from the Board and was replaced by Mr Julius Tichelaar effective 1 January 2017. I would like to thank Mr Zwinkels for his fruitful tenure on the Board and welcome Mr Tichelaar to the Board.

OUTLOOK AND STRATEGY

The Group has continued to broaden the market catchment for the banking subsidiary by tapping into some segments of the mass market and this saw the launch in August 2016 of the NMBLite product offering which is targeted at the low income segment. The uptake of the mass market products has been encouraging and this has contributed to the financial inclusion agenda.

The Bank has accelerated the deployment of POS machines throughout the country and has enhanced all the e-channels for the convenience of our transacting customers in the current environment which is characterised by cash shortages.

CORPORATE SOCIAL INVESTMENTS

We remain committed to playing an active role in the communities we serve. Our social investments during the year were channelled into the country's educational system, the disadvantaged, vulnerable groups, protection of the environment, wildlife conservation, the arts and various sporting disciplines. The activities and charities supported during the year included Tinokwirira Special School, Deaf Zimbabwe Trust, Birdlife Zimbabwe, Hockey Association of Zimbabwe, Kwekwe and Sanyati Districts Better Schools Programme initiatives and many other charity golf tournaments.

CORPORATE DEVELOPMENTS

The low cost NMBLite account, which is targeted at the low income sector, was launched in August 2016. The Bank relaunched the mobile banking platform which now incorporates Android and Apple applications.

APPRECIATION

I would like to express my appreciation to our clients, shareholders and regulatory authorities for their continued support. I would also like to thank my fellow Board members, management and staff for their steadfast commitment, dedication and passion which has seen the achievement of these results in the face of an increasingly challenging operating environment.

B. A. CHIKWANHA

CHAIRMAN

15 March 2017

AUDITOR'S STATEMENT

These financial results should be read in conjunction with the complete set of financial statements for the year ended 31 December 2016, which have been audited by KPMG Chartered Accountants (Zimbabwe) and an unmodified opinion issued thereon. The auditor's report which includes key audit matters (valuation of loans and advances, fair value disclosure of investment securities and valuation of properties) on the financial statements which forms the basis of these financial results is available for inspection at the Holding Company's registered office.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2016

 
                                      31 December 2016   31 December 2015 
----------------------------  -----  -----------------  ----------------- 
                                                   US$                US$ 
----------------------------  -----  -----------------  ----------------- 
                               Note 
----------------------------  -----  -----------------  ----------------- 
 
 Interest income                  4         33 860 139         35 761 355 
----------------------------  -----  -----------------  ----------------- 
 Interest expense                         (11 075 067)       (15 118 231) 
----------------------------  -----  -----------------  ----------------- 
                                       ---------------     -------------- 
----------------------------  -----  -----------------  ----------------- 
 Net interest income                        22 785 072         20 643 124 
----------------------------  -----  -----------------  ----------------- 
 
 Fee and commission income      5.1         15 179 149         20 984 694 
----------------------------  -----  -----------------  ----------------- 
 Net foreign exchange gains                    743 255          1 416 445 
----------------------------  -----  -----------------  ----------------- 
                                      ----------------      ------------- 
----------------------------  -----  -----------------  ----------------- 
 Revenue                                    38 707 476         43 044 263 
----------------------------  -----  -----------------  ----------------- 
 
 Other income                   5.2          1 737 860          1 234 125 
----------------------------  -----  -----------------  ----------------- 
                                      ----------------   ---------------- 
----------------------------  -----  -----------------  ----------------- 
 Operating income                           40 445 336         44 278 388 
----------------------------  -----  -----------------  ----------------- 
 Operating expenditure            6       (26 176 706)       (26 872 649) 
----------------------------  -----  -----------------  ----------------- 
 Impairment losses on loans 
  and advances                 17.3        (8 059 726)        (9 496 601) 
----------------------------  -----  -----------------  ----------------- 
                                       ---------------    --------------- 
----------------------------  -----  -----------------  ----------------- 
 Profit before taxation                      6 208 904          7 909 138 
----------------------------  -----  -----------------  ----------------- 
 Taxation charge                  7        (1 150 738)        (2 422 040) 
----------------------------  -----  -----------------  ----------------- 
                                       ---------------    --------------- 
----------------------------  -----  -----------------  ----------------- 
 Profit for the period                       5 058 166          5 487 098 
----------------------------  -----  -----------------  ----------------- 
 
 Other comprehensive income 
  Items that will not be 
  reclassified 
  to profit or loss 
----------------------------  -----  -----------------  ----------------- 
 Revaluations, net of tax                      (2 970)              2 970 
----------------------------  -----  -----------------  ----------------- 
 Total comprehensive income             --------------     -------------- 
----------------------------  -----  -----------------  ----------------- 
 for the year                                5 055 196          5 490 068 
----------------------------  -----  -----------------  ----------------- 
                                             =========          ========= 
----------------------------  -----  -----------------  ----------------- 
 Earnings per share (US 
  cents) 
----------------------------  -----  -----------------  ----------------- 
 - Basic                        9.3               1.32               1.43 
----------------------------  -----  -----------------  ----------------- 
 - Diluted basic                9.3               1.23               1.33 
----------------------------  -----  -----------------  ----------------- 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2016

 
                                                             31 December 2016                  31 December 2015 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                    Note                                  US$                               US$ 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 SHAREHOLDERS' FUNDS 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Share capital                     10.2.1                              78 598                            78 598 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Capital reserves                                                  17 585 247                        19 549 810 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Retained earnings                                                 22 185 818                        15 166 059 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                               --------------                     ------------- 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Total equity                                                      39 849 663                        34 794 467 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 
 Redeemable ordinary shares            11                          14 335 253                        14 335 253 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Subordinated term loan                12                           1 415 490                         1 414 144 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                               --------------                    -------------- 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Total shareholders' funds                                         55 600 406                        50 543 864 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                               --------------                    -------------- 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 
 LIABILITIES 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 
 Deposits and other liabilities      13.1                         265 384 520                       283 287 243 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                              ---------------                  ---------------- 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Total shareholders' funds 
  and liabilities                                                 320 984 926                       333 831 107 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                                    =========                        ========== 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 ASSETS 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 
 Cash and cash equivalents             15                          69 421 257                        63 439 347 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Current tax assets                                                   368 445                            23 075 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Investment securities               14.1                          24 744 752                        14 547 992 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Investment in debentures              16                                   -                                 - 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Loans, advances and other 
  assets                           17.1.1                         199 617 095                       235 088 981 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Non-current assets held 
  for sale                             18                           2 261 300                         2 264 300 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Quoted and other investments      14.4.1                             177 580                           146 025 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Investment in associate               23                                   -                                 - 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Investment properties                                             14 202 270                         8 125 800 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Intangible assets                     19                           1 647 034                         1 689 385 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Property and equipment                20                           6 280 286                         6 601 086 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Deferred tax assets                                                2 264 907                         1 905 116 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                             ----------------               ------------------- 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 Total assets                                                     320 984 926                       333 831 107 
--------------------------------  -------  ----------------------------------  -------------------------------- 
                                                                    =========                        ========== 
--------------------------------  -------  ----------------------------------  -------------------------------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2016

 
 
                    Share Capital   Share Premium    Share Option      Regulatory       Revaluation         Retained           Total 
                                                          Reserve         Reserve           Reserve         Earnings 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
                              US$             US$             US$             US$               US$              US$             US$ 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 
 Balances at 1 
  January 2015             78 598      15 737 548          62 563       3 293 699                 -       10 131 991      29 304 399 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Profit for the 
  year                          -               -               -               -                 -        5 487 098       5 487 098 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Other 
  comprehensive 
  income                        -               -               -               -             2 970                -           2 970 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Transfer to 
  regulatory 
  reserve                       -               -               -         453 030                 -        (453 030)               - 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
                  ---------------    ------------   -------------     -----------       -----------   --------------     ----------- 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Balances at 31 
  December 
  2015                     78 598      15 737 548          62 563       3 746 729             2 970       15 166 059      34 794 467 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Profit for the 
  year                          -               -               -               -                 -        5 058 166       5 058 166 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Other 
  comprehensive 
  income                        -               -               -               -           (2 970)                -         (2 970) 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Transfer from 
  regulatory 
  reserve                       -               -               -     (1 961 593)                 -        1 961 593               - 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
                  ---------------   -------------    ------------   -------------   ---------------     ------------   ------------- 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 Balances at 31 
  December 
  2016                     78 598      15 737 548          62 563       1 785 136                 -       22 185 818      39 849 663 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
                         ========        ========         =======        ========        ==========         ========       ========= 
---------------  ----------------  --------------  --------------  --------------  ----------------  ---------------  -------------- 
 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2016

 
                                                31 December 2016   31 December 2015 
---------------------------------------------  -----------------  ----------------- 
                                                             US$                US$ 
---------------------------------------------  -----------------  ----------------- 
 CASH FLOWS FROM OPERATING ACTIVITIES 
---------------------------------------------  -----------------  ----------------- 
 Profit before taxation                                6 208 904          7 909 138 
---------------------------------------------  -----------------  ----------------- 
 Non-cash items: 
---------------------------------------------  -----------------  ----------------- 
 -Depreciation                                         1 319 396          1 690 902 
---------------------------------------------  -----------------  ----------------- 
 -Amortisation of intangible assets                      532 768            509 687 
---------------------------------------------  -----------------  ----------------- 
 -Impairment losses on loans and advances              8 059 726          9 496 601 
---------------------------------------------  -----------------  ----------------- 
 -Investment properties fair value 
  adjustment                                           (412 006)          (118 278) 
---------------------------------------------  -----------------  ----------------- 
 -Quoted and other investments fair 
  value adjustment                                      (31 554)             62 654 
---------------------------------------------  -----------------  ----------------- 
 -(Profit)/loss on disposal of property 
  and equipment                                        (368 206)             46 924 
---------------------------------------------  -----------------  ----------------- 
 -Loss on disposal of property and 
  equipment (included in 
  staff costs)                                                 -             68 470 
---------------------------------------------  -----------------  ----------------- 
 -Profit on disposal of investment 
  properties                                            (50 000)          (635 500) 
---------------------------------------------  -----------------  ----------------- 
 -Non-current assets held for sale 
  fair value adjustments                                   3 000              3 000 
---------------------------------------------  -----------------  ----------------- 
 -Interest capitalised on subordinated 
  loan                                                   158 599            134 676 
---------------------------------------------  -----------------  ----------------- 
 -Impairment/(impairment reversal) 
  on land and buildings                                   51 600             44 200 
---------------------------------------------  -----------------  ----------------- 
                                                  --------------     -------------- 
---------------------------------------------  -----------------  ----------------- 
 Operating cash flows before changes 
  in operating assets 
  and liabilities                                     15 472 227         19 212 474 
---------------------------------------------  -----------------  ----------------- 
 
 Changes in operating assets and liabilities 
---------------------------------------------  -----------------  ----------------- 
 (Decrease)/increase in deposits and 
  other liabilities                                 (17 902 723)         42 285 825 
---------------------------------------------  -----------------  ----------------- 
 Decrease/(increase) in loans, advances 
  and other assets                                    27 412 159       (41 222 530) 
---------------------------------------------  -----------------  ----------------- 
 Increase in investment in debentures                          -          4 614 047 
---------------------------------------------  -----------------  ----------------- 
                                                  --------------    --------------- 
---------------------------------------------  -----------------  ----------------- 
 Net cash generated from operations                   24 981 663         24 889 816 
---------------------------------------------  -----------------  ----------------- 
 
 Taxation 
---------------------------------------------  -----------------  ----------------- 
 Corporate tax paid                                  (1 842 635)           (37 843) 
---------------------------------------------  -----------------  ----------------- 
 Capital gains tax paid                                 (12 234)           (91 850) 
---------------------------------------------  -----------------  ----------------- 
                                                  --------------   ---------------- 
---------------------------------------------  -----------------  ----------------- 
 Net cash from operating activities                   23 126 794         24 760 123 
---------------------------------------------  -----------------  ----------------- 
                                                  --------------   ---------------- 
---------------------------------------------  -----------------  ----------------- 
 
 CASH FLOWS FROM INVESTING ACTIVITIES 
---------------------------------------------  -----------------  ----------------- 
 Acquisition of property and equipment               (1 267 404)        (2 271 943) 
---------------------------------------------  -----------------  ----------------- 
 Acquisition of investment securities               (10 196 760)       (10 673 466) 
---------------------------------------------  -----------------  ----------------- 
 Proceeds on disposal of property 
  and equipment                                          581 414            101 767 
---------------------------------------------  -----------------  ----------------- 
 Acquisition of intangible assets                      (490 417)          (248 339) 
---------------------------------------------  -----------------  ----------------- 
 Proceeds on disposal of investment 
  properties                                             180 000          5 380 000 
---------------------------------------------  -----------------  ----------------- 
 Acquisition of investment properties                (5 794 464)        (8 230 860) 
---------------------------------------------  -----------------  ----------------- 
                                                  --------------   ---------------- 
---------------------------------------------  -----------------  ----------------- 
 Net cash used in investing activities              (16 987 631)       (15 942 841) 
---------------------------------------------  -----------------  ----------------- 
                                                  --------------   ---------------- 
---------------------------------------------  -----------------  ----------------- 
 
 
 
 CASH FLOWS FROM FINANCING ACTIVITIES 
-------------------------------------------  -------------------------  --------------------------- 
 Payment of interest on subordinated term 
  loan                                                       (157 253)                    (128 496) 
-------------------------------------------  -------------------------  --------------------------- 
                                                           -----------              --------------- 
-------------------------------------------  -------------------------  --------------------------- 
 Net cash used in financing activities                       (157 253)                    (128 496) 
-------------------------------------------  -------------------------  --------------------------- 
                                                            ----------              --------------- 
-------------------------------------------  -------------------------  --------------------------- 
 
 Net increase in cash and cash equivalents                   5 981 910                    8 688 786 
-------------------------------------------  -------------------------  --------------------------- 
 Cash and cash equivalents at beginning 
  of the year                                               63 439 347                   54 750 561 
-------------------------------------------  -------------------------  --------------------------- 
                                                        --------------             ---------------- 
-------------------------------------------  -------------------------  --------------------------- 
 Cash and cash equivalents at the end 
  of the year (Note 15)                                     69 421 257                   63 439 347 
-------------------------------------------  -------------------------  --------------------------- 
                                                              ========                     ======== 
-------------------------------------------  -------------------------  --------------------------- 
 Payment of interest on subordinated term 
  loan                                                    (157 253)                     (128 496) 
-------------------------------------------  -------------------------  --------------------------- 
                                                        --------------               -------------- 
-------------------------------------------  -------------------------  --------------------------- 
 
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 December 2016

   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 15 March 2017.

   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 17.3.

              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 

Shareholders' funds 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 2016   31 December 2015 
---------------------------------  -----------------  ----------------- 
                                                 US$                US$ 
---------------------------------  -----------------  ----------------- 
 Loans and advances to banks               1 245 664          2 226 621 
---------------------------------  -----------------  ----------------- 
 Loans and advances to customers          29 789 449         32 271 843 
---------------------------------  -----------------  ----------------- 
 Investment securities                     2 825 026          1 262 891 
---------------------------------  -----------------  ----------------- 
                                     ---------------     -------------- 
---------------------------------  -----------------  ----------------- 
                                          33 860 139         35 761 355 
---------------------------------  -----------------  ----------------- 
                                           =========          ========= 
---------------------------------  -----------------  ----------------- 
 
   5.      NON INTEREST INCOME 
   5.1     FEE AND COMMISSION income 
 
                                                      31 December               31 December 
                                                             2016                      2015 
---------------------------------------  ------------------------  ------------------------ 
                                                              US$                       US$ 
---------------------------------------  ------------------------  ------------------------ 
 Retail banking customer fees                          13 287 237                17 057 135 
---------------------------------------  ------------------------  ------------------------ 
 Corporate banking credit related fees                  1 029 037                 1 567 808 
---------------------------------------  ------------------------  ------------------------ 
 Financial guarantee fees                                 230 837                   206 420 
---------------------------------------  ------------------------  ------------------------ 
 International banking commissions                        451 117                 1 597 671 
---------------------------------------  ------------------------  ------------------------ 
 Corporate finance fees                                   180 921                   555 660 
---------------------------------------  ------------------------  ------------------------ 
                                                    -------------            -------------- 
---------------------------------------  ------------------------  ------------------------ 
                                                       15 179 149                20 984 694 
---------------------------------------  ------------------------  ------------------------ 
                                                         ========                 ========= 
---------------------------------------  ------------------------  ------------------------ 
 
   5.2     OTHER income 
 
                                                         31 December                 31 December 
                                                                2016                        2015 
------------------------------------------------  ------------------  -------------------------- 
                                                                 US$                         US$ 
------------------------------------------------  ------------------  -------------------------- 
 Quoted and other investments fair value 
  adjustments                                                 31 554                    (62 654) 
------------------------------------------------  ------------------  -------------------------- 
 Fair value adjustment on non- current 
  assets held for sale                                       (3 000)                     (3 000) 
------------------------------------------------  ------------------  -------------------------- 
 Fair value adjustment on investment properties              412 006                     118 278 
------------------------------------------------  ------------------  -------------------------- 
 Profit on disposal of investment properties                  50 000                     635 500 
------------------------------------------------  ------------------  -------------------------- 
 Profit/(loss) on disposal of property 
  and equipment                                              368 205                    (46 924) 
------------------------------------------------  ------------------  -------------------------- 
 Rental income                                               142 400                      49 523 
------------------------------------------------  ------------------  -------------------------- 
 Bad debts recovered                                         675 006                     430 851 
------------------------------------------------  ------------------  -------------------------- 
 Other net operating income                                   61 689                     112 551 
------------------------------------------------  ------------------  -------------------------- 
                                                         -----------               ------------- 
------------------------------------------------  ------------------  -------------------------- 
                                                           1 737 860                   1 234 125 
------------------------------------------------  ------------------  -------------------------- 
                                                            ========                    ======== 
------------------------------------------------  ------------------  -------------------------- 
 
   6.      Operating EXPITURE 
 
                                                 31 December      31 December 
                                                        2016             2015 
-------------------------------------------  ---------------  --------------- 
                                                         US$              US$ 
-------------------------------------------  ---------------  --------------- 
 The operating profit is after recognising 
  the following: 
-------------------------------------------  ---------------  --------------- 
 Administration costs                             12 098 932       12 702 704 
-------------------------------------------  ---------------  --------------- 
 Audit fees: 
-------------------------------------------  ---------------  --------------- 
 - Current year                                       61 468           85 557 
-------------------------------------------  ---------------  --------------- 
 - Prior year                                         84 892          109 325 
-------------------------------------------  ---------------  --------------- 
 Impairment/ (impairment reversal) on land 
  and buildings                                       51 600           44 200 
-------------------------------------------  ---------------  --------------- 
 Depreciation                                      1 319 396        1 690 902 
-------------------------------------------  ---------------  --------------- 
 Amortisation of intangible assets                   532 768          509 687 
-------------------------------------------  ---------------  --------------- 
 Directors' remuneration                             620 616          499 024 
-------------------------------------------  ---------------  --------------- 
 - Fees for services as directors                    311 431          232 705 
-------------------------------------------  ---------------  --------------- 
 - Other emoluments                                  309 185          266 319 
-------------------------------------------  ---------------  --------------- 
 
 Staff costs -salaries, allowances and 
  related costs                                   11 407 034       10 362 780 
-------------------------------------------  ---------------  --------------- 
                   -termination benefits                   -          868 470 
-------------------------------------------  ---------------  --------------- 
                                              --------------   -------------- 
-------------------------------------------  ---------------  --------------- 
                                                  26 176 706       26 872 649 
-------------------------------------------  ---------------  --------------- 
                                                   =========         ======== 
-------------------------------------------  ---------------  --------------- 
 
   7.      taxation 
 
                       31 December     31 December 
                              2016            2015 
--------------------  ------------  -------------- 
 Income tax expense            US$             US$ 
--------------------  ------------  -------------- 
 Current tax             1 497 265       1 381 742 
--------------------  ------------  -------------- 
 Deferred tax            (358 761)         878 448 
--------------------  ------------  -------------- 
 Capital gains tax          12 234         161 850 
--------------------  ------------  -------------- 
                       -----------   ------------- 
--------------------  ------------  -------------- 
                         1 150 738       2 422 040 
--------------------  ------------  -------------- 
                           =======        ======== 
--------------------  ------------  -------------- 
 
   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    Non-performing loans 

Interest on loans and advances is accrued to income until such time as reasonable doubt exists about its collectability, thereafter and until all or part of the loan is written off, interest continues to accrue on customers' accounts, but is not included in income. Such suspended interest is deducted from loans and advances in the statement of financial position. This policy meets the requirements of the Banking Regulations, 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 2016                    31 December 2015 
---------------------  -----------------  ---------------------------------- 
                                     US$                                 US$ 
---------------------  -----------------  ---------------------------------- 
 Profit for the year           5 058 166                           5 487 098 
---------------------  -----------------  ---------------------------------- 
                                ========                           ======= 
---------------------  -----------------  ---------------------------------- 
 
   9.2    Number of shares 

9.2.1 Basic earnings per share

 
                                        31 December 2016   31 December 2015 
-------------------------------------  -----------------  ----------------- 
 Weighted average number of ordinary 
  shares for 
  basic earnings per share                   384 427 351        384 427 351 
-------------------------------------  -----------------  ----------------- 
 

9.2.2 Diluted earnings per share

 
                                   31 December 2016   31 December 2015 
--------------------------------  -----------------  ----------------- 
 Number of shares at beginning 
  of period                             384 427 351        384 427 351 
--------------------------------  -----------------  ----------------- 
 Effect of dilution: 
--------------------------------  -----------------  ----------------- 
 Share options granted but not 
  issued                                  4 128 434          4 128 434 
--------------------------------  -----------------  ----------------- 
 Share options approved but not 
  granted                                23 942 639         23 942 639 
--------------------------------  -----------------  ----------------- 
                                     --------------    --------------- 
--------------------------------  -----------------  ----------------- 
 Share options granted but not 
  issued                                412 498 424        412 498 434 
--------------------------------  -----------------  ----------------- 
                                          =========          ========= 
--------------------------------  -----------------  ----------------- 
 
   9.3    Earnings per share (US cents) 
 
                               31 December 2016   31 December 2015 
----------------------------  -----------------  ----------------- 
 Basic earnings per share                  1.32               1.43 
----------------------------  -----------------  ----------------- 
 Diluted earnings per share                1.23               1.33 
----------------------------  -----------------  ----------------- 
 
   10.    SHARE CAPITAL 

10.1 Authorised

 
                                       31 December        31 December   31 December    31 December 
                                              2016               2015          2016           2015 
-------------------------------  -----------------  -----------------  ------------  ------------- 
                                  Shares (million)   Shares (million)           US$            US$ 
-------------------------------  -----------------  -----------------  ------------  ------------- 
 Ordinary shares of US$0.00028 
  each                                         600                600       168 000        168 000 
-------------------------------  -----------------  -----------------  ------------  ------------- 
                                              ====               ====         =====          ===== 
-------------------------------  -----------------  -----------------  ------------  ------------- 
 
   10.2     Issued and fully paid 

10.2.1 Ordinary shares

 
                         31 December        31 December   31 December   31 December 
                                2016               2015          2016          2015 
-----------------  -----------------  -----------------  ------------  ------------ 
                    Shares (million)   Shares (million) 
                                                                  US$           US$ 
-----------------  -----------------  -----------------  ------------  ------------ 
 
 Ordinary shares                 281                281        78 598        78 598 
-----------------  -----------------  -----------------  ------------  ------------ 
                                ====               ====         =====         ===== 
-----------------  -----------------  -----------------  ------------  ------------ 
 

10.2.2 Redeemable ordinary shares

 
                             31 December        31 December   31 December   31 December 
                                    2016               2015          2016          2015 
---------------------  -----------------  -----------------  ------------  ------------ 
                        Shares (million)   Shares (million) 
                                                                      US$           US$ 
---------------------  -----------------  -----------------  ------------  ------------ 
 
 Redeemable ordinary 
  shares                             104                104        29 040        29 040 
---------------------  -----------------  -----------------  ------------  ------------ 
                                     ===                ===         =====         ===== 
---------------------  -----------------  -----------------  ------------  ------------ 
 

Of the unissued ordinary shares of 215 million shares (2015 - 215 million), options which may be granted in terms of the 2012 ESOS amount to 28 071 073 (2015 - 28 071 073) and as at 31 December 2016; 4 128 434 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 2016      31 December 
                                                             2015 
-----------------------------  -----------------  --------------- 
                                             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 2016               31 December 
                                                                           2015 
----------------------  -----------------------------  ------------------------ 
                                                  US$                       US$ 
----------------------  -----------------------------  ------------------------ 
 
 At 1 January                               1 414 144                 1 407 964 
----------------------  -----------------------------  ------------------------ 
 Interest capitalised                         158 599                   134 676 
----------------------  -----------------------------  ------------------------ 
 Interest paid                              (157 253)                 (128 496) 
----------------------  -----------------------------  ------------------------ 
                                        -------------            -------------- 
----------------------  -----------------------------  ------------------------ 
                                            1 415 490                 1 414 144 
----------------------  -----------------------------  ------------------------ 
                                             ========                  ======== 
----------------------  -----------------------------  ------------------------ 
 

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 2016. However, there were breaches to the financial covenants regarding the open asset exposure ratio that stood at 41.5% instead of a maximum of 30% as well as the aggregate un-hedged open foreign currency positions ratio that stood at 12.6% instead of a cap of 10%. The Bank will apply for a waiver of the non-compliant ratios by 31 March 2017.

   13.          DepositS and other LIABILITIES 
   13.1        Deposits and other liabilities 
 
                                                 31 December 2016   31 December 2015 
-------------------------------  --------------------------------  ----------------- 
                                                              US$                US$ 
-------------------------------  --------------------------------  ----------------- 
 Deposits from banks and other 
  financial 
  institutions**                                       50 002 468         63 192 674 
-------------------------------  --------------------------------  ----------------- 
 Current and deposit accounts 
  from 
  customers                                           210 547 915        214 024 095 
-------------------------------  --------------------------------  ----------------- 
                                                -----------------   ---------------- 
-------------------------------  --------------------------------  ----------------- 
 Total deposits                                       260 550 383        277 216 769 
-------------------------------  --------------------------------  ----------------- 
 Trade and other payables*                              4 834 137          6 070 474 
-------------------------------  --------------------------------  ----------------- 
                                                -----------------   ---------------- 
-------------------------------  --------------------------------  ----------------- 
                                                      265 384 520        283 287 243 
-------------------------------  --------------------------------  ----------------- 
                                                       ==========          ========= 
-------------------------------  --------------------------------  ----------------- 
 

* 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 is a loan balance of US$5 263 122 due to Societe de Promotion de Participation Pour la Cooperation Economique SA (Proparco) respectively. The Group has not had any defaults on the principal and interest with respect to these loans during the year ended 31 December 2016. However, there were breaches to the financial covenants regarding the following ratios:

   --   Non-performing loans ratio - 11% (instead of a maximum of 10%); and 
   --   Loan loss reserve ratio - 42.7% (instead of a maximum of 40%). 

The Bank will apply for a waiver of the non-compliant ratios by 31 March 2017.

     13.2     Maturity analysis 
 
                       31 December 2016   31 December 2015 
--------------------  -----------------  ----------------- 
                                    US$                US$ 
--------------------  -----------------  ----------------- 
 Less than 1 month          185 752 420        184 324 981 
--------------------  -----------------  ----------------- 
 1 to 3 months               35 339 615         66 129 516 
--------------------  -----------------  ----------------- 
 3 to 6 months                2 927 632          3 241 887 
--------------------  -----------------  ----------------- 
 6 months to 1 year           6 358 137         14 969 876 
--------------------  -----------------  ----------------- 
 1 to 5 years                29 980 749          8 550 509 
--------------------  -----------------  ----------------- 
 Over 5 years                   191 830                  - 
--------------------  -----------------  ----------------- 
                        ---------------   ---------------- 
--------------------  -----------------  ----------------- 
                            260 550 383        277 216 769 
--------------------  -----------------  ----------------- 
                              =========         ========== 
--------------------  -----------------  ----------------- 
 
   13.3   Sectoral analysis of deposits 
 
                                         31 December                  31 December 
                                                2016                         2015 
----------------------------------  ----------------  ---------  ----------------  ------- 
                                                 US$          %               US$        % 
----------------------------------  ----------------  ---------  ----------------  ------- 
 
 Agriculture                               6 274 099          3         7 959 554        3 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Banks and other financial 
  institutions                            50 002 468         19        63 192 674       23 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Distribution                             24 098 216          9        28 153 680       10 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Individuals                              21 782 045          8        30 782 718       11 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Manufacturing                            39 033 359         15        37 633 942       14 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Mining companies                          5 056 123          2         6 268 507        2 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Municipalities and parastatals           16 027 950          6        11 833 310        4 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Other deposits                           36 014 266         14        34 054 452       12 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Services                                 54 712 221         21        47 908 714       17 
----------------------------------  ----------------  ---------  ----------------  ------- 
 Transport and telecommunications 
  companies                                7 549 636          3         9 429 218        4 
----------------------------------  ----------------  ---------  ----------------  ------- 
                                     ---------------   --------   ---------------   ------ 
----------------------------------  ----------------  ---------  ----------------  ------- 
                                         260 550 383        100       277 216 769      100 
----------------------------------  ----------------  ---------  ----------------  ------- 
                                           =========      =====         =========      === 
----------------------------------  ----------------  ---------  ----------------  ------- 
 
   14.     FINANCIAL INSTRUMENTS 
   14.1   Investment securities 
 
                                           31 December 2016   31 December 2015 
----------------------------------------  -----------------  ----------------- 
                                                        US$                US$ 
----------------------------------------  -----------------  ----------------- 
 Investment securities held to maturity          12 476 046          3 817 687 
----------------------------------------  -----------------  ----------------- 
 Investment securities - loans and 
  receivables                                    12 268 706         10 730 305 
----------------------------------------  -----------------  ----------------- 
                                             --------------    --------------- 
----------------------------------------  -----------------  ----------------- 
                                                 24 744 752         14 547 992 
----------------------------------------  -----------------  ----------------- 
                                                  =========          ========= 
----------------------------------------  -----------------  ----------------- 
 

The Group holds treasury bills and government bonds amounting to US$24 744 752 with interest rates ranging from 2% to 5%. Liquidity induced trades have occurred in the secondary market and there is industry consensus that these trades do not represent free market activity. In light of the absence of an observable active market for the treasury bills, the instruments are recorded at amortised cost. Of the total treasury bills balance, a total of US$22 156 958 has been pledged as security on interbank borrowings.

   14.2    Maturity analysis of investment securities held to maturity 
 
                       31 December 2016   31 December 2015 
--------------------  -----------------  ----------------- 
                                    US$                US$ 
--------------------  -----------------  ----------------- 
 Less than 1 month                    -                  - 
--------------------  -----------------  ----------------- 
 1 to 3 months                        -          1 314 802 
--------------------  -----------------  ----------------- 
 3 to 6 months                        -          2 502 885 
--------------------  -----------------  ----------------- 
 6 months to 1 year                   -                  - 
--------------------  -----------------  ----------------- 
 1 year to 5 years            2 424 461                  - 
--------------------  -----------------  ----------------- 
 Over 5 years                10 051 585                  - 
--------------------  -----------------  ----------------- 
                         --------------     -------------- 
--------------------  -----------------  ----------------- 
                             12 476 046          3 817 687 
--------------------  -----------------  ----------------- 
                               ========           ======== 
--------------------  -----------------  ----------------- 
 
   14.3   Maturity analysis of investment securities - loans and receivables 
 
                        31 December 2016   31 December 2015 
--------------------  ------------------  ----------------- 
                                     US$                US$ 
--------------------  ------------------  ----------------- 
 Less than 1 month                     -                  - 
--------------------  ------------------  ----------------- 
 1 to 3 months                   168 563                  - 
--------------------  ------------------  ----------------- 
 6 months to 1 year               48 341          6 329 114 
--------------------  ------------------  ----------------- 
 1 year to 5 years               266 785          3 400 415 
--------------------  ------------------  ----------------- 
 Over 5 years                 11 785 017          1 000 776 
--------------------  ------------------  ----------------- 
                       -----------------     -------------- 
--------------------  ------------------  ----------------- 
                              12 268 706         10 730 305 
--------------------  ------------------  ----------------- 
                              ==========          ========= 
--------------------  ------------------  ----------------- 
 
   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 2016         Level 1       Level 2            Level 3 
--------------------  ---------------  --------------  ------------  ----------------- 
                                  US$             US$           US$                US$ 
--------------------  ---------------  --------------  ------------  ----------------- 
 Trade investments             88 930               -             -             88 930 
--------------------  ---------------  --------------  ------------  ----------------- 
 Quoted investments            88 650          88 650             -                  - 
--------------------  ---------------  --------------  ------------  ----------------- 
                       --------------   -------------   -----------   ---------------- 
--------------------  ---------------  --------------  ------------  ----------------- 
                              177 580          88 650             -             88 930 
--------------------  ---------------  --------------  ------------  ----------------- 
                             ========        ========       =======        =========== 
--------------------  ---------------  --------------  ------------  ----------------- 
 
 
                          31 Dec 2015         Level 1       Level 2            Level 3 
--------------------  ---------------  --------------  ------------  ----------------- 
                                  US$             US$           US$                US$ 
--------------------  ---------------  --------------  ------------  ----------------- 
 Trade investments             77 805               -             -             77 805 
--------------------  ---------------  --------------  ------------  ----------------- 
 Quoted investments            68 220          68 220             -                  - 
--------------------  ---------------  --------------  ------------  ----------------- 
                       --------------   -------------   -----------   ---------------- 
--------------------  ---------------  --------------  ------------  ----------------- 
                              146 025          68 220             -             77 805 
--------------------  ---------------  --------------  ------------  ----------------- 
                             ========        ========       =======          ========= 
--------------------  ---------------  --------------  ------------  ----------------- 
 

During the reporting periods ended 31 December 2015 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 2016

 
                                      Trade investments 
-----------------------------------  ------------------ 
                                                    US$ 
-----------------------------------  ------------------ 
 Balance at 1 January                            77 805 
-----------------------------------  ------------------ 
 Gain recognised in profit or loss               11 125 
-----------------------------------  ------------------ 
                                            ----------- 
-----------------------------------  ------------------ 
 Balance at 31 December                          88 930 
-----------------------------------  ------------------ 
                                                ======= 
-----------------------------------  ------------------ 
 

31 December 2015

 
                                      Trade investments 
-----------------------------------  ------------------ 
                                                    US$ 
-----------------------------------  ------------------ 
 Balance at 1 January                            81 390 
-----------------------------------  ------------------ 
 Loss recognised in profit or loss              (3 585) 
-----------------------------------  ------------------ 
                                            ----------- 
-----------------------------------  ------------------ 
 Balance at 31 December                          77 805 
-----------------------------------  ------------------ 
                                                ======= 
-----------------------------------  ------------------ 
 

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 2016

 
                                    Level              Level 2           Level 3      Total carrying 
                                                                                              amount 
---------------------------  ------------  -------------------  ----------------  ------------------ 
 Assets                               US$                  US$               US$                 US$ 
---------------------------  ------------  -------------------  ----------------  ------------------ 
 Cash and cash equivalents              -           69 421 257                 -          69 421 257 
---------------------------  ------------  -------------------  ----------------  ------------------ 
 Loans, advances 
  and other 
  accounts                              -                    -       199 617 095         199 617 095 
---------------------------  ------------  -------------------  ----------------  ------------------ 
 Investment securities                  -                    -        24 744 752          24 744 752 
---------------------------  ------------  -------------------  ----------------  ------------------ 
                               ----------    -----------------   ---------------   ----------------- 
---------------------------  ------------  -------------------  ----------------  ------------------ 
                                        -           69 421 257       224 361 847         293 783 104 
 ----------------------------------------  -------------------  ----------------  ------------------ 
                                   ======           ==========         =========          ========== 
---------------------------  ------------  -------------------  ----------------  ------------------ 
 
 Liabilities 
---------------------------  ------------  -------------------  ----------------  ------------------ 
 Deposits and other 
  liabilities                           -          265 384 520                 -         265 384 520 
---------------------------  ------------  -------------------  ----------------  ------------------ 
                               ----------   ------------------    --------------   ----------------- 
---------------------------  ------------  -------------------  ----------------  ------------------ 
                                        -          265 384 520                 -         265 384 520 
 ----------------------------------------  -------------------  ----------------  ------------------ 
                                   ======          ===========         =========          ========== 
 ----------------------------------------  -------------------  ----------------  ------------------ 
 

31 December 2015

 
                                                                                     Total carrying 
                                    Level              Level 2          Level 3              amount 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 Assets                               US$                  US$              US$                 US$ 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 Cash and cash equivalents              -           63 439 347                -          63 439 347 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 Loans, advances 
  and other 
  accounts                              -                    -      235 088 981         235 088 981 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 Investments securities                                      -       14 547 992          14 547 992 
-----------------------------------------  -------------------  ---------------  ------------------ 
                               ----------    -----------------   --------------   ----------------- 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 Total                                  -           63 439 347      249 636 973         313 076 320 
---------------------------  ------------  -------------------  ---------------  ------------------ 
                                   ======           ==========         ========          ========== 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 
 Liabilities 
---------------------------  ------------  -------------------  ---------------  ------------------ 
 Deposits and other 
  liabilities                           -          283 287 243                -         283 287 243 
---------------------------  ------------  -------------------  ---------------  ------------------ 
                               ----------   ------------------     ------------   ----------------- 
---------------------------  ------------  -------------------  ---------------  ------------------ 
                                        -          283 287 243                -         283 287 243 
 ----------------------------------------  -------------------  ---------------  ------------------ 
                                   ======          ===========          =======          ========== 
 ----------------------------------------  -------------------  ---------------  ------------------ 
 
 

The carrying amount of financial assets and liabilities not measured at fair approximate fair value.

   15.          CASH AND CASH EQUIVALENTS 
 
                                      31 December 2016   31 December 2015 
-----------------------------------  -----------------  ----------------- 
                                                   US$                US$ 
-----------------------------------  -----------------  ----------------- 
 Balances with the Central Bank             36 166 732         26 238 681 
-----------------------------------  -----------------  ----------------- 
 Current, nostro accounts and cash           8 754 525         11 700 666 
-----------------------------------  -----------------  ----------------- 
 Interbank placements                       24 500 000         25 500 000 
-----------------------------------  -----------------  ----------------- 
                                        --------------     -------------- 
-----------------------------------  -----------------  ----------------- 
                                            69 421 257         63 439 347 
-----------------------------------  -----------------  ----------------- 
                                              ========          ========= 
-----------------------------------  -----------------  ----------------- 
 

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.          INVESTMENT IN DEBENTURES 
 
                              31 December 2016   31 December 2015 
--------------------------  ------------------  ----------------- 
                                           US$                US$ 
--------------------------  ------------------  ----------------- 
 Debentures                                  -          4 787 074 
--------------------------  ------------------  ----------------- 
 Redemption of debentures                    -        (4 787 074) 
--------------------------  ------------------  ----------------- 
                              ----------------     -------------- 
 ---------------------------------------------  ----------------- 
                                             -                  - 
 ---------------------------------------------  ----------------- 
                                    ==========          ========= 
 ---------------------------------------------  ----------------- 
 

The Group had convertible debentures with a carrying amount of US$4 787 074 with a maturity of 5 years from inception. The debentures were at an interest of 10% per annum. The Bank had an option to convert the debentures to equity or redeem the debentures at par on or before the maturity date of 9 March 2018. The debentures were redeemed at par on 17 March 2015.

   17.         LOANS, ADVANCES AND OTHER ASSETS 
    17.1        Total loans, advances and other assets 
   17.1.1     Loans, advances and other assets 
 
                               31 December 2016       31 December 
                                                             2015 
----------------------------  -----------------  ---------------- 
                                            US$               US$ 
----------------------------  -----------------  ---------------- 
 
 Fixed term loans                    16 889 687        25 138 443 
----------------------------  -----------------  ---------------- 
 Local loans and overdrafts         178 602 573       207 408 465 
----------------------------  -----------------  ---------------- 
                                ---------------   --------------- 
----------------------------  -----------------  ---------------- 
                                    195 492 260       232 546 908 
----------------------------  -----------------  ---------------- 
 Other assets                         4 124 835         2 542 073 
----------------------------  -----------------  ---------------- 
                                 --------------    -------------- 
----------------------------  -----------------  ---------------- 
                                    199 617 095       235 088 981 
----------------------------  -----------------  ---------------- 
                                      =========         ========= 
----------------------------  -----------------  ---------------- 
 
   17.1.2    Maturity analysis 
 
                                       31 December 2016        31 December 
                                                                      2015 
------------------------------------  -----------------  ----------------- 
                                                    US$                US$ 
------------------------------------  -----------------  ----------------- 
 
 Less than one month                         86 086 528        136 146 912 
------------------------------------  -----------------  ----------------- 
 1 to 3 months                                9 247 720         24 125 652 
------------------------------------  -----------------  ----------------- 
 3 to 6 months                                7 423 426          2 387 188 
------------------------------------  -----------------  ----------------- 
 6 months to 1 year                          16 327 018         15 686 184 
------------------------------------  -----------------  ----------------- 
 1 to 5 years                                86 773 700         64 895 082 
------------------------------------  -----------------  ----------------- 
 Over 5 years                                         -                  - 
------------------------------------  -----------------  ----------------- 
                                        ---------------   ---------------- 
------------------------------------  -----------------  ----------------- 
 Total advances                             205 858 392        243 241 018 
------------------------------------  -----------------  ----------------- 
 Allowances for impairment losses 
------------------------------------  -----------------  ----------------- 
  on loans and advances (Note 17.3)         (8 305 117)        (8 582 636) 
------------------------------------  -----------------  ----------------- 
 Suspended interest                         (2 061 015)        (2 111 474) 
------------------------------------  -----------------  ----------------- 
                                        ---------------     -------------- 
------------------------------------  -----------------  ----------------- 
                                            195 492 260        232 546 908 
------------------------------------  -----------------  ----------------- 
 Other assets                                 4 124 835          2 542 073 
------------------------------------  -----------------  ----------------- 
                                        ---------------    --------------- 
------------------------------------  -----------------  ----------------- 
                                            199 617 095        235 088 981 
------------------------------------  -----------------  ----------------- 
                                              =========          ========= 
------------------------------------  -----------------  ----------------- 
 
   17.2    Sectoral analysis of utilizations 
 
                                       31 December          %   31 December 2015          % 
                                              2016 
------------------------------  ------------------  ---------  -----------------  --------- 
 
 Agriculture and horticulture           22 172 296         11         13 907 259          6 
------------------------------  ------------------  ---------  -----------------  --------- 
 Conglomerates                           8 149 399          4         11 348 334          5 
------------------------------  ------------------  ---------  -----------------  --------- 
 Distribution                           22 957 893         11         37 364 138         16 
------------------------------  ------------------  ---------  -----------------  --------- 
 Food & beverages                        7 016 516          4          5 692 742          2 
------------------------------  ------------------  ---------  -----------------  --------- 
 Individuals                            90 381 441         44        101 585 312         42 
------------------------------  ------------------  ---------  -----------------  --------- 
 Manufacturing                          14 562 333          7         29 774 899         12 
------------------------------  ------------------  ---------  -----------------  --------- 
 Mining                                    789 502          -          1 067 328          - 
------------------------------  ------------------  ---------  -----------------  --------- 
 Services                               39 829 012         19         42 501 006         17 
------------------------------  ------------------  ---------  -----------------  --------- 
                                 -----------------   --------    ---------------   -------- 
------------------------------  ------------------  ---------  -----------------  --------- 
                                       205 858 392        100        243 241 018        100 
------------------------------  ------------------  ---------  -----------------  --------- 
                                        ==========      =====          =========      ===== 
------------------------------  ------------------  ---------  -----------------  --------- 
 

The material concentration of loans and advances is with individuals at 44% (2015 - 42%) and services sector at 19% (2015 - 17%).

17.3 Allowance for impairment losses on loans, advances and debentures

 
                                    31 December 2016                                  31 December 2015 
----------------  --------------------------------------------------  ------------------------------------------------ 
                        Specific           Portfolio           Total         Specific     Portfolio              Total 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
                             US$                 US$             US$              US$           US$                US$ 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
 At 1 January          7 574 789           1 007 847       8 582 636       10 626 997       163 195         10 790 192 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
 Charge against 
  profits              6 970 128           1 089 598       8 059 726        8 651 949       844 652          9 496 601 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
 Bad debts 
  written                                                                  (11 704 
  off               (8 337 245)                    -    (8 337 245)          157)                -    (11 704 157) 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
                   -------------      -----------      -------------   --------------   -----------      ------------- 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
                                                                                           1 007 
                     6 207 672         2 097 445         8 305 117        7 574 789         847          8 582 636 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
                     ========           =======          ========           =========      ========       ======== 
----------------  --------------  ------------------  --------------  ---------------  ------------  ----------------- 
 

During the period under review, the Group reviewed the basis and assumptions for recognising the portfolio impairment allowance in view of the current macro and micro economic conditions prevailing in Zimbabwe. The review resulted in an increase in the level of the portfolio impairment allowance recognised by the Group in proportion to its loan book size.

   17.4     Non-performing loans and advances 
 
                                            31 December 2016   31 December 2015 
-----------------------------------------  -----------------  ----------------- 
                                                         US$                US$ 
-----------------------------------------  -----------------  ----------------- 
 Gross non-performing loans and advances          22 015 828         32 092 184 
-----------------------------------------  -----------------  ----------------- 
 Allowances for impairment loss on 
  loans and advances                             (6 207 672)        (7 574 789) 
-----------------------------------------  -----------------  ----------------- 
 Retail loans insurance                          (1 577 628)        (1 682 840) 
-----------------------------------------  -----------------  ----------------- 
 Suspended interest                              (1 748 031)        (1 798 490) 
-----------------------------------------  -----------------  ----------------- 
                                               -------------    --------------- 
-----------------------------------------  -----------------  ----------------- 
 Net non-performing loans and advances            12 482 497         21 036 065 
-----------------------------------------  -----------------  ----------------- 
                                                    ========         ========== 
-----------------------------------------  -----------------  ----------------- 
 

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 residential properties, equities and promissory notes all fair valued at US$17 573 875 (2015 - US$22 797 088).

   17.5    Loans to related parties (included under loans, advances and other assets) 
 
                           31 December 2016   31 December 2015 
------------------------  -----------------  ----------------- 
                                        US$                US$ 
------------------------  -----------------  ----------------- 
 Executive directors                240 705            136 276 
------------------------  -----------------  ----------------- 
 Officers                         7 381 115          5 178 746 
------------------------  -----------------  ----------------- 
 Officers' companies                      -                  - 
------------------------  -----------------  ----------------- 
                             --------------     -------------- 
------------------------  -----------------  ----------------- 
                                  7 621 820          5 315 022 
------------------------  -----------------  ----------------- 
 Fair value adjustments           (381 887)          (293 377) 
------------------------  -----------------  ----------------- 
                              -------------     -------------- 
------------------------  -----------------  ----------------- 
                                  7 239 933          5 021 645 
------------------------  -----------------  ----------------- 
                                   ========          ========= 
------------------------  -----------------  ----------------- 
 
   18.        NON-CURRENT ASSETS HELD FOR SALE 
 
                            31 December 2016   31 December 2015 
-----------------------  -------------------  ----------------- 
                                         US$                US$ 
-----------------------  -------------------  ----------------- 
 At 1 January                      2 264 300          2 267 300 
-----------------------  -------------------  ----------------- 
 Fair value adjustment               (3 000)            (3 000) 
-----------------------  -------------------  ----------------- 
                          ------------------     -------------- 
-----------------------  -------------------  ----------------- 
                                   2 261 300          2 264 300 
-----------------------  -------------------  ----------------- 
                                 ===========          ========= 
-----------------------  -------------------  ----------------- 
 

The Group is in possession of land with a fair value of US$2 261 300 at year end. The Group entered into a sale agreement for a portion of the land in 2012 (at a price of US$2 150 000), however the execution and finalisation of the sale under this contract has been pending since then. The buyer has expressed commitment towards finalisation of the sale and the disposal process is now expected to be completed within the next twelve months. The disposal will improve the Group's cash flows. The fair value adjustment is included under non-interest income (note 5.2).

   19     INTANGIBLE ASSETS 
 
                                     Work in       Computer 
-----------------------------  -------------  -------------  --------------- 
                                    Progress       Software            Total 
-----------------------------  -------------  -------------  --------------- 
                                         US$            US$              US$ 
-----------------------------  -------------  -------------  --------------- 
 Cost 
-----------------------------  -------------  -------------  --------------- 
 Balance at 1 January 2015           208 673      2 326 292        2 534 965 
-----------------------------  -------------  -------------  --------------- 
 Acquisitions                         19 922        228 417          248 339 
-----------------------------  -------------  -------------  --------------- 
                                ------------   ------------   -------------- 
-----------------------------  -------------  -------------  --------------- 
 Balance at 1 January 2016           228 595      2 554 709        2 783 304 
-----------------------------  -------------  -------------  --------------- 
 Acquisitions                              -        490 417          490 417 
-----------------------------  -------------  -------------  --------------- 
                                ------------   ------------    ------------- 
-----------------------------  -------------  -------------  --------------- 
 Balance at 31 December 2016         228 595      3 045 126        3 273 721 
-----------------------------  -------------  -------------  --------------- 
                                 -----------   ------------     ------------ 
-----------------------------  -------------  -------------  --------------- 
 
 Accumulated amortisation 
-----------------------------  -------------  -------------  --------------- 
 Balance at 1 January 2015                 -        584 232          584 232 
-----------------------------  -------------  -------------  --------------- 
 Amortisation for the year                 -        509 687          509 687 
-----------------------------  -------------  -------------  --------------- 
                                 -----------   ------------     ------------ 
-----------------------------  -------------  -------------  --------------- 
 Balance at 1 January 2016                 -      1 093 919        1 093 919 
-----------------------------  -------------  -------------  --------------- 
 Amortisation for the year                 -        532 768          532 768 
-----------------------------  -------------  -------------  --------------- 
                                ------------    -----------      ----------- 
-----------------------------  -------------  -------------  --------------- 
 Balance at 31 December 2016               -      1 626 687        1 626 687 
-----------------------------  -------------  -------------  --------------- 
                                     =======    -----------      ----------- 
-----------------------------  -------------  -------------  --------------- 
 Carrying amount 
-----------------------------  -------------  -------------  --------------- 
 
 At 31 December 2016                 228 595      1 418 439        1 647 034 
-----------------------------  -------------  -------------  --------------- 
                                    ========        =======        ========= 
-----------------------------  -------------  -------------  --------------- 
 At 1 January 2016                   228 595      1 460 790        1 689 385 
-----------------------------  -------------  -------------  --------------- 
                                    ========       ========        ========= 
-----------------------------  -------------  -------------  --------------- 
 At 1 January 2015                   208 673      1 742 060        1 950 733 
-----------------------------  -------------  -------------  --------------- 
                                    ========      =========        ========= 
-----------------------------  -------------  -------------  --------------- 
 
   20.    PROPERTY AND EQUIPMENT 
 
                         Capital work        Computers    Motor Vehicles        Furniture    Freehold land             Total 
                          in progress                                       and equipment        buildings 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                                  US$              US$               US$              US$              US$               US$ 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Cost 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 At 1 January 
  2015                        101 375        2 605 706         4 161 425        3 093 648        2 904 518        12 866 672 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Additions                    585 511          334 338           418 383          540 202          393 509         2 271 943 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Capitalisation              (33 513)           33 513                 -                -                -                 - 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Revaluation loss                   -                -                 -                -         (40 200)          (40 200) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Disposals                          -         (11 220)         (869 083)                -                -         (880 303) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Reclasssification 
  to 
  invest property            (67 862)                -                 -                -                -          (67 862) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                      ---------------   --------------    --------------   --------------   --------------    -------------- 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 At 1 January 
  2016                        585 511        2 962 337         3 710 725        3 633 850        3 257 827        14 150 250 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Additions                    188 947          541 737           192 113          215 716          128 891         1 267 404 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Capitalisations            (585 511)          173 827           180 000           64 348          167 336                 - 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Revaluation loss                   -                -                 -                -         (55 600)          (55 600) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Disposals                          -                -       (2 799 390)                -                -       (2 799 390) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                          -----------    -------------   ---------------   --------------   --------------   --------------- 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 At 31 December 
  2016                        188 947        3 677 901         1 283 448        3 913 914        3 498 454        12 562 664 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                          -----------    -------------    --------------    -------------    -------------      ------------ 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Accumulated 
  depreciation 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 At 1 January 
  2015                              -        1 386 055         2 872 564        2 121 154          141 632         6 521 405 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Charge for the 
  year                              -          392 601           775 381          464 885           58 035         1 690 902 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Disposals                          -          (3 197)         (659 946)                -                -         (663 143) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                       --------------   --------------    --------------   --------------   --------------     ------------- 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 At 1 January 
  2016                              -        1 775 459         2 987 999        2 586 039          199 667         7 549 164 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Charge for the 
  year                              -          427 666           370 383          458 831           62 516         1 319 396 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 Disposals                          -                -       (2 586 182)                -                -       (2 586 182) 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                       --------------   --------------    --------------   --------------   --------------       ----------- 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 At 31 December 
  2016                              -        2 203 125           772 200        3 044 870          262 183         6 282 378 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
                       --------------   --------------    --------------   --------------   --------------      ------------ 
-------------------  ----------------  ---------------  ----------------  ---------------  ---------------  ---------------- 
 
 
 
 Carrying amount 
---------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
 At 31 December 2016      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 
---------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
                        =========   =========   =========   =========   =========     ======= 
---------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
 
 At 1 January 2015        101 375   1 219 651   1 288 861     972 494   2 762 886   6 345 267 
---------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
                        =========   =========   =========   =========   =========     ======= 
---------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
 

Measurement of fair value

Fair value hierarchy

Immovable properties were revalued as at 31 December 2016 on the basis of valuations carried out by independent professional valuers, PMA Real Estate (Private) Limited. The valuation which conforms to International Valuation Standards, was in terms of the policy as set out in the accounting policies section. All movable assets are measured at their carrying amounts which are arrived at by the application of a depreciation charge on their cost values over the useful lives of the assets.

The valuation of land and buildings was arrived by applying yield rates of 10% on rental levels of between US$5 - US$10 per square metre.

Level 3

The fair value of immovable properties of US$3 236 271 (2015 - US$3 058 160) 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 2016   31 December 2015 
---------------------------------  -----------------  ----------------- 
                                                 US$                US$ 
---------------------------------  -----------------  ----------------- 
 At 1 January                              3 058 160          2 762 886 
---------------------------------  -----------------  ----------------- 
 Additions                                   128 891            393 509 
---------------------------------  -----------------  ----------------- 
 Transfers from work in progress             167 336                  - 
---------------------------------  -----------------  ----------------- 
 Revaluation loss                           (55 600)           (40 200) 
---------------------------------  -----------------  ----------------- 
 Depreciation                               (62 516)           (58 035) 
---------------------------------  -----------------  ----------------- 
                                       -------------      ------------- 
---------------------------------  -----------------  ----------------- 
                                           3 236 271          3 058 160 
---------------------------------  -----------------  ----------------- 
                                             =======           ======== 
---------------------------------  -----------------  ----------------- 
 

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 fair 
 Comparison     *    Weighted average expected market rental growth (20%);   value would increase 
 Method was          and                                                     /(decrease) if: 
 applied on                                                                   *    expected market rental growth were higher/ (lower); 
 all                                                                               and 
 residential    *    Average market yield of 6%. 
 properties 
                                                                              *    the risk adjusted discount rates were lower/ 
                                                                                   (higher). 
------------  ------------------------------------------------------------  ---------------------------------------------------------- 
 
   21.    CAPITAL COMMITMENTS 
 
                                       31 December 2016   31 December 2015 
------------------------------------  -----------------  ----------------- 
                                                    US$                US$ 
------------------------------------  -----------------  ----------------- 
 Capital expenditure contracted for              69 315            807 000 
------------------------------------  -----------------  ----------------- 
 Capital expenditure authorised but 
  not yet contracted for                      5 379 915          3 516 220 
------------------------------------  -----------------  ----------------- 
                                          -------------      ------------- 
------------------------------------  -----------------  ----------------- 
                                              5 449 230          4 323 220 
------------------------------------  -----------------  ----------------- 
                                               ========           ======== 
------------------------------------  -----------------  ----------------- 
 

The capital expenditure will be funded from the Group's own resources.

   22.    CONTINGENT LIABILITIES 
 
                                      31 December 2016   31 December 2015 
-----------------------------------  -----------------  ----------------- 
                                                   US$                US$ 
-----------------------------------  -----------------  ----------------- 
 
 Guarantees                                  2 159 937          5 305 263 
-----------------------------------  -----------------  ----------------- 
 Facilities approved but not drawn 
  down                                      25 175 267         39 468 072 
-----------------------------------  -----------------  ----------------- 
 Irrevocable Letters of Credit                 450 000          1 264 607 
-----------------------------------  -----------------  ----------------- 
                                         -------------     -------------- 
-----------------------------------  -----------------  ----------------- 
                                            27 785 204         46 037 942 
-----------------------------------  -----------------  ----------------- 
                                              ========           ======== 
-----------------------------------  -----------------  ----------------- 
 
   23.    INVESTMENT IN ASSOCIATE 

23.1 Investment in Altiwave Investments (Private) Limited

The Group's banking subsidiary had a 25.5% interest in Altiwave Investments (Private) Limited which is the holding company of Lobels (Private) Limited. The investment arose from a Scheme of Arrangement agreed to by Lobels Holdings (Private) Limited shareholders and creditors (banks, suppliers and employees). Lobels Holdings (Private) Limited is in the bread and confectionery business. The combined Bank's interest was disposed off on 17 March 2015.

Altiwave Investments (Private) Limited is not listed on any public exchange. The following table illustrates the summarised unaudited financial information of the Bank's investment in Altiwave (Private) Limited as at 28 February 2015.

 
                                          31 December 2016   28 February 2015 
--------------------------------------  ------------------  ----------------- 
                                                       US$                US$ 
--------------------------------------  ------------------  ----------------- 
 Current assets                                          -         12 798 956 
--------------------------------------  ------------------  ----------------- 
 Non-current assets                                      -         10 243 534 
--------------------------------------  ------------------  ----------------- 
 Current liabilities                                     -        (5 212 870) 
--------------------------------------  ------------------  ----------------- 
 Non-current liabilities                                 -       (30 857 918) 
--------------------------------------  ------------------  ----------------- 
                                            --------------   ---------------- 
--------------------------------------  ------------------  ----------------- 
 Equity                                                  -       (13 028 298) 
--------------------------------------  ------------------  ----------------- 
                                                  ========         ========== 
--------------------------------------  ------------------  ----------------- 
 
 Share of associate's equity (25.5%)                     -        (3 322 216) 
--------------------------------------  ------------------  ----------------- 
                                                  ========           ======== 
--------------------------------------  ------------------  ----------------- 
 
 Associate's revenue and profit 
--------------------------------------  ------------------  ----------------- 
 Revenue                                                 -          5 251 729 
--------------------------------------  ------------------  ----------------- 
                                                  ========          ========= 
--------------------------------------  ------------------  ----------------- 
 Profit                                                  -            422 251 
--------------------------------------  ------------------  ----------------- 
                                                  ========         ========== 
--------------------------------------  ------------------  ----------------- 
 Share of associate's profit (25.5%)                     -            107 674 
--------------------------------------  ------------------  ----------------- 
                                                  ========         ========== 
--------------------------------------  ------------------  ----------------- 
 Reconciliation of carrying amount of 
  investment 
--------------------------------------  ------------------  ----------------- 
 1 January                                               -                  - 
--------------------------------------  ------------------  ----------------- 
 Increase in investment                                  -                  - 
--------------------------------------  ------------------  ----------------- 
 Share of profit in associate                            -            107 674 
--------------------------------------  ------------------  ----------------- 
 Impairment allowance                                    -          (107 674) 
--------------------------------------  ------------------  ----------------- 
                                              ------------      ------------- 
 ---------------------------------------------------------  ----------------- 
                                                         -                  - 
 ---------------------------------------------------------  ----------------- 
                                                   =======           ======== 
 ---------------------------------------------------------  ----------------- 
 

The investment in Altiwave Investments (Private) Limited had been fully impaired as the company had negative equity as at date of sale, 17 March 2015.

   24.    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 
                                         2016          2015 
------------------------  -----  ------------  ------------ 
                                          US$           US$ 
------------------------  -----  ------------  ------------ 
 British Pound Sterling     GBP        1.2375        1.4800 
------------------------  -----  ------------  ------------ 
 South African Rand         ZAR        13.700       15.5039 
------------------------  -----  ------------  ------------ 
 European Euro              EUR        1.0570        1.0882 
------------------------  -----  ------------  ------------ 
 Botswana Pula              BWP       10.6838       11.1111 
------------------------  -----  ------------  ------------ 
 

NMB BANK LIMITED

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2016

 
                                                 31 December 2016   31 December 2015 
--------------------------------------  ------  -----------------  ----------------- 
                                         Note                 US$                US$ 
--------------------------------------  ------  -----------------  ----------------- 
 Interest income                                       33 860 139         35 761 355 
----------------------------------------------  -----------------  ----------------- 
 Interest expense                                    (11 075 103)       (15 118 292) 
----------------------------------------------  -----------------  ----------------- 
                                                 ----------------     -------------- 
--------------------------------------  ------  -----------------  ----------------- 
 Net interest income                                   22 785 036         20 643 063 
----------------------------------------------  -----------------  ----------------- 
 Net foreign exchange gains                               743 255          1 416 445 
----------------------------------------------  -----------------  ----------------- 
 Fee and commissions income                            15 179 149         20 984 694 
----------------------------------------------  -----------------  ----------------- 
                                                 ----------------     -------------- 
--------------------------------------  ------  -----------------  ----------------- 
 Revenue                                               38 707 440         43 044 202 
----------------------------------------------  -----------------  ----------------- 
 Non-interest income                     a              1 717 672          1 293 435 
--------------------------------------  ------  -----------------  ----------------- 
                                                 ----------------    --------------- 
--------------------------------------  ------  -----------------  ----------------- 
 Operating income                                      40 425 112         44 337 637 
----------------------------------------------  -----------------  ----------------- 
 Operating expenditure                   b           (26 176 706)       (26 872 649) 
--------------------------------------  ------  -----------------  ----------------- 
 Impairment losses on loans and 
  advances                                            (8 059 726)        (9 496 601) 
----------------------------------------------  -----------------  ----------------- 
                                                   --------------     -------------- 
--------------------------------------  ------  -----------------  ----------------- 
 Profit before taxation                                 6 188 680          7 968 387 
----------------------------------------------  -----------------  ----------------- 
 Taxation                                             (1 149 769)        (2 425 049) 
----------------------------------------------  -----------------  ----------------- 
                                                   --------------      ------------- 
--------------------------------------  ------  -----------------  ----------------- 
 Profit for the period                                  5 038 911          5 543 338 
----------------------------------------------  -----------------  ----------------- 
                                                   --------------     -------------- 
--------------------------------------  ------  -----------------  ----------------- 
 Other comprehensive 
--------------------------------------  ------  -----------------  ----------------- 
 Other comprehensive income 
  Items that will not be reclassified 
  to profit or loss 
--------------------------------------  ------  -----------------  ----------------- 
 Revaluation, net of tax                 c                (2 970)              2 970 
--------------------------------------  ------  -----------------  ----------------- 
                                                    -------------       ------------ 
--------------------------------------  ------  -----------------  ----------------- 
 Total comprehensive income for 
  the period                                            5 035 941          5 546 308 
----------------------------------------------  -----------------  ----------------- 
                                                          =======           ======== 
--------------------------------------  ------  -----------------  ----------------- 
 Earnings per share (US cents) 
--------------------------------------  ------  -----------------  ----------------- 
 -Basic                                  d                  30.53              33.60 
--------------------------------------  ------  -----------------  ----------------- 
 

STATEMENT OF FINANCIAL POSITION

as at 31 December 2016

 
                                             31 December 2016     31 December 2015 
--------------------------------  ------  -------------------  ------------------- 
                                   Note                   US$                  US$ 
--------------------------------  ------  -------------------  ------------------- 
 SHAREHOLDER'S FUNDS 
--------------------------------  ------  -------------------  ------------------- 
 Share capital                       e                 16 506               16 506 
--------------------------------  ------  -------------------  ------------------- 
 Share Premium                                     31 474 502           31 474 502 
----------------------------------------  -------------------  ------------------- 
 Regulatory Reserve                                 1 785 136            3 746 729 
----------------------------------------  -------------------  ------------------- 
 Revaluation reserve                                        -                2 970 
----------------------------------------  -------------------  ------------------- 
 Retained earnings                                 21 437 257           14 436 753 
----------------------------------------  -------------------  ------------------- 
                                              ---------------      --------------- 
--------------------------------  ------  -------------------  ------------------- 
 Total shareholder's funds                         54 713 401           49 677 460 
----------------------------------------  -------------------  ------------------- 
                                              ---------------      --------------- 
--------------------------------  ------  -------------------  ------------------- 
 
 LIABILITIES 
--------------------------------  ------  -------------------  ------------------- 
 Deposits and other liabilities                   265 354 607          283 257 535 
----------------------------------------  -------------------  ------------------- 
 Subordinated term loan                             1 415 490            1 414 144 
----------------------------------------  -------------------  ------------------- 
 Current tax liabilities                                    -               52 443 
----------------------------------------  -------------------  ------------------- 
                                            -----------------     ---------------- 
--------------------------------  ------  -------------------  ------------------- 
 Total liabilities                                266 770 097          284 724 122 
----------------------------------------  -------------------  ------------------- 
                                             ----------------      --------------- 
--------------------------------  ------  -------------------  ------------------- 
 Total shareholder's funds 
  and liabilities                                 321 483 498          334 401 582 
----------------------------------------  -------------------  ------------------- 
                                                   ==========            ========= 
--------------------------------  ------  -------------------  ------------------- 
 ASSETS 
--------------------------------  ------  -------------------  ------------------- 
 Cash and cash equivalents           f             69 421 257           63 439 347 
--------------------------------  ------  -------------------  ------------------- 
 Current tax assets                                   292 926                    - 
--------------------------------  ------  -------------------  ------------------- 
 Investment securities                             24 744 752           14 547 992 
----------------------------------------  -------------------  ------------------- 
 Amount owing from Holding 
  Company                                             610 604              610 604 
----------------------------------------  -------------------  ------------------- 
 Investment in debentures                                   -                    - 
--------------------------------  ------  -------------------  ------------------- 
 Loans, advances and other 
  assets                                          199 672 558          235 144 444 
----------------------------------------  -------------------  ------------------- 
 Non-current assets held for 
  sale                                              2 261 300            2 264 300 
----------------------------------------  -------------------  ------------------- 
 Unquoted investments                                  88 930               77 805 
----------------------------------------  -------------------  ------------------- 
 Investment in associate                                    -                    - 
--------------------------------  ------  -------------------  ------------------- 
 Investment properties               g             14 202 270            8 125 800 
--------------------------------  ------  -------------------  ------------------- 
 Intangible assets                                  1 647 034            1 689 385 
----------------------------------------  -------------------  ------------------- 
 Property and equipment                             6 280 286            6 601 086 
----------------------------------------  -------------------  ------------------- 
 Deferred tax asset                                 2 261 581            1 900 819 
----------------------------------------  -------------------  ------------------- 
                                           ------------------   ------------------ 
--------------------------------  ------  -------------------  ------------------- 
 Total assets                                     321 483 498          334 401 582 
----------------------------------------  -------------------  ------------------- 
                                                  ===========          =========== 
 ---------------------------------------  -------------------  ------------------- 
 

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2016

 
                        Share            Share       Revaluation       Regulatory   Retained Earnings 
                      Capital          Premium           Reserve          Reserve                                Total 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
                          US$              US$               US$              US$                 US$              US$ 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Balances at 1 
  January 2015         16 506       31 474 502                 -        3 293 699           9 346 445       44 131 152 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Profit for the 
  year                      -                -                 -                -           5 543 338        5 543 338 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Other 
  comprehensive 
  income                    -                -             2 970                -                   -            2 970 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Transfer from 
  retained 
  earnings                  -                -                 -          453 030           (453 030)                - 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
                     --------    -------------   ---------------   --------------    ----------------   -------------- 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Balances at 31 
  December 2015        16 506       31 474 502             2 970        3 746 729          14 436 753       49 677 460 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Profit for the 
  year                      -                -                 -                -           5 038 911        5 038 911 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Other 
  comprehensive 
  income                    -                -           (2 970)                -                   -          (2 970) 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Transfer to 
  retained 
  earnings                  -                -                 -      (1 961 593)           1 961 593                - 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
                     --------   --------------   ---------------   --------------       -------------   -------------- 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 Balances at 31 
  December 2016        16 506       31 474 502                 -        1 785 136          21 437 257       54 713 401 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
                        =====         ========         =========         ========            ========         ======== 
------------------  ---------  ---------------  ----------------  ---------------  ------------------  --------------- 
 

STATEMENT OF CASH FLOWS

for the year ended 31 December 2016

 
                                                     31 December 2016       31 December 
                                                                                   2015 
--------------------------------------------------  -----------------  ---------------- 
 CASH FLOWS FROM OPERATING ACTIVITIES                             US$               US$ 
--------------------------------------------------  -----------------  ---------------- 
 Profit before taxation                                     6 188 680         7 968 387 
--------------------------------------------------  -----------------  ---------------- 
 Non-cash items 
--------------------------------------------------  -----------------  ---------------- 
 -Impairment losses on loans and advances                   8 059 726         9 496 601 
--------------------------------------------------  -----------------  ---------------- 
 -Non-current assets held for sale fair value 
  adjustment                                                    3 000             3 000 
--------------------------------------------------  -----------------  ---------------- 
 -Investment properties fair value adjustment               (412 006)         (118 278) 
--------------------------------------------------  -----------------  ---------------- 
 -(Profit)/loss on disposal of property and 
  equipment                                                 (368 205)            46 924 
--------------------------------------------------  -----------------  ---------------- 
 -Loss on disposal of property and equipment 
  (included in staff 
  costs)                                                            -            68 470 
--------------------------------------------------  -----------------  ---------------- 
 -Profit on disposal of investment properties                (50 000)         (635 500) 
--------------------------------------------------  -----------------  ---------------- 
 -Quoted and other investments fair value 
  adjustment                                                 (11 125)             3 585 
--------------------------------------------------  -----------------  ---------------- 
 -Impairment on land and buildings                             51 600            44 200 
--------------------------------------------------  -----------------  ---------------- 
 -Depreciation                                              1 319 396         1 690 902 
--------------------------------------------------  -----------------  ---------------- 
 -Interest capitalised on subordinated loan                   158 599           134 676 
--------------------------------------------------  -----------------  ---------------- 
 -Amortisation of intangible assets                           532 768           509 687 
--------------------------------------------------  -----------------  ---------------- 
                                                     ----------------    -------------- 
--------------------------------------------------  -----------------  ---------------- 
 Operating cash flows before changes in operating 
  Assets and liabilities                                   15 472 433        19 212 654 
--------------------------------------------------  -----------------  ---------------- 
 
 Changes in operating assets and liabilities 
--------------------------------------------------  -----------------  ---------------- 
 (Decrease)/increase in deposits and other 
  liabilities                                            (17 902 928)        42 285 647 
--------------------------------------------------  -----------------  ---------------- 
 Increase in investment in debentures                               -         4 614 047 
--------------------------------------------------  -----------------  ---------------- 
 Decrease/(increase)in loans, advances and 
  other assets                                             27 412 159      (41 222 531) 
--------------------------------------------------  -----------------  ---------------- 
                                                      ---------------   --------------- 
--------------------------------------------------  -----------------  ---------------- 
 Net cash generated from operations                        24 981 664        24 889 817 
--------------------------------------------------  -----------------  ---------------- 
                                                      ---------------   --------------- 
--------------------------------------------------  -----------------  ---------------- 
 Taxation 
--------------------------------------------------  -----------------  ---------------- 
 Capital gains tax paid                                      (12 234)          (91 850) 
--------------------------------------------------  -----------------  ---------------- 
 Corporate tax paid                                       (1 842 636)          (37 843) 
--------------------------------------------------  -----------------  ---------------- 
                                                       --------------   --------------- 
--------------------------------------------------  -----------------  ---------------- 
 Net cash inflow from operating activities                 23 126 794        24 760 124 
--------------------------------------------------  -----------------  ---------------- 
                                                       --------------   --------------- 
--------------------------------------------------  -----------------  ---------------- 
 CASH FLOWS FROM INVESTING ACTIVITIES 
--------------------------------------------------  -----------------  ---------------- 
 Proceeds on disposal of property and equipment               581 414           101 766 
--------------------------------------------------  -----------------  ---------------- 
 Acquisition of intangible assets                           (490 417)         (248 339) 
--------------------------------------------------  -----------------  ---------------- 
 Acquisition of property and equipment                    (1 267 404)       (2 271 943) 
--------------------------------------------------  -----------------  ---------------- 
 Acquistion of investment properties                      (5 794 464)       (8 230 860) 
--------------------------------------------------  -----------------  ---------------- 
 Acquisition of investment securities held 
  to maturity                                            (10 196 760)      (10 673 466) 
--------------------------------------------------  -----------------  ---------------- 
 Proceeds on disposal of investment properties                180 000         5 380 000 
--------------------------------------------------  -----------------  ---------------- 
                                                     ----------------     ------------- 
--------------------------------------------------  -----------------  ---------------- 
 Net cash outflow from investing activities              (16 987 631)      (15 942 842) 
--------------------------------------------------  -----------------  ---------------- 
                                                       --------------     ------------- 
--------------------------------------------------  -----------------  ---------------- 
 
 
 
 CASH FLOWS FROM FINANCING ACTIVITIES 
-------------------------------------------  ---------------  ---------------- 
 
 Payment of interest on subordinated term 
  loan                                             (157 253)         (128 496) 
-------------------------------------------  ---------------  ---------------- 
                                              --------------   --------------- 
-------------------------------------------  ---------------  ---------------- 
 Net cash inflow from financing activities         (157 253)         (128 496) 
-------------------------------------------  ---------------  ---------------- 
                                              --------------   --------------- 
-------------------------------------------  ---------------  ---------------- 
 Net increase in cash and cash equivalents         5 981 910         8 688 786 
-------------------------------------------  ---------------  ---------------- 
 Cash and cash equivalents at beginning 
  of the year                                     63 439 347        54 750 561 
-------------------------------------------  ---------------  ---------------- 
                                              --------------   --------------- 
-------------------------------------------  ---------------  ---------------- 
 Cash and cash equivalents at the end of 
  the year (note f)                               69 421 257        63 439 347 
-------------------------------------------  ---------------  ---------------- 
                                                    ========          ======== 
-------------------------------------------  ---------------  ---------------- 
 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

for the year ended 31 December 2016

There are no material differences between the Bank and the Holding company as the Bank is the principal operating subsidiary of the Group. The notes to the financial statements under NMBZ Holdings Limited are therefore the same as those of the Bank in every material respect where applicable.

   a.   NON-INTEREST income 
 
 
                                          31 December 2016   31 December 2015 
---------------------------------------  -----------------  ----------------- 
                                                       US$                US$ 
---------------------------------------  -----------------  ----------------- 
 Quoted and other investments fair 
  value adjustments                                 11 125            (3 585) 
---------------------------------------  -----------------  ----------------- 
 Profit on disposal of investment 
  properties                                        50 000            635 500 
---------------------------------------  -----------------  ----------------- 
 Profit/(loss) on disposal of property 
  and equipment                                    368 205           (46 924) 
---------------------------------------  -----------------  ----------------- 
 Fair value adjustment on non-current 
  assets held for sale                             (3 000)            (3 000) 
---------------------------------------  -----------------  ----------------- 
 Fair value adjustment on investment 
  properties                                       412 006            118 278 
---------------------------------------  -----------------  ----------------- 
 Rental income                                     142 400             49 523 
---------------------------------------  -----------------  ----------------- 
 Bad debts recovered                               675 006            430 851 
---------------------------------------  -----------------  ----------------- 
 Other operating income                             61 930            112 792 
---------------------------------------  -----------------  ----------------- 
                                            --------------       ------------ 
---------------------------------------  -----------------  ----------------- 
                                                 1 717 672          1 293 435 
---------------------------------------  -----------------  ----------------- 
                                                  ========             ====== 
---------------------------------------  -----------------  ----------------- 
 
   b.   Operating EXPITURE 
 
 
                                              31 December 2016   31 December 2015 
-------------------------------------------  -----------------  ----------------- 
                                                           US$                US$ 
-------------------------------------------  -----------------  ----------------- 
 The operating profit is after recognising 
  the following: 
-------------------------------------------  -----------------  ----------------- 
 Administration costs                               12 098 932         12 702 704 
-------------------------------------------  -----------------  ----------------- 
 Audit fees: 
-------------------------------------------  -----------------  ----------------- 
 - Current year                                         61 468             85 557 
-------------------------------------------  -----------------  ----------------- 
 - Prior year                                           84 892            109 325 
-------------------------------------------  -----------------  ----------------- 
 Impairment on land and buildings                       51 600             44 200 
-------------------------------------------  -----------------  ----------------- 
 Depreciation                                        1 319 396          1 690 902 
-------------------------------------------  -----------------  ----------------- 
 Amortisation of intangible assets                     532 768            509 687 
-------------------------------------------  -----------------  ----------------- 
 Directors' remuneration                               620 616            499 024 
-------------------------------------------  -----------------  ----------------- 
 - Fees for services as directors                      311 431            232 705 
-------------------------------------------  -----------------  ----------------- 
 - Other emoluments                                    309 185            266 319 
-------------------------------------------  -----------------  ----------------- 
 
 Staff costs -salaries, allowances 
  and related costs                                 11 407 034         10 362 780 
-------------------------------------------  -----------------  ----------------- 
                -termination benefits                        -            868 470 
-------------------------------------------  -----------------  ----------------- 
                                                --------------     -------------- 
-------------------------------------------  -----------------  ----------------- 
                                                    26 176 706         26 872 649 
-------------------------------------------  -----------------  ----------------- 
                                                      ========           ======== 
-------------------------------------------  -----------------  ----------------- 
 
   c.         OTHER COMPREHENSIVE LOSS/INCOME 
 
 
                                    31 December 2015   31 December 2016 
---------------------------------  -----------------  ----------------- 
                                                 US$                US$ 
---------------------------------  -----------------  ----------------- 
 Revaluation (loss)/gain on land 
  and buildings                              (4 000)              4 000 
---------------------------------  -----------------  ----------------- 
 Tax effect                                    1 030            (1 030) 
---------------------------------  -----------------  ----------------- 
                                         -----------       ------------ 
---------------------------------  -----------------  ----------------- 
                                             (2 970)              2 970 
---------------------------------  -----------------  ----------------- 
                                              ======             ====== 
---------------------------------  -----------------  ----------------- 
 
   d.         EARNINGS PER SHARE 

The calculation of earnings per share is based on the following figures:

   d.1       Earnings 
 
                        31 December 2016   31 December 2015 
---------------------  -----------------  ----------------- 
                                     US$                US$ 
---------------------  -----------------  ----------------- 
 Profit for the year           5 038 911          5 543 338 
---------------------  -----------------  ----------------- 
 
   d.2       Number of shares 
 
 Weighted average shares in issue    16 506 050   16 506 050 
----------------------------------  -----------  ----------- 
 
   d.3       Earnings per share (US cents) 
 
 Basic    30.53   33.60 
-------  ------  ------ 
 
   e.      SHARE CAPITAL 
   e.1    Authorised 

The authorised ordinary share capital at 31 December 2016 is at the historical cost figure of US$25 000 (2015 - 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 2016 is at the historical cost figure of US$16 506 (2015 - US$16 506) comprising 16 506 050 (2015 - 16 506 050) ordinary shares of US$0.001 each.

   f.         CASH AND CASH EQUIVALENTS 
 
                                      31 December 2016   31 December 2015 
-----------------------------------  -----------------  ----------------- 
                                                   US$                US$ 
-----------------------------------  -----------------  ----------------- 
 Balances with the Central Bank             36 166 732         26 238 681 
-----------------------------------  -----------------  ----------------- 
 Current, nostro accounts and cash           8 754 525         11 700 666 
-----------------------------------  -----------------  ----------------- 
 Interbank placements                       24 500 000         25 500 000 
-----------------------------------  -----------------  ----------------- 
                                         -------------    --------------- 
-----------------------------------  -----------------  ----------------- 
                                            69 421 257         63 439 347 
-----------------------------------  -----------------  ----------------- 
                                              ========          ========= 
-----------------------------------  -----------------  ----------------- 
 
   g.       INVESTMENT PROPERTIES 
 
                                         31 December 2016   31 December 2015 
--------------------------------------  -----------------  ----------------- 
                                                      US$                US$ 
--------------------------------------  -----------------  ----------------- 
 
 At 1 January                                   8 125 800          4 453 300 
--------------------------------------  -----------------  ----------------- 
 Transfer from property and equipment                   -             67 862 
--------------------------------------  -----------------  ----------------- 
 Improvements                                   5 794 464          8 230 860 
--------------------------------------  -----------------  ----------------- 
 Disposals                                      (130 000)        (4 744 500) 
--------------------------------------  -----------------  ----------------- 
 Fair value adjustments                           412 006            118 278 
--------------------------------------  -----------------  ----------------- 
                                            -------------      ------------- 
--------------------------------------  -----------------  ----------------- 
 At 31 December                                14 202 270          8 125 800 
--------------------------------------  -----------------  ----------------- 
                                                 ========            ======= 
--------------------------------------  -----------------  ----------------- 
 

Investment properties comprise a commercial property 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$142 400 (2015 - US$49 523) 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$3 201 470 as at 31 December 2016. 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 2016 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$7 382 270 (2015 - US$2 830 800) has been categorised under level 2 in the fair value hierarchy based on the inputs used for the valuation technique described below.

 
                           31 December 2016   31 December 2015 
------------------------  -----------------  ----------------- 
                                        US$                US$ 
------------------------  -----------------  ----------------- 
 
 At 1 January                     2 830 800          2 673 300 
------------------------  -----------------  ----------------- 
 Improvements                     3 988 019          3 200 000 
------------------------  -----------------  ----------------- 
 Disposals                                -        (3 200 000) 
------------------------  -----------------  ----------------- 
 Fair value adjustments             563 451            157 500 
------------------------  -----------------  ----------------- 
                            ---------------      ------------- 
------------------------  -----------------  ----------------- 
 Balance at 31 December           7 382 270          2 830 800 
------------------------  -----------------  ----------------- 
                                  =========           ======== 
------------------------  -----------------  ----------------- 
 

Level 3

The fair value for investment properties of US$6 820 000 (2015 - US$5 295 000) 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 2016   31 December 2015 
--------------------------------------  -----------------  ----------------- 
                                                      US$                US$ 
--------------------------------------  -----------------  ----------------- 
 
 At 1 January                                   5 295 000          1 780 000 
--------------------------------------  -----------------  ----------------- 
 Improvements                                   1 806 445          5 030 860 
--------------------------------------  -----------------  ----------------- 
 Transfer from property and equipment                   -             67 862 
--------------------------------------  -----------------  ----------------- 
 Disposals                                      (130 000)        (1 544 500) 
--------------------------------------  -----------------  ----------------- 
 Fair value adjustments                         (151 445)           (39 222) 
--------------------------------------  -----------------  ----------------- 
                                          ---------------      ------------- 
--------------------------------------  -----------------  ----------------- 
 Balance at 31 December                         6 820 000          5 295 000 
--------------------------------------  -----------------  ----------------- 
                                                =========           ======== 
--------------------------------------  -----------------  ----------------- 
 

The values were arrived at by applying yield rates of 10% on rental values of between US$5 - US$10 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 between 
 technique       inputs                                                        key unobservable inputs 
                                                                               and fair value measurement 
-------------  ------------------------------------------------------------  ---------------------------------------------------------- 
  The                                                                         The estimated fair value 
  investment     *    Weighted average expected market rental growth (20%);   would increase /(decrease) 
  method                                                                      if: 
  Discounted                                                                   *    expected market rental growth were higher/ (lower); 
  cash flows     *    Void period (average 3 months after the end of each 
  was used to         lease); 
  value all                                                                    *    void periods were shorter/(longer); 
  income 
  producing      *    Occupancy rate (55%); and 
  properties.                                                                  *    the occupancy rates were higher /(lower); and 
 
                 *    Average market yield of 8%. 
                                                                               *    the risk adjusted discount rates were lower/ 
                                                                                    (higher). 
 
  The direct 
  comparison 
  method was 
  applied on 
  all 
  residential 
  properties. 
-------------  ------------------------------------------------------------  ---------------------------------------------------------- 
 
   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 of      Audit           Risk            Committee       Review        Nominations        Credit 
                   Directors     Committee       Management      (ALCO) &        Committee     Committee          Committee 
                                                                 Finance 
                                                                 Committee 
--------------  -------------  --------------  --------------  --------------  -------------  ---------------  ------------- 
 Mr. B. A. 
  Chikwanha      4     4                        4    4                                         4     4          4      4 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. B. 
  Ndachena**** 
  (E)            1     1                                        1    1 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. E. 
  Sandersen      4     4                        4    3          4    4          4     4 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. B. P. 
  Washaya (E)    4     4                                        4    4                                          4      4 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Ms. S. 
  Chitehwe****   1     1        1    1                          1    1          1     1 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. J. 
  Chenevix - 
  Trench*        1     1                                        1    1          1     1        1     1 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Ms. M. R. 
  Svova**        2     2        2    2                          2    2                                          2      2 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. J. de la 
  Fargue***      3     3                                                                       2     2          3      3 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. B.A.M. 
  Zwinkels       4     4                                        4    4          4     4        4     4 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. C. I. F. 
  Ndiaye*****    4     4                        4    3                          4     4        4     4 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Ms. J. 
  Maguranyanga   4     4        2    2                                          4     4        4     4 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. K. 
  Qurashi**      2     2        2    2          2    2                                                          2      2 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 Mr. C. 
  Chikaura       4     4        4    4          4    3          2    2                         4     4          2      2 
--------------  ----  -------  ---  ---------  ---  ---------  ---  ---------  ----  -------  ----  ---------  -----  ------ 
 
 

KEY

 
   Meetings planned 
------------------- 
 

KEY

(E) Executive.

*Resigned on 21 March 2016.

**Resigned on 20 May 2016.

***Appointed on 4 May 2016.

****Appointed on 19 September 2016.

*****Resigned on 17 November 2016.

   4.      RISK MANAGEMENT 

The Board of Directors has overall responsibility for the establishment and oversight of the Bank's risk management framework. The Board has established the Board Asset and Liability Management Committee (ALCO) and Board Risk Committee, which are responsible for defining the Bank's risk universe, developing policies and monitoring implementation.

Risk management is linked logically from the level of individual transactions to the Bank level. Risk management activities broadly take place simultaneously at the following different hierarchy levels:

a) Strategic Level: This involves risk management functions performed by senior management and the board of directors. It includes the definition of risk, ascertaining the Bank's risk appetite, formulating strategy and policy for managing risk and establishes adequate systems and controls to ensure overall risk remains within acceptable levels and is adequately compensated.

b) Macro Level: It encompasses risk management within a business area or across business lines. These risk management functions are performed by middle management.

c) Micro Level: This involves "On-the-line" risk management where risks are actually created. These are the risk management activities performed by individuals who assume risk on behalf of the organization such as Treasury Front Office, Corporate Banking, Retail banking etc. The risk management in these areas is confined to operational procedures set by management.

Risk management is premised on four (4) mutually reinforcing pillars, namely:

   a)      adequate board and senior management oversight; 
   b)      adequate strategy, policies, procedures and limits; 
   c)      adequate risk identification, measurement, monitoring and information systems; and 
   d)      comprehensive internal controls and independent reviews. 
   4.1   Credit risk 

Credit risk is the risk that a financial contract will not be honoured according to the original set of terms. The risk arises when borrowers or counterparties to a financial instrument fail to meet their contractual obligations. The Bank reviewed its credit risk management structures aimed at enhancing credit risk and asset quality. The Bank's general credit strategies centre on sound credit granting process, diligent credit monitoring and strong loan collection and recovery. There is a separation between loan collection and recovery. There is a separation between loan granting and credit monitoring to ensure 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 Bank has in place a Board Loans Review Committee responsible for reviewing the quality of the loan book and adequacy of loan loss provisions.

The Bank has automated credit processes from loan origination, appraisal, monitoring and collections. The system has a robust loan monitoring and reporting module which is critical in managing credit risk. In view of the Bank's move into the mass market, retail credit has become a key area of focus. The Bank has put in place robust personal loan monitoring systems and structures to mitigate retail loan delinquencies. 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 Bank adheres to limits, mandates and its credit policy. 

-- Ensure adherence to facility covenants and conditions of sanction e.g. annual audits, gearing levels, management accounts.

-- Manage trends in asset and portfolio composition, quality and growth and non-performing loans.

   --           Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits. 

Credit Monitoring and Financial Modelling

   --           Independent Credit Risk Management. 
   --           Independent on-going monitoring of individual credit and portfolios. 

-- Triggers remedial actions to protect the interests of the Bank, if appropriate (e.g. in relation to deteriorated credits).

-- Monitors the on-going development and enhancement of credit risk management across the Bank.

   --           Reviews the Internal Credit Rating System. 
   --           On-going championing of the Basel II methodologies across the Bank. 

-- Ensures consistency in the rating processes and performs independent review of credit grades to ensure they conform to the rating standards.

-- Confirm the appropriateness of the credit risk strategy and policy or recommends necessary revisions in response to changes/trends identified.

Credit Administration

   --           Prepares and keeps custody of all facility letters. 
   --           Security registration. 
   --           Safe custody of security documents. 

-- Ensures all conditions of sanction are fulfilled before allowing drawdown or limit marking.

-- Review of credit files for documentation compliance e.g. call reports, management accounts.

Recoveries

The recoveries unit is responsible for all collections and ensures that the Bank maximizes recoveries from Non-Performing Loans (NPLs).

   4.2       Market risk 

This is the exposure of the Bank's on and off balance sheet positions to adverse movement in market prices resulting in a loss in earnings and capital. The market prices will range from money market (interest rate risk), foreign exchange and equity markets in which the bank operates. The Bank has in place a Management Asset and Liability Committee (ALCO) which monitors market risk and recommends the appropriate levels to which the Bank should be exposed at any time. Net Interest Margin is the primary measure of interest rate risk, supported by periodic stress tests to assess the Bank's ability to withstand stressed market conditions. On foreign exchange risk, the bank monitors currency mismatches and make adjustments depending on exchange rate movement forecast. The mismatches per currency are contained within 5% of the Bank's capital position.

ALCO meets on a monthly basis and operates within the prudential guidelines and policies established by the Board ALCO. The Board ALCO is responsible for setting exposure thresholds and limits, and meets on a quarterly basis.

   4.3       Liquidity risk 

Liquidity risk is the risk of financial loss arising from the inability of the Bank to fund asset increases or meet obligations as they fall due without incurring unacceptable costs or losses. The Bank identifies this risk through maturity profiling of assets and liabilities and assessment of expected cash flows and the availability of collateral which could be used if additional funding is required.

The daily liquidity position is monitored and regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. All liquidity policies and procedures are subject to review and approval by the Board ALCO.

The key measure used by the bank for managing liquidity risk is the ratio of net liquid assets to deposits to customers. The Bank also actively monitors its loans to deposit ratio against a set threshold in a bid to monitor and limit funding risk. The Bank monitors funding concentration risk by reviewing the ratio of top 20 depositors to the total funding. Funding mix is also monitored by monitoring the contribution of wholesale and demand deposits to the total funding for the bank. Liquidity risk is monitored through a daily liquidity meeting. This is augmented by a monthly management ALCO and a quarterly board ALCO.

   4.4       Operational risk 

This risk is inherent in all business activities and is the risk of loss arising from inadequate or failed internal processes, people, systems or from external events. The Bank utilises monthly Key Risk Indicators to monitor operational risk in all units. Further to this, the Bank has an elaborate Operational Loss reporting system in which all incidents with a material impact on the well-being of the Bank are reported to risk management. The risk department conducts periodic risk assessments on all the units within the Bank aimed at identifying the top risks and ways to minimise their impact. There is a Board Risk Committee whose function is to ensure that this risk is minimized. The Risk Committee with the assistance of the internal audit function and the Risk Management department assesses the adequacy of the internal controls and makes the necessary recommendations to the Board.

   4.5       Legal and compliance risk 

Legal risk is risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations. Legal risk may entail such issues as contract formation, capacity and contract frustration. Compliance risk is the risk arising from non - compliance with laws and regulations. To manage this risk permanent relationships are maintained with firms of legal practitioners and access to legal advice is readily available to all departments. The Bank has an independent compliance function which is responsible for identifying and monitoring all compliance issues and ensures the Bank complies with all regulatory and statutory requirements.

   4.6       Reputational risk 

Reputation risk is the risk of loss of business as a result of negative publicity or negative perceptions by the market with regards to the way the Bank conducts its business. To manage this risk, the Bank strictly monitors customers' complaints, continuously train staff at all levels, conducts market surveys and periodic reviews of business practices through its Internal Audit department. The directors are satisfied with the risk management processes in the Bank as these have contributed to the minimisation of losses arising from risky exposures.

   4.7       Strategic risk 

This refers to current and prospective impact on a Bank's earnings and capital arising from adverse business decisions or implementing strategies that are not consistent with the internal and external environment. To manage this risk, the Bank always has a strategic plan that is adopted by the Board of Directors. Further, attainment of strategic objectives by the various departments is monitored periodically at management level.

   4.8       Risk Ratings 
   4.8.1    Reserve Bank of Zimbabwe Ratings 

The Reserve Bank of Zimbabwe conducted an onsite inspection on the Bank in the last quarter of 2016. The results of the onsite examination are yet to be finalized. The last onsite examination before the 2016 one was conducted in 2013 and a review was done in 2014 during which the RBZ indicated that the Bank had attended to their satisfaction all matters raised in the 2013 inspection.

4.8.1.1 CAMELS* Ratings

 
                          Latest RBS**   Previous RBS   Previous RBS 
     CAMELS Component        Ratings        Ratings        Ratings 
                           30/06/2013     31/01/2008     30/06/2007 
-----------------------  -------------  -------------  ------------- 
 Capital Adequacy              2              4              4 
-----------------------  -------------  -------------  ------------- 
 Asset Quality                 4              2              3 
-----------------------  -------------  -------------  ------------- 
 Management                    3              3              3 
-----------------------  -------------  -------------  ------------- 
 Earnings                      2              3              3 
-----------------------  -------------  -------------  ------------- 
 Liquidity                     2              3              3 
-----------------------  -------------  -------------  ------------- 
 Sensitivity to Market 
  Risk                         2              3              3 
-----------------------  -------------  -------------  ------------- 
 Composite Rating              3              3              4 
-----------------------  -------------  -------------  ------------- 
 

*CAMELS is an acronym for Capital Adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to Market Risk. CAMELS rating system uses a rating scale of 1-5, where '1' is Strong, '2' is Satisfactory, '3' is Fair, '4' is Weak and '5' is Critical.

**RBS stands for Risk-Based Supervision

4.8.1.2 Summary RAS ratings

 
                                  Latest RAS***   Previous RAS     Previous 
          RAS Component              Ratings         Ratings      RAS Ratings 
                                    30/06/2013     31/01/2008     30/06/2007 
-------------------------------  --------------  -------------  ------------- 
 Overall Inherent Risk              Moderate        Moderate         High 
-------------------------------  --------------  -------------  ------------- 
 Overall Risk Management           Acceptable      Acceptable        Weak 
  Systems 
-------------------------------  --------------  -------------  ------------- 
 Overall Composite Risk             Moderate        Moderate         High 
-------------------------------  --------------  -------------  ------------- 
 Direction of Overall Composite      Stable          Stable       Increasing 
  Risk 
-------------------------------  --------------  -------------  ------------- 
 

*** RAS stands for Risk Assessment System.

4.8.1.3 Summary risk matrix - 30 June 2013 on - site examination

 
                      Level of Inherent   Adequacy of        Overall Composite   Direction 
     Type of Risk      Risk                Risk Management    Risk                of Overall 
                                           Systems                                Composite 
                                                                                  Risk 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Credit               High                Weak               High                Increasing 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Liquidity            Moderate            Acceptable         Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Interest Rate        Moderate            Acceptable         Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Foreign Exchange     Low                 Acceptable         Low                 Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Strategic Risk       Moderate            Acceptable         Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Operational Risk     Moderate            Acceptable         Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Legal & Compliance   Moderate            Strong             Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Reputation           Moderate            Strong             Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 Overall              Moderate            Acceptable         Moderate            Stable 
-------------------  ------------------  -----------------  ------------------  ------------ 
 

KEY

Level of Inherent Risk

Low - reflects a lower than average probability of an adverse impact on a banking institution's capital and earnings. Losses in a functional area with low inherent risk would have little negative impact on the banking institution's overall financial condition.

Moderate - could reasonably be expected to result in a loss which could be absorbed by a banking institution in the normal course of business.

High - reflects a higher than average probability of potential loss. High inherent risk could reasonably be expected to result in a significant and harmful loss to the banking institution.

Adequacy of Risk Management Systems

Weak - risk management systems are inadequate or inappropriate given the size, complexity and risk profile of the banking institution. Institution's risk management systems are lacking in important ways and therefore a cause of more than normal supervisory attention. The internal control systems will be lacking in important aspects particularly as indicated by continued control exceptions or by the failure to adhere to written policies and procedures.

Acceptable - management of risk is largely effective but lacking to some modest degree. While the institution might be having some minor risk management weaknesses, these have been recognized and are being addressed. Management information systems are generally adequate.

Strong - management effectively identifies and controls all types of risk posed by the relevant functional areas or per inherent risk. The board and senior management are active participants in managing risk and ensure appropriate policies and limits are put in place. The policies comprehensively define the bank's risk tolerance, responsibilities and accountabilities are effectively communicated.

Overall Composite Risk

Low - would be assigned to low inherent risk areas. Moderate risk areas may be assigned a low composite risk where internal controls and risk management systems are strong and effectively mitigate much of the risk.

Moderate - risk management systems appropriately mitigates inherent risk. For a given low risk area, significant weaknesses in the risk management systems may result in a moderate composite risk assessment. On the other hand, a strong risk management system may reduce the risk so that any potential financial loss from the activity would have only a moderate negative impact on the financial condition of the organization.

High - risk management systems do not significantly mitigate the high inherent risk. Thus, the activity could potentially result in a financial loss that would have a significant impact on the bank's overall condition.

Direction of Overall Composite Risk

Increasing - based on the current information, risk is expected to increase in the next 12 months.

Decreasing - based on current information, risk is expected to decrease in the next 12 months.

Stable -based on the current information, risk is expected to be stable in the next 12 months.

   4.8.2    External Credit Ratings 

The external credit ratings were given by Global Credit Rating (GCR), a credit rating agency accredited with the Reserve Bank of Zimbabwe.

Security class 2016 2015

Long term BB+ BB+

The current rating expires in August 2017.

   4.9       Regulatory Compliance 

There were no instances of regulatory non-compliance in the period under review. The Bank remains committed to complying with and adhering to all regulatory requirements.

   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 2016      31 December 
                                                                                     2015 
-----------------------------------------------  -----------------------  --------------- 
                                                                     US$              US$ 
-----------------------------------------------  -----------------------  --------------- 
 
 Share capital                                                    16 506           16 506 
-----------------------------------------------  -----------------------  --------------- 
 Share premium                                                31 474 502       31 474 502 
-----------------------------------------------  -----------------------  --------------- 
 Retained earnings                                            21 437 257       14 439 723 
-----------------------------------------------  -----------------------  --------------- 
 Fair value gain on investment properties                    (1 797 022)      (3 112 902) 
-----------------------------------------------  -----------------------  --------------- 
                                                         ---------------   -------------- 
-----------------------------------------------  -----------------------  --------------- 
                                                              51 131 243       42 817 829 
-----------------------------------------------  -----------------------  --------------- 
 Less: capital allocated for market 
-----------------------------------------------  -----------------------  --------------- 
   and operational risk                                        (980 355)        (722 035) 
-----------------------------------------------  -----------------------  --------------- 
 Credit to insiders                                                    -                - 
-----------------------------------------------  -----------------------  --------------- 
                                                          --------------   -------------- 
-----------------------------------------------  -----------------------  --------------- 
 Tier 1 capital                                               50 150 888       42 095 794 
-----------------------------------------------  -----------------------  --------------- 
 Tier 2 capital (subject to limit as 
  per Banking 
  Regulations)                                                 5 691 960        7 812 084 
-----------------------------------------------  -----------------------  --------------- 
 
 Revaluation reserve                                           1 797 022        3 112 902 
-----------------------------------------------  -----------------------  --------------- 
 Subordinated debt                                               849 294        1 414 144 
-----------------------------------------------  -----------------------  --------------- 
 Regulatory reserve (limited to 1.25% 
  of risk weighted 
  assets)                                                      1 785 136        2 277 191 
-----------------------------------------------  -----------------------  --------------- 
 Portfolio provisions (limited to 1.25% 
  of risk weighted 
  assets)                                                      1 260 508        1 007 847 
-----------------------------------------------  -----------------------  --------------- 
                                                         ---------------   -------------- 
-----------------------------------------------  -----------------------  --------------- 
 Total Tier 1 & 2 capital                                     55 842 848       49 907 878 
-----------------------------------------------  -----------------------  --------------- 
 Tier 3 capital (sum of market and operational 
  risk capital)                                                  980 355          722 035 
-----------------------------------------------  -----------------------  --------------- 
                                                         ---------------   -------------- 
-----------------------------------------------  -----------------------  --------------- 
 Total capital base                                           56 823 203       50 629 913 
-----------------------------------------------  -----------------------  --------------- 
                                                               =========        ========= 
-----------------------------------------------  -----------------------  --------------- 
 Total risk weighted assets                                  243 651 546      262 803 080 
-----------------------------------------------  -----------------------  --------------- 
                                                               =========        ========= 
-----------------------------------------------  -----------------------  --------------- 
 Tier 1 ratio                                                    20.58%%           16.02% 
-----------------------------------------------  -----------------------  --------------- 
 Tier 2 ratio                                                      2.34%            2.97% 
-----------------------------------------------  -----------------------  --------------- 
 Tier 3 ratio                                                      0.40%            0.27% 
-----------------------------------------------  -----------------------  --------------- 
 Total capital adequacy ratio                                     23.32%           19.26% 
-----------------------------------------------  -----------------------  --------------- 
 RBZ minimum required                                             12.00%           12.00% 
-----------------------------------------------  -----------------------  --------------- 
 
   6.         SEGMENT INFORMATION 

For management purposes, the Bank is organised into five operating segments based on products and services as follows:

 
            Retail Banking          Individual customer's deposits and consumer 
                                     overdrafts, credit card facilities and 
                                     funds transfer facilities. 
 
            Corporate Banking       Loans and other credit facilities and 
                                     deposit and current accounts for corporate 
                                     and institutional customers. 
 
            Treasury                Money market investment, securities trading, 
                                     accepting and discounting of instruments 
                                     and foreign currency trading. 
 
            International Banking   Handles the Bank's foreign currency denominated 
                                     banking business and manages relationships 
                                     with correspondent. 
 
            Corporate Finance       Corporate restructuring, empowerment 
                                     transactions investment advisory services, 
                                     structured finance and capital raising. 
 

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects is measured differently from operating profit or loss in the financial statements. Income taxes are managed on a bank wide basis and are not allocated to operating segments.

Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense.

Transfer prices between operating segments are on arm's length basis in a manner similar to transactions with third parties.

No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Bank's total revenue in 2016 and 2015.

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 2016 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Income 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Third party         29 011 529      14 595 952     4 813 944         451 117      660 645     1 967 328      51 500 215 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Impairment 
  losses on 
  financial 
  investments       (4 527 156)     (3 496 994)             -               -     (35 576)             -     (8 059 726) 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
                     ----------     -----------   -----------      ----------   ----------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Net operating 
  income             24 484 373      11 098 958     4 813 944         451 117      624 769     1 967 328      43 440 489 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
                     ----------     -----------   -----------      ----------   ----------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Results 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Interest and 
  similar 
  income             15 724 296      13 336 078     4 070 689               -      479 424       249 652      33 860 139 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Interest and 
  similar                                                                                                        (11 075 
  expense           (5 021 782)     (4 580 040)   (1 417 555)               -     (55 726)             -            103) 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
                     ----------     -----------    ----------      ----------   ----------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Net interest 
  income 
  (expense)          10 702 514       8 756 038     2 653 134               -      423 698       249 652      22 785 036 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
                     ----------     -----------   -----------      ----------   ----------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Fee and 
  commission 
  income             13 287 237       1 259 874             -         451 117      180 921             -      15 179 149 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Depreciation 
  of property 
  and 
  equipment           1 002 084          48 765        31 329          26 261       22 665       188 292       1 319 396 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Amortisation 
  of 
  intangible 
  assets                      -               -             -               -            -       532 768         532 768 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Segment 
  profit/ 
  (loss)                466 829       1 197 243     3 182 690       (800 014)      174 604     1 967 328       6 188 680 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Income tax 
  charge                      -               -             -               -            -   (1 149 769)     (1 149 769) 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Other 
  comprehensive 
  (loss)/ 
  income, net 
  of tax                      -               -             -               -            -       (2 970)         (2 970) 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
   net of tax        ----------     -----------   -----------      ----------   ----------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Profit/(loss) 
  for the 
  year                  466 829       1 197 243     3 182 690       (800 014)      174 604       814 589       5 035 941 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
                       ========       =========      ========        ========     ========      ========         ======= 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Assets and 
 liabilities 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Capital 
  expenditure           997 785          36 759             -             236            -       723 041       1 757 821 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
                                                                                                                 321 483 
 Total assets        84 579 341     125 687 660    87 613 797          10 137      240 957    23 351 606             498 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 Total                                                                                                           266 770 
  liabilities        61 017 973     101 110 952    97 437 938               -            -     7 203 234             097 
---------------  --------------  --------------  ------------  --------------  -----------  ------------  -------------- 
 

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 2015 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Income 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Third party         30 779 845      19 942 424     5 108 349       1 597 671     992 446     1 035 194      59 455 929 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Impairment 
  losses 
  on loans, 
  advances and 
  debentures        (2 551 763)     (6 944 838)             -               -           -             -     (9 496 601) 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
                    -----------      ----------    ----------     -----------   ---------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Net operating 
  income             28 228 082      12 997 586     5 108 349       1 597 671     992 446     1 035 194      49 959 328 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
                    -----------      ----------    ----------     -----------   ---------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Results 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Interest and 
  similar 
  income             13 722 707      18 168 196     3 254 024               -     436 786       179 642      35 761 355 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Interest and 
  similar                                                                                                       (15 118 
  expense           (5 246 473)     (7 523 572)   (2 059 002)               -   (289 245)             -            292) 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
                    -----------      ----------    ----------     -----------   ---------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Net interest 
  income              8 476 234      10 644 624     1 195 022               -     147 541       179 642      20 645 063 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
                    -----------      ----------    ----------     -----------   ---------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Fee and 
  commission 
  income             17 057 135       1 774 228             -       1 597 671     555 660             -      20 984 694 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Depreciation 
  of property 
  and 
  equipment           1 211 150         138 300        55 011          61 312      34 234       190 895       1 690 902 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Amortisation 
  of 
  intangible 
  assets                      -               -             -               -           -       509 687         509 687 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Segment 
  profit/ 
  (loss)              5 904 945       (243 899)     1 189 657       (193 878)     276 368     1 035 194       7 968 387 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Income tax 
  charge                      -               -             -               -           -   (2 425 049)     (2 425 049) 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Other 
  comprehensive 
  income, net 
  of tax                      -               -             -               -           -         2 970           2 970 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
   net of tax       -----------      ----------    ----------     -----------   ---------     ---------       --------- 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Profit/(loss) 
  for 
  the year            5 904 945       (243 899)     1 189 657       (193 878)     276 368   (1 386 885)       5 546 308 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
                       ========       =========      ========        ========    ========      ========         ======= 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 As at 31 
 December 
 2015 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Assets and 
 liabilities 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Capital 
  expenditure         1 251 784          45 811         1 178           2 200           -     1 219 310       2 520 283 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
                                                                                                                334 401 
 Total assets       126 097 301     120 542 673    66 724 913          95 275   3 183 641    17 757 779             582 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 Total                                                                                                          284 724 
  liabilities        76 966 500      83 704 208   117 254 881               -           -     6 798 533             122 
---------------  --------------  --------------  ------------  --------------  ----------  ------------  -------------- 
 
   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 
   36 St Andrew Square                                                               Bridgewater Road 
   (Off Enterprise Road)                                                              Bristol 
   Eastlea                                                                                    BS99 9ZZ 

P O Box 11 United Kingdom

Harare

Zimbabwe

This information is provided by RNS

The company news service from the London Stock Exchange

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