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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nmbz Holdings Ld | LSE:NMBA | London | Ordinary Share | ZW0009011389 | ORD ZWR0.25 (ZIMBABWE REG) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMNMB
RNS Number : 0642I
NMBZ Holdings Ld
25 August 2016
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED UNAUDITED RESULTS
FOR THE SIX MONTHSED 30 JUNE 2016
FINANCIAL SUMMARY
Hot Features
Premium
30 June 2016 30 June 2015 31 December
2015
--------------------------- ----------------------- ------------------------ --------------
US$ US$ US$
--------------------------- ----------------------- ------------------------ --------------
Unaudited Unaudited Audited
--------------------------- ----------------------- ------------------------ --------------
Total income (US$) 26 096 925 28 802 534 59 396 619
--------------------------- ----------------------- ------------------------ --------------
Attributable profit (US$) 2 640 274 3 166 684 5 490 068
--------------------------- ----------------------- ------------------------ --------------
Basic earnings per share
(US cents) 0.69 0.82 1.43
--------------------------- ----------------------- ------------------------ --------------
Total deposits (US$) 249 205 508 287 047 011 277 216 769
--------------------------- ----------------------- ------------------------ --------------
Loans and advances (US$) 225 292 910 236 180 331 243 241 018
--------------------------- ----------------------- ------------------------ --------------
Total shareholders' funds
(US$) 53 184 655 48 216 645 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 difficult operating environment, evident throughout 2015 persisted in the first half of 2016. This was characterised by nostro funding challenges, liquidity constraints, deflationary pressures, depressed levels of capacity utilisation in the productive sector and company closures. This prompted the Central Bank and the banks to introduce cash withdrawal limits and prioritisation of imports. In this environment, the Group recorded an attributable profit of US$2 640 274 for the period under review which was a 17% decrease from the attributable profit of US$3 166 684 recorded in the comparable period.
Key highlights as at 30 June 2016 which are notable in this challenging environment are:
- The bank's shareholder's funds stood at $52.3 million
- Capital adequacy ratio of 20.8% against RBZ's minimum requirement of 12%
- Liquidity ratio of 32.5% versus RBZ's minimum requirement of 30%
- NPL ratio came down from 14.9% at 30 June 2015 to 11.1%
GROUP RESULTS
Financial performance
The profit before taxation was US$3 558 801 during the period under review and this gave rise to an attributable profit of US$2 640 274 which translated to an earnings per share of 0.69 cents (2015 - 0.82 cents). Total income for the period decreased by 9% from a prior period of US$28 802 534 to US$26 096 925 which is split into interest income of US$17 451 237 (2015 - US$17 583 627), fee and commission income of US$7 584 529 (2015 - US$10 561 243), net foreign exchange gains of US$353 209 (2015 - US$609 218) and non-interest income of US$707 950 (2015 - US$48 446).
Operating expenses amounted to US$13 537 382 and these were 4% down from a prior year of US$14 070 828 as a result of continuing cost cutting and containment measures in the face of downward pressures on income generation.
Impairment losses on loans and advances amounted to US$3 191 396 for the current period from a prior period amount of US$2 644 309 and the increase was mainly due to increased provisioning resulting from the deteriorating economic environment.
Financial position
The Group's total assets decreased by 7% from US$333 831 107 as at 31 December 2015 to US$311 941 890 as at 30 June 2016 and this was mainly due to a fall in cash and cash equivalents and loans, advances and other assets.
Cash and cash equivalents were adversely affected by accelerated cash withdrawals driven by the market-wide cash shortages, but the bank systematically had the cash resources to allow withdrawals of the stipulated daily limits.
Gross loans and advances decreased by 7% from US$243 241 018 as at 31 December 2015 to US$225 292 910 as at 30 June 2016 mainly due to stricter credit management, loans surrendered to ZAMCO amounting to US$11.6 million and collections. The Bank's non-performing loans ratio reduced to 11.1% as at 30 June 2016 from 14.9% as at 30 June 2015.
Total deposits decreased by 10% from US$277 216 769 as at 31 December 2015 to US$249 205 508 as at 30 June 2016 due partly to market reaction to macro-economic pressures and the impending introduction of bond notes as an incentive to exporters.
GROUP RESULTS (continued)
Financial position (continued)
The Bank's liquidity ratio closed the period at 32.5% (31 December 2015 - 30.4%) and this was above the minimum statutory requirement of 30%.
Capital
The banking subsidiary's capital adequacy ratio at 30 June 2016 calculated in accordance with the guidelines of the Reserve Bank of Zimbabwe (RBZ) was 20.8% (31 December 2015 - 19.3%). The minimum required by the RBZ is 12%. We consider the level of our capitalisation to be adequate to support further underwriting when the economic environment improves.
The Group's shareholder funds increased by 5% from US$50 543 864 as at 31 December 2015 to US$53 184 655 as at 30 June 2016 as a result of the attributable profit recorded in the period under review.
The Bank's Tier 1 capital as at 30 June 2016 was US$44 288 514 and we will continue to put strategies in place to work towards meeting the required minimum regulatory capital of US$100 million for a Tier 1 bank by 31 December 2020 subject to improvements in the operating environment as forecast in our capitalisation plan submitted to and approved by the Central Bank.
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 has proposed not to declare a dividend.
CORPORATE SOCIAL INVESTMENTS
We are committed and dedicated to playing an active human development role in the communities that we serve and nurture. Our social investments during the first half of the year were channelled into the country's education system, the disadvantaged and vulnerable groups, protection of the environment and wildlife conservation, the arts and the development of sporting disciplines in young people. The worthy causes we sponsored include, among others, Birdlife Zimbabwe where this year's theme was the protection of the vultures, Petra T24 Cricket tournament which attracted many schools from around Zimbabwe, Arundel Girls Hockey UK tour where we sponsored the team's full kit and the Kwekwe athletic gala. We further channeled our community support to various fundraising golf tournaments to support different causes they were spearheading. These golf tournaments included Petra High school, Milestone school, Midlands Christian College and the Zimbabwe Association of Funeral Assurers. Our contribution towards the disadvantaged communities saw us sponsoring the training of deaf students as teachers at Morgan Zintec College.
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 the 20(th) of May 2016. Mr James de la Fargue was appointed to both boards of NMBZ Holdings Limited and NMB Bank Limited with effect from the 4(th) of May 2016. I would like to thank the three former board members for their invaluable contributions to both NMBZ Holdings Limited and NMB Bank Limited during their tenure and welcome and wish Mr James de la Fargue a fruitful tenure on the Board.
OUTLOOK AND STRATEGY
The banking subsidiary continued to make inroads into the broader market segments thereby laying a foundation for a strategic shift towards small to medium sized enterprises.
The Group continued to source more international lines of credit and is in the process of drawing down a US$20 million credit line and finalising the legal documentation for an approved further US$15 million facility.
In view of the downward pressures on revenues and the continued deteriorating operating environment, cost reductions and containment will be a strategic imperative.
POST REPORTING PERIOD DEVELOPMENT
Some of the Group's shareholders, FMO of the Netherlands and Norfund of Norway, who jointly own 17.98% of the company, have joined forces with Rabobank of the Netherlands to pool investments in financial institutions across Africa through a new investment vehicle, Arise, formed out of the partnership. Arise will have a presence in 20 African countries and capital will be allocated to support the current investee companies as well as new minority investments in the market. Banco Montepio, a Portuguese financial group with banking investments in Africa, is expected to join the partnership in the near future. NMBZ Holdings Limited will be able to benefit from a wide network of other African banks that are part of the new partnership and assist our quest for the much needed lines of credit to serve the small and medium enterprises (SMEs), the rural sector and clients who have not previously had access to financial services.
APPRECIATION
I would like to pay tribute to our valued clients, shareholders and regulatory authorities for their continued support in the period under review. My appreciation goes to my fellow board members, management and staff for their unwavering commitment and dedication which has made the achievement of these results possible in the face of a deteriorating operating environment.
B. A. CHIKWANHA
CHAIRMAN
17 August 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2016
Note 30 June 2016 30 June 2015
-------------------------- ----- ----------------- -----------------
US$ US$
-------------------------- ----- ----------------- -----------------
Unaudited Unaudited
-------------------------- ----- ----------------- -----------------
Interest income 4 17 451 237 17 583 627
-------------------------- ----- ----------------- -----------------
Interest expense (5 809 346) (7 881 122)
-------------------------- ----- ----------------- -----------------
--------------- ---------------
-------------------------- ----- ----------------- -----------------
Net interest income 11 641 891 9 702 505
-------------------------- ----- ----------------- -----------------
Net foreign exchange
gains 353 209 609 218
-------------------------- ----- ----------------- -----------------
Fee and commission
income 5.1 7 584 529 10 561 243
-------------------------- ----- ----------------- -----------------
--------------- ---------------
-------------------------- ----- ----------------- -----------------
Revenue 19 579 629 20 872 966
-------------------------- ----- ----------------- -----------------
Non-interest income 5.2 707 950 48 446
-------------------------- ----- ----------------- -----------------
-------------- --------------
-------------------------- ----- ----------------- -----------------
20 287 579 20 921 412
-------------------------- ----- ----------------- -----------------
Operating expenditure 6 (13 537 382) (14 070 828)
-------------------------- ----- ----------------- -----------------
Impairment losses on
loans and advances (3 191 396) (2 644 309)
-------------------------- ----- ----------------- -----------------
---------------- ----------------
-------------------------- ----- ----------------- -----------------
Profit before taxation 3 558 801 4 206 275
-------------------------- ----- ----------------- -----------------
Taxation 7 (918 527) (1 039 591)
-------------------------- ----- ----------------- -----------------
------------- ---------------
-------------------------- ----- ----------------- -----------------
Profit for the period 2 640 274 3 166 684
-------------------------- ----- ----------------- -----------------
Other comprehensive - -
income, net of tax
-------------------------- ----- ----------------- -----------------
-------------- ---------------
-------------------------- ----- ----------------- -----------------
Total comprehensive
income for the period 2 640 274 3 166 684
-------------------------- ----- ----------------- -----------------
========= =========
-------------------------- ----- ----------------- -----------------
Attributable to:
-------------------------- ----- ----------------- -----------------
-Owners of the parent 2 640 274 3 166 684
-------------------------- ----- ----------------- -----------------
-Non - controlling - -
interest
-------------------------- ----- ----------------- -----------------
------------- ---------------
-------------------------- ----- ----------------- -----------------
2 640 274 3 166 684
-------------------------- ----- ----------------- -----------------
======== =========
-------------------------- ----- ----------------- -----------------
Earnings per share
(US cents)
-------------------------- ----- ----------------- -----------------
- Basic 9.3 0.69 0.82
-------------------------- ----- ----------------- -----------------
- Diluted basic 9.3 0.64 0.77
-------------------------- ----- ----------------- -----------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
30 June 2016 31 December 2015
-------------------------------- ----- ------------------- ---------------------------
Note US$ US$
-------------------------------- ----- ------------------- ---------------------------
Unaudited Audited
-------------------------------- ----- ------------------- ---------------------------
EQUITY
-------------------------------- ----- ------------------- ---------------------------
Share capital 10 78 598 78 598
-------------------------------- ----- ------------------- ---------------------------
Capital reserves 19 831 581 19 546 840
-------------------------------- ----- ------------------- ---------------------------
Retained earnings 17 524 562 15 169 029
-------------------------------- ----- ------------------- ---------------------------
--------------- -------------
-------------------------------- ----- ------------------- ---------------------------
Total equity 37 434 741 34 794 467
-------------------------------- ----- ------------------- ---------------------------
Redeemable ordinary
shares 11 14 335 253 14 335 253
-------------------------------- ----- ------------------- ---------------------------
Subordinated term loan 12 1 414 661 1 414 144
-------------------------------- ----- ------------------- ---------------------------
--------------- ---------------
-------------------------------- ----- ------------------- ---------------------------
Total shareholders'
funds 53 184 655 50 543 864
-------------------------------- ----- ------------------- ---------------------------
LIABILITIES
-------------------------------- ----- ------------------- ---------------------------
Deposits and other liabilities 13 258 234 945 283 287 243
-------------------------------- ----- ------------------- ---------------------------
Current tax liabilities 522 290 -
-------------------------------- ----- ------------------- ---------------------------
--------------- ---------------
-------------------------------- ----- ------------------- ---------------------------
Total shareholders'
funds and
liabilities 311 941 890 333 831 107
-------------------------------- ----- ------------------- ---------------------------
========= =========
-------------------------------- ----- ------------------- ---------------------------
ASSETS
-------------------------------- ----- ------------------- ---------------------------
Cash and cash equivalents 15 47 549 405 63 439 347
-------------------------------- ----- ------------------- ---------------------------
Current tax assets - 23 075
-------------------------------- ----- ------------------- ---------------------------
Investment securities 14 25 100 614 14 547 992
-------------------------------- ----- ------------------- ---------------------------
Loans, advances and
other
-------------------------------- ----- ------------------- ---------------------------
assets 16 217 467 660 235 088 981
-------------------------------- ----- ------------------- ---------------------------
Non - current assets
held for sale 2 264 300 2 264 300
-------------------------------- ----- ------------------- ---------------------------
Quoted and other investments 156 027 146 025
-------------------------------- ----- ------------------- ---------------------------
Deferred tax assets 2 242 168 1 905 116
-------------------------------- ----- ------------------- ---------------------------
Investment properties 8 925 800 8 125 800
-------------------------------- ----- ------------------- ---------------------------
Intangible assets 17 1 538 692 1 689 385
-------------------------------- ----- ------------------- ---------------------------
Property and equipment 18 6 697 224 6 601 086
-------------------------------- ----- ------------------- ---------------------------
----------------- --------------
-------------------------------- ----- ------------------- ---------------------------
Total assets 311 941 890 333 831 107
-------------------------------- ----- ------------------- ---------------------------
========== =========
-------------------------------- ----- ------------------- ---------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2016
Capital Reserves
---------------- -------------- ------------------------------------------------- --------------- ----------------
Share Capital Share Premium Share Option Regulatory Retained Total
Reserve Reserve Earnings
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
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
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Total
comprehensive
income
for the six
Months - - - - 3 166 684 3 166 684
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Impairment
allowance for
loans and
Advances - - - 1 064 601 (1 064 601) -
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Share based
payments -
share
options
Movement - - 3 107 - - 3 107
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
---------- ------------- --------- ------------- -------------- -------------
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Balances at 30
June 2015 78 598 15 737 548 65 670 4 358 300 12 234 074 32 474 190
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Total
comprehensive
income
for the six
months - - - - 2 323 384 2 323 384
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Impairment
allowance for
loans and
advances - - - (611 571) 611 571 -
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Share based
payments -
share
options
movement - - (3 107) - - (3 107)
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
---------- ------------ ---------- ------------- ------------ ---------------
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Balances at 31
December
2015 78 598 15 737 548 62 563 3 746 729 15 169 029 34 794 467
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Total
comprehensive
income
for the six
months - - - - 2 640 274 2 640 274
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Impairment
allowance for
loans and
advances - - - 284 741 (284 741) -
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
----------- ------------- ---------- ------------ ------------- -------------
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
Balances at 30
June 2016 78 598 15 737 548 62 563 4 031 470 17 524 562 37 434 741
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
======= ======== ====== ======= ======== ========
---------------- -------------- ---------------- -------------- --------------- --------------- ----------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2016
30 June 2016 30 June 2015
--------------------------------------------- ----------------- -----------------
US$ US$
--------------------------------------------- ----------------- -----------------
Unaudited Unaudited
--------------------------------------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
--------------------------------------------- ----------------- -----------------
Profit before taxation 3 558 801 4 206 275
--------------------------------------------- ----------------- -----------------
Non-cash items:
--------------------------------------------- ----------------- -----------------
- Amortisation of intangible assets 259 253 254 471
--------------------------------------------- ----------------- -----------------
-Depreciation 700 047 904 817
--------------------------------------------- ----------------- -----------------
-Impairment losses on loans and advances 3 191 396 2 644 309
--------------------------------------------- ----------------- -----------------
-Quoted and other investments fair value
adjustment (10 002) 24 118
--------------------------------------------- ----------------- -----------------
-(Profit)/loss on disposal of property
and equipment (37 514) 4 253
--------------------------------------------- ----------------- -----------------
-Share based payment - remuneration expense - 3 107
--------------------------------------------- ----------------- -----------------
------------- --------------
--------------------------------------------- ----------------- -----------------
Operating cash flows before changes in
operating assets and
liabilities 7 661 981 8 041 350
--------------------------------------------- ----------------- -----------------
Changes in operating assets and liabilities
--------------------------------------------- ----------------- -----------------
Deposits and other liabilities (25 052 298) 54 966 557
--------------------------------------------- ----------------- -----------------
Loans, advances and other assets 14 429 925 (27 372 588)
--------------------------------------------- ----------------- -----------------
Investment in debentures - 4 614 047
--------------------------------------------- ----------------- -----------------
-------------- -------------
--------------------------------------------- ----------------- -----------------
(2 960 392) 40 249 366
--------------------------------------------- ----------------- -----------------
--------------- --------------
--------------------------------------------- ----------------- -----------------
Taxation
--------------------------------------------- ----------------- -----------------
Corporate tax paid (710 213) -
--------------------------------------------- ----------------- -----------------
--------------- --------------
--------------------------------------------- ----------------- -----------------
Net cash (outflow)/inflow from operating
activities (3 670 605) 40 249 366
--------------------------------------------- ----------------- -----------------
--------------- ---------------
--------------------------------------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
--------------------------------------------- ----------------- -----------------
Acquisition of intangible assets (108 560) (220 003)
--------------------------------------------- ----------------- -----------------
Acquisition of investment property (800 000) (8 109 500)
--------------------------------------------- ----------------- -----------------
Purchase of property and equipment (799 981) (527 665)
--------------------------------------------- ----------------- -----------------
Proceeds on disposal of property and
equipment 41 309 18 113
--------------------------------------------- ----------------- -----------------
Purchase of investment securities (10 552 622) (6 260 876)
--------------------------------------------- ----------------- -----------------
--------------- ---------------
--------------------------------------------- ----------------- -----------------
Net cash outflow from investing activities (12 219 854) (15 099 931)
--------------------------------------------- ----------------- -----------------
-------------- ---------------
--------------------------------------------- ----------------- -----------------
Net cash (outflow)/inflow before financing
activities (15 890 459) 25 149 435
--------------------------------------------- ----------------- -----------------
-------------- ---------------
--------------------------------------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
--------------------------------------------- ----------------- -----------------
Payment of interest on subordinated term
loan (74 331) (72 476)
--------------------------------------------- ----------------- -----------------
Interest capitalised on subordinated
term loan 74 848 71 714
--------------------------------------------- ----------------- -----------------
------------- ---------------
--------------------------------------------- ----------------- -----------------
Net cash inflow/(outflow) from financing
activities 517 (762)
--------------------------------------------- ----------------- -----------------
--------------- --------------
--------------------------------------------- ----------------- -----------------
Net (decrease)/increase in cash and cash
equivalents (15 889 942) 25 148 673
--------------------------------------------- ----------------- -----------------
Cash and cash equivalents at beginning
of the period 63 439 347 54 750 561
--------------------------------------------- ----------------- -----------------
--------------- --------------
--------------------------------------------- ----------------- -----------------
Cash and cash equivalents at the end
of the period 47 549 405 79 899 234
--------------------------------------------- ----------------- -----------------
========= ========
--------------------------------------------- ----------------- -----------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2016
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe and is an investment holding company. Its registered office is 64 Kwame Nkrumah Avenue, Harare. Its principal operating subsidiary is engaged in banking.
2. ACCOUNTING CONVENTION
Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position of the Group since the last annual consolidated financial statements as at and for the year ended 31 December 2015. These condensed consolidated interim financial statements do not include all the information required for the full annual financial statements prepared in accordance with International Financial Reporting Standards.
These condensed consolidated interim financial statements were approved by the Board of Directors on 17 August 2016.
2.1 Basis of preparation
The condensed consolidated interim financial statements have been prepared under the historical cost convention except for quoted and other investments, investment properties and financial instruments which are carried at fair value and land and buildings which are stated at revalued amount. These condensed consolidated interim financial statements are reported in United States of America dollars and rounded to the nearest dollar.
2.2 Basis of consolidation
The Group financial results incorporate the financial results of the Company, its subsidiaries and associate company. Subsidiaries are investees controlled by the Group. The Group controls an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases. The financial results of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, income and expenses; profits and losses resulting from intra-group transactions that are recognised in assets and liabilities are eliminated in full. When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
An associate is an entity over which the Group has significant influence, as evidenced by the Group holding directly or indirectly 20% or more of the voting power of the investee, representation on the Board and direct involvement with the policy making processes of the investee. The investment in Associate is accounted for using the equity method.
2.3 Comparative financial information
The interim financial statements comprise consolidated statements of financial position, comprehensive income, changes in equity and cash flows. The comparative consolidated statements of comprehensive income, changes in equity and cash flows are for six months.
2.4 Use of estimates and judgements
The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and key sources of estimation and uncertainity were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2015.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
In the process of applying the Group's accounting policies, management has made the following judgements which have the most significant effect on the amounts recognised in the consolidated financial statements:
2.4.1 Deferred tax
Provision for deferred taxation is made using the liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences arising out of the initial recognition of assets or liabilities and temporary differences on initial recognition of business combinations that affect neither accounting nor taxable profit are not recognised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
In determining the amounts used for taxation purposes the directors referred to applicable effective exchange rates at the date of acquisition of assets or incurring of liabilities. The Zimbabwe Revenue Authority (ZIMRA), announced methods to account for the deferred tax arising on assets purchased in ZWD. These methods require the preparer to first estimate the equivalent USD value of those assets at the time of purchase. Since the measurement of transactions in Zimbabwe dollars in the prior periods is affected by several economic variables such as mode of payment and hyperinflation, this is an area where the directors have had to apply their judgement and acknowledge there could be significant variations in the results achieved depending on assumptions made.
2.4.2 Land and buildings
The properties were valued by directors. The determined fair value of land and buildings is most sensitive to the estimated yield as well as the long term vacancy rate. In addition, the property market is currently not stable due to liquidity constraints and hence comparable values are also not stable.
2.4.3 Investment properties
Investment properties were valued by directors. The directors considered comparable market evidence of recent sale transactions and those transactions where firm offers had been made but awaiting acceptance. In addition, the property market is currently not stable due to liquidity constraints and hence comparable values are also not stable.
2.4.4 Property and equipment
The directors exercised their judgment in determining the residual values of the other property and equipment which have been determined as nil.
2.4.5 Investment securities
2.4.5.1Investment securities - held to maturity
This relates tothe RBZ Bond that was valued at amortised cost as there is currently no market information to facilitate the application of fair value principles (refer to note 14.1). There is currently no active market for these bonds.
2.4.5.2 Investment securities - loans and receivables
This relates to various Treasury Billsthat were valued at amortised cost as there is currently no market information to facilitate the application of fair value principles (refer to note 14.1).
2.4.5 Investment securities held to maturity
This relates to theRBZ Bond that was valued at amortised cost as there is currently no market
information to facilitate the application of fair value principles, refer to Note 14.1.
2.4.6 Intangible assets
Intangible assets are initially recognised at cost. Subsequently the assets are measured at cost less accumulated amortisation and any impairment loss.
2.4.7 Fair value adjustments of unquoted investments
Subject to contractual provisions, the fair value of unquoted investments is established with reference to the net asset value and the earnings capacity of the business. Valuations on the earnings basis is calculated as the sustainable earnings for the entity multiplied by discounted Price Earnings Ratio of a quoted Company with similar operations in a similar environment.
The valuation of investment in unlisted companies has been carried in the statement of financial position of the Bank based on the audited net asset values of the investee companies.
2.4.8 Impairment losses on loan and advances
The Group reviews all loans and advances at each reporting date to assess whether an impairment loss should be recorded in profit or loss. In particular, judgement by management is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. In estimating these cash flows, the Group makes judgements about the borrower's financial situation and the net realisable value of collateral. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. Loans and advances that have been assessed individually and found not to be impaired and all individually insignificant loans and advances are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether provision should be made due to incurred loss events for which there is objective evidence but whose effects are not yet evident. The collective assessment takes account of data from the loan portfolio (such as credit quality, levels of arrears, credit utilisation, loan to collateral ratios etc.), concentrations of risks and economic data.
The impairment loss on loans and advances is disclosed in more detail under note 8 and note 16.3 below.
2.4.9 Non-current assets held for sale
Non-current assets or disposal group are held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. These are measured at the lower of carrying amount and fair value less costs to sell and they are not depreciated.
Non-current assets were valued by the directors who considered comparable market evidence of recent sale transactions and those transactions where firm offers had been made but waiting acceptance.
2.4.10 Going concern
The Directors have assessed the ability of the Group to continue operating as a going concern and believe that the preparation of these consolidated financial statements on a going concern basis is still appropriate.
3. ACCOUNTING POLICIES
The selected principal accounting policies applied in the preparation of these condensed financial statements are set out below. These policies have been consistently applied unless otherwise stated.
3.1 Financial instruments 3.1.1 Classification
Financial assets and liabilities at fair value through profit and loss include financial assets and
liabilities held for trading i.e. those that the Group principally holds for the purpose of short-term profit taking as well as those that were, upon initial recognition, designated by the entity as financial assets or liabilities at fair value through profit and loss.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those classified as held-for-trading and the Group upon initial recognition designates as at fair value through profit or loss and those the Group upon initial recognition designates as available-for-sale.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.
Financial assets available-for-sale are non-derivative financial assets that are designated as available-for- sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
3.1.2 Recognition
The Group recognises financial assets at fair value through profit and loss and available for sale assets on the date it commits to purchase the assets. From this date any gains and losses arising from changes in fair value of the assets are recognised in the income statement and other comprehensive income respectively.
Held-to-maturity investments and loans and receivables are recognised at cost which is the fair value of the consideration given on the day that they are transferred to the Group.
3.1.3 Measurement
Financial assets and liabilities are measured initially at fair value. Subsequent to initial recognition, financial assets and liabilities measured at fair value through profit and loss and available-for-sale financial assets are measured at fair value, except that any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at cost, less impairment losses.
Held-to-maturity investments and loans and receivables are measured at amortised cost less impairment losses. Amortised cost is calculated using the effective interest rate method. Premiums and discounts, including initial transaction costs, are included in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument.
3.1.4 Fair value measurement principles
The fair value of financial instruments is based on their quoted market price at the reporting date without any deduction for transaction costs. If a quoted market price is not available, the fair value of the instrument is estimated using pricing models or discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future cash flows are based on management's best estimates and the discount rate is a market related rate at the reporting date for an instrument with similar terms and conditions. Where pricing models are used, inputs are based on market related measures at the reporting date.
3.2 Investment properties
Investment properties are stated at fair value. Gains and losses arising from a change in fair value of investment properties are recognised in the income statement. The fair value is determined at the end of each reporting period.
3.3 Share - based payments
The Group issues share options to certain employees in terms of the Employee Share Option Scheme. Share options are measured at fair value at the date of grant. The fair value determined at the date of grant of the options is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured using the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and other behavioural considerations.
3.4 Property and equipment
International Accounting Standard 16 (IAS 16) stipulates that the residual value and the useful life of an asset must be reviewed at least each financial year-end. If the residual value of an asset increases by an amount equal to or greater than the asset's carrying amount, then the depreciation of the asset ceases. Depreciation will resume only when the residual value decreases to an amount below the asset's carrying amount.
3.5 Intangible assets
Intangible assets are initially recognised at cost. Subsequently, the assets are measured at cost less accumulated armotisation and any accumulated impairment losses.
3.6 Shareholders' funds
Shareholders' funds refer to the total investment made by the shareholders to the Group and it consists of share capital, share premium, share options reserve, retained earnings, redeemable ordinary shares and subordinated term loans.
3.7 Taxation
Income tax
Income tax expenses comprise current, AIDS levy and deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current
Current tax comprises expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using rates enacted or substantively enacted at the reporting date in the country where the Bank operates and generates taxable income and any adjustment to tax payable in respect of previous years.
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities.
Deferred taxation
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Bank expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Bank has not rebutted this presumption.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Additional taxes that arise from the distribution of dividends by the Bank are recognised at the same time as the liability to pay the related dividend is recognised. These amounts are generally recognised in profit or loss because they generally relate to income arising from transactions that were originally recognised in profit or loss.
3.8 Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances, and short term highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are measured at amortised cost in the statement of financial position.
3.9 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Bank and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The specific recognition criteria described below must also be met before revenue is recognised.
3.10 Interest income
For all financial instruments measured amortised cost and financial instruments designated at fair value through profit or loss, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
Interest income includes income arising out of the banking activities of lending and investing.
3.11 Interest expense
Interest expense arises from deposit taking. The expense is recognised in profit or loss as it accrues, taking into account the effective interest cost of the liability.
4. INTEREST INCOME
30 June 2016 30 June 2015
----------------------- -------------------------------- ---------------
US$ US$
----------------------- -------------------------------- ---------------
Loans and advances to
banks 660 355 1 273 619
----------------------- -------------------------------- ---------------
Loans and advances to
customers 16 058 121 15 822 939
----------------------- -------------------------------- ---------------
Investment securities 732 761 487 069
----------------------- -------------------------------- ---------------
-------------- --------------
----------------------- -------------------------------- ---------------
17 451 237 17 583 627
----------------------- -------------------------------- ---------------
======== ========
----------------------- -------------------------------- ---------------
5. FEE AND COMMISSION INCOME AND non-interest income
5.1 Fee and commission income
30 June 2016 30 June 2015
----------------------------------- -------------- ---------------
US$ US$
----------------------------------- -------------- ---------------
Retail banking customer fees 6 414 627 8 820 206
----------------------------------- -------------- ---------------
Corporate banking credit related
fees 618 055 287 279
----------------------------------- -------------- ---------------
Financial guarantee income 133 762 108 120
----------------------------------- -------------- ---------------
International banking commissions 237 164 790 538
----------------------------------- -------------- ---------------
Corporate finance fees 180 921 555 100
----------------------------------- -------------- ---------------
------------- --------------
----------------------------------- -------------- ---------------
7 584 529 10 561 243
----------------------------------- -------------- ---------------
======== ========
----------------------------------- -------------- ---------------
5.2 Non - interest income
30 June 2016 30 June 2015
--------------------------------------- ------------- -------------
US$ US$
--------------------------------------- ------------- -------------
Net gain/(loss) from quoted and
other
--------------------------------------- ------------- -------------
investments 10 002 (24 118)
--------------------------------------- ------------- -------------
Profit/(loss) on disposal of property
and equipment 37 514 (4 253)
--------------------------------------- ------------- -------------
Insurance claims and recoveries 5 744 9 441
--------------------------------------- ------------- -------------
Rental income 73 300 31 413
--------------------------------------- ------------- -------------
Bad debts recovered 561 945 27 248
--------------------------------------- ------------- -------------
Other net operating income 19 445 8 715
--------------------------------------- ------------- -------------
----------- ------------
--------------------------------------- ------------- -------------
707 950 48 446
--------------------------------------- ------------- -------------
====== ======
--------------------------------------- ------------- -------------
6. Operating EXPITURE
30 June 2016 30 June 2015
---------------------------------------- --------------- --------------
US$ US$
---------------------------------------- --------------- --------------
The operating profit is after charging
the following:
---------------------------------------- --------------- --------------
Administration costs 6 279 928 6 773 288
---------------------------------------- --------------- --------------
Staff costs - salaries, allowances
and related costs 6 183 584 6 019 338
---------------------------------------- --------------- --------------
Directors' remuneration 114 570 118 914
---------------------------------------- --------------- --------------
Amortisation of intangible assets 259 253 254 471
---------------------------------------- --------------- --------------
Depreciation 700 047 904 817
---------------------------------------- --------------- --------------
-------------- -------------
---------------------------------------- --------------- --------------
13 537 382 14 070 828
---------------------------------------- --------------- --------------
======== ========
---------------------------------------- --------------- --------------
7. taxation
30 June 2016 30 June 2015
-------------------- ------------- -------------
US$ US$
-------------------- ------------- -------------
Income tax expense
-------------------- ------------- -------------
Current tax 1 219 010 734 150
-------------------- ------------- -------------
AIDS levy 36 570 22 024
-------------------- ------------- -------------
Deferred tax (337 053) 283 417
-------------------- ------------- -------------
------------ ------------
-------------------- ------------- -------------
918 527 1 039 591
-------------------- ------------- -------------
======= ========
-------------------- ------------- -------------
8. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment losses are applied to write off loans and advances in part or in whole when they are considered partly or wholly irrecoverable. The aggregate impairment losses which are made during the year are dealt with as per paragraph 8.3.
8.1 Specific provisions
Specific provisions are made where the repayment of identified loans and advances is in doubt and reflect estimates of the loss. Loans and advances are written off against specific provisions once the probability of recovering any significant amounts becomes remote.
8.2 Portfolio provisions
The portfolio provision relates to the inherent risk of losses which, although not separately identified, is known to be present in any loan portfolio.
8.3 Regulatory Guidelines and International Financial Reporting Standards Requirements
The Banking Regulations 2000 gives guidance on provisioning for doubtful debts and stipulates certain minimum percentages to be applied to the respective categories of the loan book.
International Accounting Standard 39, Financial Instruments Recognition and Measurement (IAS 39), prescribes the provisioning for impairment losses based on the actual loan losses incurred in the past applied to the sectoral analysis of book debts and the discounting of expected cash flows on specific problem accounts.
The two prescriptions are likely to give different results. The Group has taken the view that where the IAS 39 charge is less than the amount provided for in the Banking Regulations, the difference is recognized directly in equity as a transfer from retained earnings to a regulatory reserve and where it is more, the full amount will be charged to the profit or loss.
8.4 Non-performing loans
Interest on loans and advances is accrued to income until such time as reasonable doubt exists about its collectability, thereafter and until all or part of the loan is written off, interest continues to accrue on customers' accounts, but is not included in income. Such suspended interest is deducted from loans and advances in the statement of financial position. This policy meets the requirements of the Banking Regulations 2000 issued by the RBZ.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of NMBZ Holdings Limited by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of NMBZ Holdings Limited adjusted for the after tax effect of: (a) any dividends or other items related to dilutive potential ordinary shares deducted in arriving at profit or loss attributable to ordinary equity holders of the parent entity; (b) any interest recognised in the period related to dilute potential ordinary shares; (c) any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares, by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares; that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2016
9.1 Earnings (US$)
30 June 2016 30 June 2015
------- ------------- -------------
Basic 2 640 274 3 166 684
------- ------------- -------------
9.2 Number of shares
30 June 2016 30 June 2015
------------------------------------------------- ----------------- -----------------
9.2.1 Basic earnings per share
------------------------------------------------- ----------------- -----------------
Weighted average number of ordinary
shares for
------------------------------------------------- ----------------- -----------------
basic earnings per share 384 427 351 384 427 351
------------------------------------------------- ----------------- -----------------
9.2.2 Diluted earnings per share
------------------------------------------------- ----------------- -----------------
Number of shares at beginning of
period 384 427 351 384 427 351
------------------------------------------------- ----------------- -----------------
Effect of dilution:
------------------------------------------------- ----------------- -----------------
Share options granted but not exercised 4 128 434 4 128 434
------------------------------------------------- ----------------- -----------------
Share options approved but not
yet granted 23 942 639 23 942 639
------------------------------------------------- ----------------- -----------------
---------------- ----------------
------------------------------------------------- ----------------- -----------------
412 498 424 412 498 424
------------------------------------------------- ----------------- -----------------
========= =========
------------------------------------------------- ----------------- -----------------
9.3 Earnings per share (US cents)
30 June 2016 30 June 2015
--------------- ------------- -------------
Basic 0.69 0.82
--------------- ------------- -------------
Diluted basic 0.64 0.77
--------------- ------------- -------------
10. SHARE CAPITAL
10.1 Authorised
30 June 2016 31 December 30 June 2016 31 December2015
2015
----------------- --------------- --------------- ------------- ----------------
Shares million Shares million US$$ US$
----------------- --------------- --------------- ------------- ----------------
Ordinary shares
of US$0.00028
each 600 600 168 000 168 000
----------------- --------------- --------------- ------------- ----------------
==== ==== ====== ======
----------------- --------------- --------------- ------------- ----------------
10.2 Issued and fully paid
10.2.1 Ordinary shares
30 June 2016 31 December 30 June 2016 31 December
2015 2015
----------------- --------------- --------------- ------------- ------------
Shares million Shares million US$$ US$
----------------- --------------- --------------- ------------- ------------
Ordinary shares 281 281 78 598 78 598
----------------- --------------- --------------- ------------- ------------
==== === ====== ======
----------------- --------------- --------------- ------------- ------------
10.2.2 Redeemable ordinary shares
30 June 2016 31 December 30 June 2016 31 December
2015 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 and as at 30 June 2016, 4 128 434 share options had been issued.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03), the unissued shares are under the control of the directors.
11. REDEEMABLE ORDINARY SHARES
30 June 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 Company received US$14 831 145 capital from Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden N.V. (FMO), Norwegian Investment Fund for Developing Countries (Norfund) and AfricInvest Financial Sector Holdings (AfricInvest) who were allocated 34 571 429 shares each (total of 103 714 287) for individually investing US$4 943 715. This amount, net of share issue expenses, was used to recapitalise the Bank in order to contribute towards the minimum capital requirements for a Tier 1 bank set by the Reserve Bank of Zimbabwe of US$100 million by 31 December 2020.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back agreement with Norfund, FMO and AfricInvest, where these three strategic investors have a right on their own discretion at any time after the 5(th) anniversary (30 June 2018) but before the 9(th) anniversary (30 June 2022) of its first subscription date, to request NMBZ to buy back all or part of its NMBZ shares at a price to be determined using the agreed terms as entailed in the share buy-back agreement. It is a condition precedent that at any point when the share buy-back is being considered, the proceeds used to finance the buy-back should come from the distributable reserves which are over and above the minimum regulatory capital requirements. Further, no buy-back option can be exercised by any investor after the 9(th) anniversary (30 June 2022) of the effective date.
The share buy-back agreement creates a potential obligation for NMBZ Holdings Limited to purchase its own instruments. Thus shares issued gave rise to a potential financial liability and are classified as redeemable ordinary shares.
12. SUBORDINATED TERM LOAN
30 June 2016 31 December 2015
---------------------- --------------- ------------------
US$ US$
---------------------- --------------- ------------------
At 1 January 1 414 144 1 407 964
---------------------- --------------- ------------------
Interest capitalised 74 848 134 676
---------------------- --------------- ------------------
Interest paid (74 331) (128 496)
---------------------- --------------- ------------------
-------------- -----------------
---------------------- --------------- ------------------
1 414 661 1 414 144
---------------------- --------------- ------------------
========= ==========
---------------------- --------------- ------------------
In 2013, the Bank received a subordinated term loan amounting to US$1.4 million from a Development Financial Institution which attracts an interest rate of LIBOR plus 10% and has a seven year maturity date (13 June 2020) from the first disbursement date.
The above liability would, in the event of the winding up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. The Group has not had any defaults of the principal and interest with respect to this subordinated loan during the six months period ended 30 June 2016. However, there was a breach to the financial covenants regarding the open asset exposure ratio that stood at 39.5% instead of a maximum of 30%. The Bank will apply for a waiver of the non-compliant ratio by 30 September 2016.
13. DepositS and other LIABILITIES
13.1 Deposits and other liabilities
30 June 2016 31 December 2015
------------------------------- ---------------- ------------------
US$ US$
------------------------------- ---------------- ------------------
Deposits from banks and other
financial
institutions** 70 234 296 63 192 674
------------------------------- ---------------- ------------------
Current and deposit accounts 178 971 212 214 024 095
------------------------------- ---------------- ------------------
--------------- -----------------
------------------------------- ---------------- ------------------
Total deposits* 249 205 508 277 216 769
------------------------------- ---------------- ------------------
Trade and other payables* 9 029 437 6 070 474
------------------------------- ---------------- ------------------
--------------- -----------------
------------------------------- ---------------- ------------------
258 234 945 283 287 243
------------------------------- ---------------- ------------------
========== ==========
------------------------------- ---------------- ------------------
`
*Deposits and other payables approximate the related carrying amount due to their short term nature.
**Included in deposits from banks and other financial institutions are loan balances of US$6 315 789 and US$7 285 713 due to Societe de Promotion de Participation Pour la Cooperation Economique SA (Proparco) and Norsad Finance Limited respectively. The Group has not had any defaults on the principal and interest with respect to these loans during the period ended 30 June 2016. However, there were breaches to the financial covenants regarding the following ratios for the Proparco facility:
-- Cost to income ratio - 66.7% (instead of a maximum of 65%). -- Open credit exposure - 39.5% (instead of a maximum of 25%).
-- Non-performing loans ratio (including restructured loans) - 14.2% (instead of a maximum of 10%).
On the Norsad facility there was a breach to the financial covenant regarding the Open loan exposure ratio that stood at 39.5% instead of a cap of 30%.
The Bank will apply for a waiver of the non-compliant ratios by 30 September 2016.
13.2 Maturity analysis
30 June 2016 31 December 2015
--------------------- ---------------- -----------------
US$ US$
--------------------- ---------------- -----------------
Less than one month 187 567 805 184 324 981
--------------------- ---------------- -----------------
1 to 3 months 29 202 074 66 129 516
--------------------- ---------------- -----------------
3 to 6 months 7 088 867 3 241 887
--------------------- ---------------- -----------------
6 months to 1 year 7 207 774 14 969 876
--------------------- ---------------- -----------------
1 to 5 years 18 138 988 8 550 509
--------------------- ---------------- -----------------
Over 5 years - -
--------------------- ---------------- -----------------
--------------- ---------------
--------------------- ---------------- -----------------
249 205 508 277 216 769
--------------------- ---------------- -----------------
========== =========
--------------------- ---------------- -----------------
13.3 Sectoral analysis of deposits
30 June 2016 31 December
2015
---------------------------------- ---------------- --------- ---------------- -----
US$ % US$ %
---------------------------------- ---------------- --------- ---------------- -----
Agriculture 6 995 693 3 7 959 554 3
---------------------------------- ---------------- --------- ---------------- -----
Banks and financial institutions 70 234 296 28 63 192 674 23
---------------------------------- ---------------- --------- ---------------- -----
Distribution 24 624 114 10 28 153 680 10
---------------------------------- ---------------- --------- ---------------- -----
Individuals 28 494 507 12 30 782 718 11
---------------------------------- ---------------- --------- ---------------- -----
Manufacturing 28 095 529 11 37 633 942 14
---------------------------------- ---------------- --------- ---------------- -----
Mining companies 4 379 347 2 6 268 507 2
---------------------------------- ---------------- --------- ---------------- -----
Municipalities and parastatals 11 003 757 4 11 833 310 4
---------------------------------- ---------------- --------- ---------------- -----
Other deposits 33 474 880 13 34 054 452 12
---------------------------------- ---------------- --------- ---------------- -----
Services 35 073 294 14 47 908 714 17
---------------------------------- ---------------- --------- ---------------- -----
Transport and telecommunication
Companies 6 830 091 3 9 429 218 4
---------------------------------- ---------------- --------- ---------------- -----
--------------- -------- --------------- ----
---------------------------------- ---------------- --------- ---------------- -----
249 205 508 100 277 216 769 100
---------------------------------- ---------------- --------- ---------------- -----
========= ==== ========= ===
---------------------------------- ---------------- --------- ---------------- -----
14. FINANCIAL INSTRUMENTS
14.1 Investment securities
30 June 2016 31 December 2015
--------------------------------- -------------- -----------------
US$ US$
--------------------------------- -------------- -----------------
Investment securities held to
maturity 12 878 934 3 817 687
--------------------------------- -------------- -----------------
Investment securities available
for sale 12 221 680 10 730 305
--------------------------------- -------------- -----------------
------------- --------------
--------------------------------- -------------- -----------------
25 100 614 14 547 992
--------------------------------- -------------- -----------------
======== ========
--------------------------------- -------------- -----------------
The Group holds Treasury Bills and Government Bonds totalling US$25 100 614 with interest rates ranging from 2.5% to 5%. Liquidity induced trades have occurred in the secondary market and there is industry consensus that these trades do not represent free market activity. In light of the absence of an active market for the Treasury Bills, the instruments are recorded at amortised cost. Of the total Treasury Bills balance, a total of US$21 573 265 has been pledged as security against interbank borrowings.
14.2 Maturity analysis of investment securities held to maturity
30 June 2016 31 December 2015
-------------------- --------------- -----------------
US$ US$
-------------------- --------------- -----------------
Less than 1 month - -
-------------------- --------------- -----------------
1 to 3 months - 1 314 802
-------------------- --------------- -----------------
3 to 6 months 2 827 349 2 502 885
-------------------- --------------- -----------------
6 months to 1 year - -
-------------------- --------------- -----------------
1 to 5 years - -
-------------------- --------------- -----------------
Over 5 years 10 051 585 -
-------------------- --------------- -----------------
-------------- --------------
-------------------- --------------- -----------------
12 878 934 3 817 687
-------------------- --------------- -----------------
======== ========
-------------------- --------------- -----------------
14.3 Maturity analysis of investment securities available for sale
30 June 2016 31 December 2015
-------------------- --------------- -----------------
US$ US$
-------------------- --------------- -----------------
Less than 1 month - -
-------------------- --------------- -----------------
1 to 3 months - -
-------------------- --------------- -----------------
3 to 6 months 6 329 114 -
-------------------- --------------- -----------------
6 months to 1 year 1 691 722 6 329 114
-------------------- --------------- -----------------
1 to 5 years 4 200 844 3 400 415
-------------------- --------------- -----------------
Over 5 years - 1 000 776
-------------------- --------------- -----------------
-------------- --------------
-------------------- --------------- -----------------
12 221 680 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
30 June 2016 Level 1 Level 2 Level 3
-------------------- --------------- ------------ -------------- ---------------
US$ 2013 US$ US$
-------------------- --------------- ------------ -------------- ---------------
Trade investments 93 865 - - 93 865
-------------------- --------------- ------------ -------------- ---------------
Quoted investments 62 162 62 162 - -
-------------------- --------------- ------------ -------------- ---------------
-------------- ----------- ------------- --------------
-------------------- --------------- ------------ -------------- ---------------
156 027 62 162 - 93 865
-------------------- --------------- ------------ -------------- ---------------
========= ======= ======== ========
-------------------- --------------- ------------ -------------- ---------------
During the reporting period ended 30 June 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. The trade investments were valued using the net asset value method.
31 December
2015 Level 1 Level 2 Level 3
-------------------- -------------- ------------ -------------- ---------------
US$ 2013 US$ US$
-------------------- -------------- ------------ -------------- ---------------
Trade investments 77 805 - - 77 805
-------------------- -------------- ------------ -------------- ---------------
Quoted investments 68 220 68 220 - -
-------------------- -------------- ------------ -------------- ---------------
------------- ----------- ------------- --------------
-------------------- -------------- ------------ -------------- ---------------
146 025 68 220 - 77 805
-------------------- -------------- ------------ -------------- ---------------
========= ======= ======== ========
-------------------- -------------- ------------ -------------- ---------------
During the reporting period ended 31 December 2015, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Level 3 fair value measurements
Reconciliation of trade investments
30 June 2016 31 December 2015
----------------------------- ------------- -----------------
US$ US$
----------------------------- ------------- -----------------
Opening balance 77 805 81 390
----------------------------- ------------- -----------------
Total gain/(loss) in profit
or loss 16 060 (3 585)
----------------------------- ------------- -----------------
---------- ----------
----------------------------- ------------- -----------------
Closing balance 93 865 77 805
----------------------------- ------------- -----------------
====== =====
----------------------------- ------------- -----------------
14.4.2 Financial instruments not measured at fair value
The table below sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorised.
30 June 2016 Total carrying
--------------------------- ---------------------- ----------------- ------------------- ------------------
Level 1 Level 2 Level 3 Amount
--------------------------- ---------------------- ----------------- ------------------- ------------------
US$ US$ US$ US$
--------------------------- ---------------------- ----------------- ------------------- ------------------
Assets
--------------------------- ---------------------- ----------------- ------------------- ------------------
Cash and cash equivalents - 47 549 405 - 47 549 405
--------------------------- ---------------------- ----------------- ------------------- ------------------
Loans, advances
and other
assets - 217 467 660 - 217 467 660
--------------------------- ---------------------- ----------------- ------------------- ------------------
Investment securities - - 25 100 614 25 100 614
--------------------------- ---------------------- ----------------- ------------------- ------------------
------- ---------------- ----------------- -----------------
--------------------------- ---------------------- ----------------- ------------------- ------------------
Total - 265 017 065 25 100 614 290 117 679
--------------------------- ---------------------- ----------------- ------------------- ------------------
==== ========== =========== ==========
--------------------------- ---------------------- ----------------- ------------------- ------------------
Liabilities
--------------------------- ---------------------- ----------------- ------------------- ------------------
Deposits and other
liabilities - 258 234 945 - 258 234 945
--------------------------- ---------------------- ----------------- ------------------- ------------------
------- ---------------- ------------------ ---------------
--------------------------- ---------------------- ----------------- ------------------- ------------------
- 258 234 945 - 258 234 945
-------------------------------------------------- ----------------- ------------------- ------------------
===== ========== =========== ==========
-------------------------------------------------- ----------------- ------------------- ------------------
Financial instruments not measured at fair value
The below table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorised.
31 December Total carrying
2015
--------------------------- ------------- ----------------- ------------------- ------------------
Level 1 Level 2 Level 3 Amount
--------------------------- ------------- ----------------- ------------------- ------------------
US$ US$ US$ US$
--------------------------- ------------- ----------------- ------------------- ------------------
Assets
--------------------------- ------------- ----------------- ------------------- ------------------
Cash and cash equivalents - 63 439 347 - 63 439 347
--------------------------- ------------- ----------------- ------------------- ------------------
Loans, advances
and other 235 088
assets - 981 - 235 088 981
--------------------------- ------------- ----------------- ------------------- ------------------
Investment securities - - 14 547 992 14 547 992
--------------------------- ------------- ----------------- ------------------- ------------------
-------- ---------------- ----------------- -----------------
--------------------------- ------------- ----------------- ------------------- ------------------
298 528
Total - 328 14 547 992 313 076 320
--------------------------- ------------- ----------------- ------------------- ------------------
===== ========== =========== ==========
--------------------------- ------------- ----------------- ------------------- ------------------
Liabilities
--------------------------- ------------- ----------------- ------------------- ------------------
Deposits and other 283 287
liabilities - 243 - 283 287 243
--------------------------- ------------- ----------------- ------------------- ------------------
-------- ---------------- ------------------ ---------------
--------------------------- ------------- ----------------- ------------------- ------------------
283 287
- 243 - 283 287 243
----------------------------------------- ----------------- ------------------- ------------------
===== ========== =========== ==========
----------------------------------------- ----------------- ------------------- ------------------
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
-- The fair values of cash and cash equivalents, advances and other assets and deposits and other liabilities carrying amounts approximate their fair values largely due to the short - term maturities of these instruments.
-- Fair value of financial assets and liabilities at fair value through profit or loss is derived from quoted market prices in active markets. If quoted market prices are not available the fair value is estimated using pricing models or discounted cash flow techniques.
15. CASH AND CASH EQUIVALENTS
30 June 2016 31 December
2015
------------------------------ -------------- ---------------
US$ US$
------------------------------ -------------- ---------------
Balances with Central Bank 17 362 075 26 238 681
------------------------------ -------------- ---------------
Current, nostro accounts and
cash 9 187 330 11 700 666
------------------------------ -------------- ---------------
Interbank placements 21 000 000 25 500 000
------------------------------ -------------- ---------------
------------- --------------
------------------------------ -------------- ---------------
47 549 405 63 439 347
------------------------------ -------------- ---------------
======== ========
------------------------------ -------------- ---------------
16. LOANS, ADVANCES AND OTHER ASSETS
16. 1 Total loans, advances and other assets
30 June 2016 31 December
2015
---------------------- --------------- ----------------
US$ US$
---------------------- --------------- ----------------
Fixed term loans 15 998 341 25 138 443
---------------------- --------------- ----------------
Loans and overdrafts 198 909 102 207 408 465
---------------------- --------------- ----------------
-------------- ---------------
---------------------- --------------- ----------------
214 907 443 232 546 908
---------------------- --------------- ----------------
Other assets 2 560 217 2 542 073
---------------------- --------------- ----------------
-------------- ---------------
---------------------- --------------- ----------------
217 467 660 235 088 981
---------------------- --------------- ----------------
========= =========
---------------------- --------------- ----------------
Maturity analysis
-------------------------------- ------------------ ------------------
30 June 2016 31 December 2015
-------------------------------- ------------------ ------------------
US$ US$
-------------------------------- ------------------ ------------------
Less than one month 105 924 220 136 146 912
-------------------------------- ------------------ ------------------
1 to three months 8 912 548 24 125 652
-------------------------------- ------------------ ------------------
3 to 6 months 6 837 484 2 387 188
-------------------------------- ------------------ ------------------
6 months to 1 year 13 048 287 15 686 184
-------------------------------- ------------------ ------------------
1 to 5 years 75 752 574 64 895 082
-------------------------------- ------------------ ------------------
Over 5 years 14 817 797 -
-------------------------------- ------------------ ------------------
----------------- ---------------
-------------------------------- ------------------ ------------------
Total advances 225 292 910 243 241 018
-------------------------------- ------------------ ------------------
Allowance for impairment
losses on loans and advances (8 510 537) (8 582 636)
-------------------------------- ------------------ ------------------
Suspended interest (1 874 930) (2 111 474)
-------------------------------- ------------------ ------------------
--------------- ---------------
-------------------------------- ------------------ ------------------
214 907 443 232 546 908
-------------------------------- ------------------ ------------------
Other assets 2 560 217 2 542 073
-------------------------------- ------------------ ------------------
---------------- ----------------
-------------------------------- ------------------ ------------------
217 467 660 235 088 981
-------------------------------- ------------------ ------------------
========== ==========
-------------------------------- ------------------ ------------------
16.2 Sectoral analysis of utilizations
30 June 31 December
2016 2015
------------------ ---------------- -------- ---------------- ---------
US$ % US$ %
------------------ ---------------- -------- ---------------- ---------
Agriculture and
horticulture 17 971 407 8 13 907 259 6
------------------ ---------------- -------- ---------------- ---------
Conglomerates 8 905 175 4 11 348 334 5
------------------ ---------------- -------- ---------------- ---------
Distribution 24 509 390 11 37 364 138 16
------------------ ---------------- -------- ---------------- ---------
Food & beverages 6 513 782 3 5 692 742 2
------------------ ---------------- -------- ---------------- ---------
102 336
Individuals 409 45 101 585 312 42
------------------ ---------------- -------- ---------------- ---------
Manufacturing 19 459 878 9 29 774 899 12
------------------ ---------------- -------- ---------------- ---------
Mining 833 466 - 1 067 328 -
------------------ ---------------- -------- ---------------- ---------
Services 44 763 403 20 42 501 006 17
------------------ ---------------- -------- ---------------- ---------
--------------- ------- --------------- --------
------------------ ---------------- -------- ---------------- ---------
225 292
910 100 243 241 018 100
------------------ ---------------- -------- ---------------- ---------
========= ==== ========= =====
------------------ ---------------- -------- ---------------- ---------
The material concentration of loans and advances are to individuals at 45% (2015 - 42%) and the services sector at 20% (2015 - 17%).
16.3 Allowance for impairment losses on loans and advances
30 June 2016 31 December 2015
-------------- ---------------------------------------------- ------------------------------------------------------
Specific Portfolio Total Specific Portfolio Total
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
US$ US$ US$ US$ US$ US$
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
1 007 8 582 10 790
At 1 January 7 574 789 847 636 10 626 997 163 195 192
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
Charge
against 3 191
profits 3 142 623 48 773 396 8 651 949 844 652 9 496 601
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
Bad debts
written (3 263 (3 263 (11 704 (11 704
off 496) - 496) 157) - 157)
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
------------- ------------ -------------- --------------- ------------ ---------------
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
1 056 8 510 1 007
Balance 7 453 916 620 536 7 574 789 847 8 582 636
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
======== ======= ======== ========= ======= =========
-------------- -------------- ------------- --------------- ---------------- ------------------ ----------------
16.4 Non-performing loans and advances
30 June 2016 31 December
2015
----------------------------------------- --------------------- ---------------------
US$ US$
----------------------------------------- --------------------- ---------------------
Total non-performing loans and advances 25 043 805 32 092 184
----------------------------------------- --------------------- ---------------------
Allowance for impairment losses on
loans and advances (7 453 916) (7 574 789)
----------------------------------------- --------------------- ---------------------
Retail loans insurance (1 713 577) (1 682 840)
----------------------------------------- --------------------- ---------------------
Suspended interest on impaired loans (1 546 481) (1 798 490)
----------------------------------------- --------------------- ---------------------
--------------- ---------------
----------------------------------------- --------------------- ---------------------
Residue 14 329 831 21 036 065
----------------------------------------- --------------------- ---------------------
========= =========
----------------------------------------- --------------------- ---------------------
The residue of these accounts represents recoverable portions covered by realisable security, which includes guarantees, cession of debtors, mortgage bonds over properties, equities and promissory notes all fair valued at US$15 725 229 (2015 - US$22 797 088).
16.5 Loans to related parties (included under loans, advances and other aasets)
30 June 2016 31 December
2015
-------------------------- --------------- ---------------
US$ US$
-------------------------- --------------- ---------------
Non- executive directors - -
-------------------------- --------------- ---------------
Executive directors 141 278 136 276
-------------------------- --------------- ---------------
Officers 5 988 189 5 178 746
-------------------------- --------------- ---------------
Directors' companies - -
-------------------------- --------------- ---------------
Officers' companies - -
-------------------------- --------------- ---------------
-------------- --------------
-------------------------- --------------- ---------------
6 129 467 5 315 022
-------------------------- --------------- ---------------
Fair value adjustments (273 942) (293 377)
-------------------------- --------------- ---------------
------------- --------------
-------------------------- --------------- ---------------
5 855 525 5 021 645
-------------------------- --------------- ---------------
======== =========
-------------------------- --------------- ---------------
Loans to officers amounting to US$2 461 339 were granted at a preferential rate of 6% per annum as part of their overall remuneration agreements, US$2 947 935 were granted at a commercial rate of 13% per annum and the balance amounting to US$578 915 being mortgage loans which were granted at a commercial rate of 12% per annum.
17. INTANGIBLE ASSETS
Work in progress Computer software Total
-------------------------- ----------------- ------------------ --------------
US$ 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 31 December
2015 228 595 2 554 709 2 783 304
-------------------------- ----------------- ------------------ --------------
Acquisitions - 108 560 108 560
-------------------------- ----------------- ------------------ --------------
---------- ------------ ------------
-------------------------- ----------------- ------------------ --------------
Balance at 30 June 2016 228 595 2 663 269 2 891 864
-------------------------- ----------------- ------------------ --------------
====== ======= ========
-------------------------- ----------------- ------------------ --------------
Accumulated amortisation
-------------------------- ----------------- ------------------ --------------
Balance at 1 January
2015 - 584 232 584 232
-------------------------- ----------------- ------------------ --------------
Amortisation for the
year - 509 687 509 687
-------------------------- ----------------- ------------------ --------------
--------- ----------- -----------
-------------------------- ----------------- ------------------ --------------
Balance at 31 December
2015 - 1 093 919 1 093 919
-------------------------- ----------------- ------------------ --------------
Amortisation for the
period - 259 253 259 253
-------------------------- ----------------- ------------------ --------------
--------- ------------ -------------
-------------------------- ----------------- ------------------ --------------
Balance at 30 June 2016 - 1 353 172 1 353 172
-------------------------- ----------------- ------------------ --------------
===== ======== ========
-------------------------- ----------------- ------------------ --------------
Carrying amount
-------------------------- ----------------- ------------------ --------------
At 30 June 2016 228 595 1 310 097 1 538 692
-------------------------- ----------------- ------------------ --------------
======= ======== ========
-------------------------- ----------------- ------------------ --------------
At 31 December 2015 228 595 1 460 790 1 689 385
-------------------------- ----------------- ------------------ --------------
======= ======== ========
-------------------------- ----------------- ------------------ --------------
18. PROPERTY AND EQUIPMENT
Capital work Computer Furniture Freehold
in progress Hardware Motor and buildings Total
vehicles equipment
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
US$ US$ US$ US$ US$
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Cost
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Balance 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
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Revaluation loss - - - - (40 200) (40 200)
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Capitalisations (33 513) 33 513 - - - -
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Disposals - (11 220) (869 083) - - (880 803)
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Transfer to
investment
properties (67 862) - - - - (67 862)
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
------------ ------------ ----------- ---------- -------------- -----------
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
At 31 December
2015 585 511 2 962 337 3 710 725 3 633 850 3 257 827 14 150 250
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Additions 161 279 233 346 125 453 160 901 119 002 799 981
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Capitalisations (467 079) 55 395 180 000 64 348 167 336 -
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Disposals - - (177 206) - - (177 206)
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
------------ ------------ ------------ ------------ ------------ -------------
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Balance at 30
June 2016 279 711 3 251 078 3 838 972 3 859 099 3 544 165 14 773 025
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
------------ ------------ ------------ ------------ ------------ ========
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
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)
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
----------- -------------- -------------- ------------ ------------- ----------
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Balance at 31
December
2015 - 1 775 459 2 987 999 2 586 039 199 667 7 549 164
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Charge for the
period - 209 057 213 643 244 092 33 255 700 047
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Disposals - - (173 410) - - (173 410)
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
----------- ------------ ------------ ------------- ------------ ------------
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Balance at 30
June 2016 - 1 984 516 3 028 232 2 830 131 232 922 8 075 801
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
====== ======= ======== ======= ======= =======
----------------- ------------- ----------------- --------------- -------------- --------------------- --------------
Capital work Furniture and Freehold
in progress Computers Motor vehicles equipment buildings Total
----------------- ------------- ------------ ----------------- -------------- --------------------- ------------
US$ US$ US$ US$ US$
----------------- ------------- ------------ ----------------- -------------- --------------------- ------------
Carrying amount
At
30 June 2016 279 711 1 266 562 810 740 1 028 968 3 311 243 6 697 224
----------------- ------------- ------------ ----------------- -------------- --------------------- ------------
====== ======== ======= ======== ======= ========
----------------- ------------- ------------ ----------------- -------------- --------------------- ------------
Carrying amount
at 31
December
2015 585 511 1 186 878 722 726 1 047 811 3 058 160 6 601 086
----------------- ------------- ------------ ----------------- -------------- --------------------- ------------
======= ======== ======= ======= ======= ========
----------------- ------------- ------------ ----------------- -------------- --------------------- ------------
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2015 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 8% on rental levels of between US$3 - US$7 per square metre.
As there were no professional valuations done as at 30 June 2016, the land and buildings are recorded at the fair values obtained by the professional valuers as at 31 December 2015.
The carrying cost less accumulated depreciation of the land and buildings had revaluations not been performed would have been US$3 701 991 as at 30 June 2016 (31 December 2015 -US$3 669 148).
Level 3
The fair value of immovable properties of US$3 311 243 has been categorised under Level 3 in fair value hierarchy based on the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening and closing balances for Level 3 fair values:
30 June 2016 31 December 2015
------------------ -------------- -------------------------------------
US$ S$
------------------ -------------- -------------------------------------
At 1 January 3 058 160 2 762 886
------------------ -------------- -------------------------------------
Additions 119 002 393 509
------------------ -------------- -------------------------------------
Capitalisation 167 336 -
------------------ -------------- -------------------------------------
Revaluation gain - (40 200)
------------------ -------------- -------------------------------------
Depreciation (33 255)) (58 035)
------------------ -------------- -------------------------------------
------------- -------------
------------------ -------------- -------------------------------------
Balance 3 311 243 3 058 160
------------------ -------------- -------------------------------------
======== ========
------------------ -------------- -------------------------------------
19. CAPITAL COMMITMENTS
30 June 2016 31 December
2015
------------------------------------ -------------- ---------------
US$ US$
------------------------------------ -------------- ---------------
Capital expenditure contracted for 304 534 807 000
------------------------------------ -------------- ---------------
Capital expenditure authorised but
not yet
contracted for 2 804 344 3 516 220
------------------------------------ -------------- ---------------
------------- --------------
------------------------------------ -------------- ---------------
3 108 878 4 323 220
------------------------------------ -------------- ---------------
======== ========
------------------------------------ -------------- ---------------
The capital expenditure will be funded from internal resources.
20. CONTINGENT LIABILITIES
30 June 2016 31 December
2015
----------------------------------- --------------- ---------------
US$ US$
----------------------------------- --------------- ---------------
Guarantees 3 918 321 5 305 263
----------------------------------- --------------- ---------------
Facilities approved but not drawn
down 26 862 177 39 468 072
----------------------------------- --------------- ---------------
Irrevocable letters of credit 450 000 1 264 607
----------------------------------- --------------- ---------------
-------------- --------------
----------------------------------- --------------- ---------------
31 230 498 46 037 942
----------------------------------- --------------- ---------------
======== ========
----------------------------------- --------------- ---------------
21. ASSETS UNDER CUSTODY
In 2014, the Bank received Treasury Bills from the Reserve Bank of Zimbabwe amounting to US$2 706 327 on behalf of its Tobacco Retention Scheme customers. A third of the Treasury Bills mature in April 2017, April 2018 and April 2019. These Treasury Bills are currently held off balance sheet.
22. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States of America dollars (US$) at period end:-
Mid-rate Mid-rate
------------------------ ----- ------------- ------------
30 June 2016 31 December
2015
------------------------ ----- ------------- ------------
US$ US$
------------------------ ----- ------------- ------------
British Pound Sterling GBP 1.3400 1.4800
------------------------ ----- ------------- ------------
South African Rand ZAR 14.7180 15.5039
------------------------ ----- ------------- ------------
European Euro EUR 1.1105 1.0882
------------------------ ----- ------------- ------------
Botswana Pula BWP 10.7991 11.1111
------------------------ ----- ------------- ------------
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2016
30 June 2016 30 June 2015
------------------------------- ------ ------------------ ----------------
US$ US$
------------------------------- ------ ------------------ ----------------
Unaudited Unaudited
------------------------------- ------ ------------------ ----------------
Note
------------------------------- ------ ------------------ ----------------
Interest income 17 451 237 17 583 627
--------------------------------------- ------------------ ----------------
Interest expense (5 809 362) (7 881 159)
--------------------------------------- ------------------ ----------------
----------------- --------------
------------------------------- ------ ------------------ ----------------
Net interest income 11 641 875 9 702 468
--------------------------------------- ------------------ ----------------
Net foreign exchange gains 353 209 609 218
--------------------------------------- ------------------ ----------------
Fee and commission income 7 584 529 10 561 243
--------------------------------------- ------------------ ----------------
----------------- --------------
------------------------------- ------ ------------------ ----------------
Net operating income 19 579 613 20 872 929
--------------------------------------- ------------------ ----------------
Non-interest income a 714 128 72 684
------------------------------- ------ ------------------ ----------------
--------------- --------------
------------------------------- ------ ------------------ ----------------
20 293 741 20 945 613
-------------------------------------- ------------------ ----------------
Operating expenditure b (13 537 382) (14 067 722)
------------------------------- ------ ------------------ ----------------
Impairment losses on loans
and advances (3 191 396) (2 644 309)
--------------------------------------- ------------------ ----------------
--------------- ---------------
------------------------------- ------ ------------------ ----------------
Profit before taxation 3 564 963 4 233 582
--------------------------------------- ------------------ ----------------
Taxation (918 856) (1 041 627)
--------------------------------------- ------------------ ----------------
------------- ---------------
------------------------------- ------ ------------------ ----------------
Profit for the period 2 646 107 3 191 955
--------------------------------------- ------------------ ----------------
Other comprehensive income - -
net of tax
------------------------------- ------ ------------------ ----------------
-------------- -------------
------------------------------- ------ ------------------ ----------------
Total comprehensive income
for the
period 2 646 107 3 191 955
--------------------------------------- ------------------ ----------------
======= ========
------------------------------- ------ ------------------ ----------------
Earnings per share (US cents)
------------------------------- ------ ------------------ ----------------
-Basic c 16.03 19.34
------------------------------- ------ ------------------ ----------------
STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
30 June 2016 31 December 2015
-------------------------------- ------ ----------------- -------------------
US$ US$
-------------------------------- ------ ----------------- -------------------
Unaudited Audited
-------------------------------- ------ ----------------- -------------------
EQUITY Note
-------------------------------- ------ ----------------- -------------------
Share capital d 16 506 16 506
-------------------------------- ------ ----------------- -------------------
Share premium 31 474 502 31 474 502
---------------------------------------- ----------------- -------------------
Regulatory reserve 4 031 470 3 746 729
---------------------------------------- ----------------- -------------------
Retained earnings 16 801 089 14 439 723
---------------------------------------- ----------------- -------------------
--------------- --------------
-------------------------------- ------ ----------------- -------------------
Total shareholder's
funds 52 323 567 49 677 460
---------------------------------------- ----------------- -------------------
LIABILITIES
-------------------------------- ------ ----------------- -------------------
Deposits and other liabilities 258 205 132 283 257 535
---------------------------------------- ----------------- -------------------
Subordinated term loan 1 414 661 1 414 144
---------------------------------------- ----------------- -------------------
Current liabilities 597 810 52 443
---------------------------------------- ----------------- -------------------
---------------- ---------------
-------------------------------- ------ ----------------- -------------------
Total liabilities 260 217 603 284 724 122
---------------------------------------- ----------------- -------------------
--------------- --------------
-------------------------------- ------ ----------------- -------------------
Total shareholder's
funds and
liabilities 312 541 170 334 401 582
---------------------------------------- ----------------- -------------------
========= =========
-------------------------------- ------ ----------------- -------------------
ASSETS
-------------------------------- ------ ----------------- -------------------
Cash and cash equivalents e 47 549 405 63 439 347
-------------------------------- ------ ----------------- -------------------
Investment securities 25 100 614 14 547 992
---------------------------------------- ----------------- -------------------
Amount owing from Holding
Company 610 604 610 604
---------------------------------------- ----------------- -------------------
Loans, advances and
other assets 217 523 123 235 144 444
---------------------------------------- ----------------- -------------------
Non - current asset
held for sale g 2 264 300 2 264 300
-------------------------------- ------ ----------------- -------------------
Unquoted investments 93 865 77 805
---------------------------------------- ----------------- -------------------
Deferred tax assets 2 237 543 1 900 819
---------------------------------------- ----------------- -------------------
Investment properties f 8 925 800 8 125 800
-------------------------------- ------ ----------------- -------------------
Intangible assets 1 538 692 1 689 385
---------------------------------------- ----------------- -------------------
Property and equipment 6 697 224 6 601 086
---------------------------------------- ----------------- -------------------
---------------- -----------------
-------------------------------- ------ ----------------- -------------------
Total assets 312 541 170 334 401 582
---------------------------------------- ----------------- -------------------
========== ==========
--------------------------------------- ----------------- -------------------
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2016
Capital Reserves
----------------------------- -------------- ----------------------------------- ------------------ --------------
Share Capital Share Premium Regulatory Reserve Retained Earnings Total
----------------------------- -------------- -------------- ------------------- ------------------ --------------
US$ US$ US$ US$ US$
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Balances at 1 January 2015 16 506 31 474 502 3 293 699 9 346 445 44 131 152
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Total comprehensive income
for
the six months - - - 3 191 955 3 191 955
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Impairment allowance for
loans
and advances - - 1 064 601 (1 064 601) -
----------------------------- -------------- -------------- ------------------- ------------------ --------------
--------- ------------- ------------ ------------ -------------
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Balances at 30 June 2015 16 506 31 474 502 4 358 300 11 473 799 47 323 107
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Total comprehensive income
for
the six months - - - 2 354 353 2 354 353
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Impairment allowance for
loans
and advances - - (611 571) 611 571 -
----------------------------- -------------- -------------- ------------------- ------------------ --------------
--------- ------------- ----------- -------------- ------------
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Balances at 31 December 2015 16 506 31 474 502 3 746 729 14 439 723 49 677 460
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Total comprehensive income
for
the six months - - - 2 646 107 2 646 107
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Impairment allowance for
loans
and advances - - 284 741 (284 741) -
----------------------------- -------------- -------------- ------------------- ------------------ --------------
--------- ------------- ----------- ------------- -------------
----------------------------- -------------- -------------- ------------------- ------------------ --------------
Balances at 30 June 2016 16 506 31 474 502 4 031 470 16 801 089 52 323 567
----------------------------- -------------- -------------- ------------------- ------------------ --------------
===== ======== ======= ======== ========
----------------------------- -------------- -------------- ------------------- ------------------ --------------
STATEMENT OF CASH FLOWS
for the six months ended 30 June 2016
30 June 2016 30 June 2015
---------------------------------------------- -------------------- ---------------------------
US$ US$
---------------------------------------------- -------------------- ---------------------------
Unaudited Unaudited
---------------------------------------------- -------------------- ---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
---------------------------------------------- -------------------- ---------------------------
Profit before taxation 3 564 963 4 233 582
---------------------------------------------- -------------------- ---------------------------
Non-cash items
---------------------------------------------- -------------------- ---------------------------
-Impairment losses on loans and advances 3 191 396 2 644 309
---------------------------------------------- -------------------- ---------------------------
-(Profit)/loss on disposal of property
and equipment (37 514) 4 253
---------------------------------------------- -------------------- ---------------------------
-Amortisation of intangible assets 259 253 254 471
---------------------------------------------- -------------------- ---------------------------
-Depreciation 700 047 904 818
---------------------------------------------- -------------------- ---------------------------
-Quoted and other investments fair (16 060) -
value adjustments
---------------------------------------------- -------------------- ---------------------------
------------- --------------
---------------------------------------------- -------------------- ---------------------------
Operating cash flows before changes
in operating
assets and liabilities 7 662 085 8 041 433
---------------------------------------------- -------------------- ---------------------------
Changes in operating assets and liabilities
---------------------------------------------- -------------------- ---------------------------
Deposits and other liabilities (25 052 402) 54 966 475
---------------------------------------------- -------------------- ---------------------------
Loans, advances and other assets 14 429 925 (27 372 589)
---------------------------------------------- -------------------- ---------------------------
Investment in debentures - 4 614 047
---------------------------------------------- -------------------- ---------------------------
-------------- ---------------
---------------------------------------------- -------------------- ---------------------------
(2 960 392) 40 249 366
---------------------------------------------- -------------------- ---------------------------
-------------- ---------------
---------------------------------------------- -------------------- ---------------------------
Taxation
---------------------------------------------- -------------------- ---------------------------
Corporate tax paid (710 213) -
---------------------------------------------- -------------------- ---------------------------
-------------- ---------------
---------------------------------------------- -------------------- ---------------------------
Net cash (outflow)/inflow from operating
activities (3 670 605) 40 249 366
---------------------------------------------- -------------------- ---------------------------
--------------- --------------
---------------------------------------------- -------------------- ---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
---------------------------------------------- -------------------- ---------------------------
Proceeds on disposal of property and
equipment 41 309 18 113
---------------------------------------------- -------------------- ---------------------------
Acquisition of intangible assets (108 560) (220 003)
---------------------------------------------- -------------------- ---------------------------
Purchase of property and equipment (799 981) (527 665)
---------------------------------------------- -------------------- ---------------------------
Acquisition of investment property (800 000) (8 109 500)
---------------------------------------------- -------------------- ---------------------------
Purchase of investment securities (10 552 622) (6 260 876)
---------------------------------------------- -------------------- ---------------------------
--------------- --------------
---------------------------------------------- -------------------- ---------------------------
Net cash outflow from investing activities (12 219 854) (15 099 931)
---------------------------------------------- -------------------- ---------------------------
--------------- --------------
---------------------------------------------- -------------------- ---------------------------
Net cash (outflow)/inflow before financing
activities (15 890 459) 25 149 435
---------------------------------------------- -------------------- ---------------------------
--------------- --------------
---------------------------------------------- -------------------- ---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
---------------------------------------------- -------------------- ---------------------------
Payment of interest on subordinated
term loan (74 331) (72 476)
---------------------------------------------- -------------------- ---------------------------
Interest capitalised on subordinated
term loan 74 848 71 714
---------------------------------------------- -------------------- ---------------------------
-------------- ---------------
---------------------------------------------- -------------------- ---------------------------
Net cash inflow/(outflow) from financing
activities 517 (762)
---------------------------------------------- -------------------- ---------------------------
--------------- ----------------
---------------------------------------------- -------------------- ---------------------------
Net (decrease)/increase in cash and
cash equivalents (15 889 942) 25 148 673
---------------------------------------------- -------------------- ---------------------------
Cash and cash equivalents at beginning
of the period 63 439 347 54 750 561
---------------------------------------------- -------------------- ---------------------------
--------------- ----------------
---------------------------------------------- -------------------- ---------------------------
Cash and cash equivalents at the end
of the period 47 549 405 79 899 234
---------------------------------------------- -------------------- ---------------------------
========= =========
---------------------------------------------- -------------------- ---------------------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 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.
a. NON-INTEREST income
30 June 2016 30 June 2015
---------------------------------------- ---------------------------- -------------
US$ US$
---------------------------------------- ---------------------------- -------------
Quoted and other investments fair 16 060 -
value adjustments
---------------------------------------- ---------------------------- -------------
Rental income 73 300 31 413
---------------------------------------- ---------------------------- -------------
Insurance claims and recoveries 5 744 9 442
---------------------------------------- ---------------------------- -------------
Profit/ (loss) on disposal of property
and equipment 37 514 (4 253)
---------------------------------------- ---------------------------- -------------
Bad debts recovered 561 945 27 248
---------------------------------------- ---------------------------- -------------
Other net operating income 19 565 8 834
---------------------------------------- ---------------------------- -------------
----------- -----------
---------------------------------------- ---------------------------- -------------
714 128 72 684
---------------------------------------- ---------------------------- -------------
====== ======
---------------------------------------- ---------------------------- -------------
b. Operating EXPITURE
30 June 2016 30 June 2015
---------------------------------------- --------------- --------------
US$ US$
---------------------------------------- --------------- --------------
The operating profit is after charging
the following:-
---------------------------------------- --------------- --------------
Administration costs 6 279 928 6 773 288
---------------------------------------- --------------- --------------
Staff costs - salaries, allowances
and related costs 6 183 584 6 016 231
---------------------------------------- --------------- --------------
Directors' remuneration 114 570 118 914
---------------------------------------- --------------- --------------
Amortisation of intangible assets 259 253 254 471
---------------------------------------- --------------- --------------
Depreciation 700 047 904 818
---------------------------------------- --------------- --------------
-------------- -------------
---------------------------------------- --------------- --------------
13 537 382 14 067 722
---------------------------------------- --------------- --------------
======== ========
---------------------------------------- --------------- --------------
c. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
c.1 Earnings (US$)
30 June 2016 30 June 2016
------- ------------- -------------
Basic 2 646 107 3 191 955
------- ------------- -------------
c.2 Number of shares
Weighted average shares in issue 16 506 050 16 506 050
---------------------------------- ----------- -----------
c.3 Earnings per share (US cents)
Basic 16.03 19.34
------- ------ ------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2016
d. SHARE CAPITAL d.1 Authorised
The authorised ordinary share capital at 30 June 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.
d.2 Issued and fully paid
The issued share capital at 30 June 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$0.001 each.
e. CASH AND CASH EQUIVALENTS
30 June 2016 31 December 2015
------------------------------ ---------------- -----------------
US$ US$
------------------------------ ---------------- -----------------
Balances with the Central
Bank 17 362 075 26 238 681
------------------------------ ---------------- -----------------
Current, nostro accounts and
cash 9 187 330 11 700 666
------------------------------ ---------------- -----------------
Interbank placements 21 000 000 25 500 000
------------------------------ ---------------- -----------------
--------------- --------------
------------------------------ ---------------- -----------------
47 549 405 63 439 347
------------------------------ ---------------- -----------------
========= =========
------------------------------ ---------------- -----------------
f. INVESTMENT PROPERTIES
30 June 2016 31 December 2015
---------------------------- ---------------- -----------------
US$ US$
---------------------------- ---------------- -----------------
Balance at 1 January 8 125 800 4 453 300
---------------------------- ---------------- -----------------
Additions 800 000 8 230 860
---------------------------- ---------------- -----------------
Transfer from property and
equipment - 67 862
---------------------------- ---------------- -----------------
Fair value adjustments - 118 278
---------------------------- ---------------- -----------------
Disposals - (4 744 500)
---------------------------- ---------------- -----------------
--------------- --------------
---------------------------- ---------------- -----------------
Balance 8 925 800 8 125 800
---------------------------- ---------------- -----------------
========= ========
---------------------------- ---------------- -----------------
Investment properties comprise commercial and residential properties that are leased out to third parties and land held for capital appreciation. All investment properties were not encumbered.
Measurement of fair value
Fair value hierarchy
The fair value of the Bank's investment properties as at 31 December 2015 was arrived at on the basis of valuations carried out by independent professional valuers, PMA Real Estate (Private) Limited. The valuation which conforms to International Valuation Standards, was in terms of the policy as set out in the accounting policies section and was derived with reference to market information close to the date of the valuation.
As there were no professional valuations done as at 30 June 2016, the investment properties are recorded at the fair values as obtained by the professional valuers as at 31 December 2015.
The Bank has no restrictions on the realisability of all investment properties and no contractual obligations to purchase, construct or develop the investment properties or for repairs, maintenance and enhancements.
Rental income amounting to US$73 300 (2015 - US$31 413) was received and no operating expenses were incurred on the investment properties in the current period due to the net leasing arrangements on the properties.
Level 2
The fair value for investment properties of US$3 616 800 has been categorised under Level 2 in fair value hierarchy based on the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening and closing balances for Level 2 fair values:
30 June 2016 31 December
2015
------------------------ --------------- ---------------
US$ US$
------------------------ --------------- ---------------
At 1 January 2 816 800 2 659 300
------------------------ --------------- ---------------
Additions 800 000 3 200 000
------------------------ --------------- ---------------
Fair value adjustments - 157 500
------------------------ --------------- ---------------
Disposals - (3 200 000)
------------------------ --------------- ---------------
-------------- --------------
------------------------ --------------- ---------------
Balance 3 616 800 2 816 800
------------------------ --------------- ---------------
======== ========
------------------------ --------------- ---------------
Level 3
The fair value for investment properties of US$5 309 000 has been categorised under Level 3 in fair value hierarchy based on the inputs used for the valuation technique highlighted above.
The following table shows the reconciliation between the opening and closing balances for Level 3 fair values:
30 June 2016 31 December 2015
-------------------------------------- ---------------- -----------------
US$ US$
-------------------------------------- ---------------- -----------------
At 1 January 5 309 000 1 794 000
-------------------------------------- ---------------- -----------------
Additions - 5 030 860
-------------------------------------- ---------------- -----------------
Transfer from property and equipment - 67 862
-------------------------------------- ---------------- -----------------
Fair value adjustments - (39 222)
-------------------------------------- ---------------- -----------------
Disposals - (1 544 500)
-------------------------------------- ---------------- -----------------
--------------- --------------
-------------------------------------- ---------------- -----------------
Balance 5 309 000 5 309 000
-------------------------------------- ---------------- -----------------
========= ========
-------------------------------------- ---------------- -----------------
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment properties, as well as the significant unobservable inputs used.
Valuation technique Significant unobservable Inter-relationship
inputs between key unobservable
inputs and fair value
measurement
------------------------------------------------------------ ------------------------- -----------------------------
-Expected market -The estimated fair
* The Investment Method was applied on all income rental growth (weighted value would increase
producing properties. Market capitalisation rates average negative (decrease) if:
were derived from market sales evidence and were 2%). -expected market rental
determined in consultation with other investors and -Void period (average growth were higher/
property brokers in the market. 7 months after the (lower);
end of each lease). -void periods were
-Occupancy rate (20 shorter/(longer);
* The Direct Comparison Method was applied on all -30%), weighted average -the occupancy rates
residential properties, after PMA Real Estate 25%). were higher/(lower);
(Private) Limited identified various properties that -Average market yield -the risk adjusted
have been sold or which were on sale and situated in was 10.5%. discount rates were
comparable areas using the Main Space Equivalent lower/(higher).
(MSE) principle. The total MSE of comparable areas
was then used to determine the value per square metre
of MSE.
------------------------------------------------------------ ------------------------- -----------------------------
g. NON-CURRENT ASSETS HELD FOR SALE
30 June 2016 31 December
2015
--------------------------------- ---------------- ---------------
US$ US$
--------------------------------- ---------------- ---------------
Carrying amount as at 1 January 2 264 300 2 267 300
--------------------------------- ---------------- ---------------
Fair value adjustments - -
--------------------------------- ---------------- ---------------
Disposals - (3 000)
--------------------------------- ---------------- ---------------
--------------- --------------
--------------------------------- ---------------- ---------------
2 264 300 2 264 300
--------------------------------- ---------------- ---------------
========= ========
--------------------------------- ---------------- ---------------
The Bank is in possession of land with a fair value of US$2 225 300 at year end. The Bank 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 Bank's cash flows.
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 control 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), the Banking Act (Chapter 24:20) and International Financial Reporting Standards.
2. CORPORATE GOVERNANCE
The Bank adheres to principles of corporate governance derived from the King III Report, the United Kingdom Combined Code and RBZ corporate governance guidelines. The Bank is cognisant of its duty to conduct business with due care and in good faith in order to safeguard all stakeholders' interests.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and expertise on the Board. Non-executive directors are of such calibre as to provide independence to the Board. The Chairman of the Board is an independent non-executive director. The Board is supported by mandatory committees in executing its responsibilities. The Board meets at least quarterly to assess risk, review performance and provide guidance to management on both operational and policy issues.
The Board conducts an annual peer based evaluation on the effectiveness of its activities. The process involves the members evaluating each other collectively as a board and individually as members. The evaluation, as prescribed by the RBZ, takes into account the structure of the board, effectiveness of committees, strategic leadership, corporate social responsibility, attendance and participation of members and weaknesses noted. Remedial plans are invoked to address identified weaknesses with a view to continually improve the performance and effectiveness of the Board and its members.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2016
3.1 Directors' attendance at NMB Bank Limited Board meetings
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 2 2 2 2 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. B. P. Washaya 2 2 2 2 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. J. de la
Fargue*** 1 1 1 1 1 1 1 1 1 1
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Ms. M. R. Svova** 2 2 2 2 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. C. Chikaura 2 2 2 2 2 1 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. J.
Chenevix-Trench* 1 1 1 1 1 1 1 1
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. B.A.M.
Zwinkels 2 2 2 2 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. C.I.F. Ndiaye 2 2 2 1 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. K. Qurashi** 2 2 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Mr. E. Sandersen 2 2 2 1 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Ms. J.
Maguranyanga 2 2 2 2 2 2 2 2
------------------ --- -------- --------- --- --------- ---------- --- -------- --- ---------- ---------
Meetings planned
-----------------
KEY
*Mr. J. Chenevix - Trench resigned from the board on 21 March 2016.
**Ms. M. R. Svova and Mr. K. Qurashi resigned from the board on 20 May 2016.
***Mr. J. de la Fargue was appointed to the board on 4 May 2016.
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established the Board Asset and Liability Management Committee (ALCO) and Board Risk Committee, which are responsible for defining the Group's risk universe, developing policies and monitoring implementation. The Group has complied with Basel II implementation timelines set by the Reserve Bank of Zimbabwe.
Risk management is linked logically from the level of individual transactions to the Bank level. Risk management activities broadly take place simultaneously at the following different hierarchy levels:
a) Strategic Level: This involves risk management functions performed by senior management and the board of directors. It includes the definition of risk, ascertaining the Bank's risk appetite, formulating strategy and policy for managing risk and establishes adequate systems and controls to ensure overall risk remains within acceptable levels and is adequately compensated.
b) Macro Level: It encompasses risk management within a business area or across business lines. These risk management functions are performed by middle management.
c) Micro Level: This involves "On-the-line" risk management where risks are actually created. These are the risk management activities performed by individuals who assume risk on behalf of the organization such as Treasury Front Office, Corporate Banking, Retail Banking etc. The risk management in these areas is confined to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing pillars, namely:
a) adequate board and senior management oversight; b) adequate strategy, policies, procedures and limits; c) adequate risk identification, measurement, monitoring and information systems; and d) comprehensive internal controls and independent reviews. 4.1 Credit risk
Credit risk is the risk that a financial contract will not be honoured according to the original set of terms. The risk arises when borrowers or counterparties to a financial instrument fail to meet their contractual obligations. The Bank reviewed its credit risk management structures aimed at enhancing credit risk and asset quality. The Bank's general credit strategies centre on sound credit granting process, diligent credit monitoring and strong loan collection and recovery. There is a separation between loan collection and recovery. There is a separation between loan granting and credit monitoring to ensure 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 implemented an end to end credit risk management solution. The system automated the Bank's credit process from origination, appraisal, monitoring and collections. In the last half of 2014, the Bank did a gradual roll-out of the credit risk system to allow for a smooth transition and rigorous assessment of the system's impact on the Bank's processes and procedure.
Management of credit risk is the responsibility of Credit Management, Credit Monitoring, Credit Administration and Recoveries departments with the following responsibilities:
Credit Management
-- Responsible for evaluating & approving credit proposals from the business units. -- Together with business units, has primary responsibility on the quality of the loan book. -- Reviewing credit policy for approval by the Board Credit Committee.
-- Reviewing business unit level credit portfolios to ascertain changes in the credit quality of individual customers or other counterparties as well as the overall portfolio and detect unusual developments.
-- Approve initial customer internal credit grades or recommend to the Credit Committees for approval.
-- Setting the credit risk appetite parameters. -- Ensure the bank adheres to limits, mandates and its credit policy.
-- Ensure adherence to facility covenants and conditions of sanction e.g. annual audits, gearing levels, management accounts.
-- Manage trends in asset and portfolio composition, quality and growth and non-performing loans.
-- Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits.
Credit Monitoring and Financial Modelling
-- Independent Credit Risk Management. -- Independent on-going monitoring of individual credit and portfolios
-- Triggers remedial actions to protect the interests of the Bank, if appropriate (e.g. in relation to deteriorated credits).
-- Monitors the on-going development and enhancement of credit risk management across the Bank.
-- Reviews the Internal Credit Rating System. -- On-going championing of the Basel II methodologies across the Bank.
-- Ensures consistency in the rating processes and performs independent review of credit grades to ensure they conform to the rating standards.
-- Confirm the appropriateness of the credit risk strategy and policy or recommends necessary revisions in response to changes/trends identified.
-- Conduct stress tests on the various risks the Bank is exposed to and assessing how resilient the Bank is to these various shocks under various scenarios
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.
4.2 Market risk
This is the exposure of the Bank's on and off balance sheet positions to adverse movement in market prices resulting in a loss in earnings and capital. The market prices will range from money market (interest rate risk), foreign exchange and equity markets in which the Bank operates. The Bank has in place a Management Asset and Liability Committee (ALCO) which monitors market risk and recommends the appropriate levels to which the Bank should be exposed at any time. Net Interest Margin is the primary measure of interest rate risk, supported by periodic stress tests to assess the Bank's ability to withstand stressed market conditions. On foreign exchange risk, the bank monitors currency mismatches and make adjustments depending on exchange rate movement forecast. The mismatches are also contained within 10% of the Bank's capital position.
ALCO meets on a monthly basis and operates within the prudential guidelines and policies established by the Board ALCO. The Board ALCO is responsible for setting exposure thresholds and limits, and meets on a quarterly basis.
4.3 Liquidity risk
Liquidity risk is the risk of financial loss arising from the inability of the Bank to fund asset increases or meet obligations as they fall due without incurring unacceptable costs or losses. The Bank identifies this risk through maturity profiling of assets and liabilities and assessment of expected cash flows and the availability of collateral which could be used if additional funding is required.
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. Liquidity risk is monitored through a daily treasury strategy meeting. This is augmented by a monthly management ALCO and a quarterly board ALCO.
4.4 Operational risk
This risk is inherent in all business activities and is the risk of loss arising from inadequate or failed internal processes, people, systems or from external events. The Bank utilises monthly Key Risk Indicators to monitor operational risk in all units. Further to this, the Bank has an elaborate Operational Loss reporting system in which all incidents with a material impact on the well-being of the Bank are reported to risk management. The risk department conducts periodic risk assessments on all the units within the Bank aimed at identifying the top risks and ways to minimise their impact. There is a Board Risk Committee whose function is to ensure that this risk is minimized. The Risk Committee with the assistance of the internal audit function and the Risk Management department assesses the adequacy of the internal controls and makes the necessary recommendations to the Board.
4.5 Legal and compliance risk
Legal risk is risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations. Legal risk may entail such issues as contract formation, capacity and contract frustration. Compliance risk is the risk arising from non - compliance with laws and regulations. To manage this risk permanent relationships are maintained with firms of legal practitioners and access to legal advice is readily available to all departments. The Bank has an independent compliance function which is responsible for identifying and monitoring all compliance issues and ensures the Bank complies with all regulatory and statutory requirements.
4.6 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 minimization 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. Further, there is an ALCO and and Finance Committee at board level responsible for monitoring overall progress towards attaining strategic objectives for the Bank.
The directors are satisfied with the risk management processes in the Bank as these have contributed to the minimisation of losses arising from risky exposures.
4.8 Risk Ratings 4.8.1 Reserve Bank of Zimbabwe Ratings
The Reserve Bank of Zimbabwe conducted an onsite inspection on the Group's banking subsidiary in 2013 and detailed below were the final ratings. Subsequent to this, a further review was done in 2014 during which the RBZ indicated that the bank had attended to their satisfaction on all matters raised in the 2013 inspection. No review was conducted in 2016.
4.8.1.1 CAMELS* Ratings
Latest RBS** Previous RAS Previous RAS
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 RBS Previous RBS
RAS Component Ratings Ratings Ratings
30/06/2013 31/01/2008 30/06/2007
------------------------------- -------------- ------------- -------------
Overall Inherent Risk Moderate Moderate High
------------------------------- -------------- ------------- -------------
Overall Risk Management Acceptable Acceptable Weak
Systems
------------------------------- -------------- ------------- -------------
Overall Composite Risk Moderate Moderate High
------------------------------- -------------- ------------- -------------
Direction of Overall Composite Stable Stable Increasing
Risk
------------------------------- -------------- ------------- -------------
*** RAS stands for Risk Assessment System.
4.8.1.3 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 2015 2014
Long term BB+ BB+
The current rating expires in August 2016.
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 30 June 2016 was as follows:
30 June 2016 31 December
2015
------------------------------------------ ------------------ ----------------------
US$ US$
------------------------------------------ ------------------ ----------------------
Share capital 16 506 16 506
------------------------------------------ ------------------ ----------------------
Share premium 31 474 502 31 474 502
------------------------------------------ ------------------ ----------------------
Retained earnings 16 801 089 14 439 723
------------------------------------------ ------------------ ----------------------
Fair value gain on investment properties (3 112 902) (3 112 902)
------------------------------------------ ------------------ ----------------------
----------------- -------------
------------------------------------------ ------------------ ----------------------
45 179 195 42 817 829
------------------------------------------ ------------------ ----------------------
Less: capital allocated for market
and operational risk (890 681) (722 035)
------------------------------------------ ------------------ ----------------------
Credit to insiders - -
------------------------------------------ ------------------ ----------------------
----------------- -------------
------------------------------------------ ------------------ ----------------------
Tier 1 capital 44 288 514 42 095 794
------------------------------------------ ------------------ ----------------------
Tier capital (subject to limit as
per Banking regulations
subject to limit as per Banking
regulations) 7 710 083 7 812 084
------------------------------------------ ------------------ ----------------------
Fair value gain on investment properties 3 112 902 3 112 902
------------------------------------------ ------------------ ----------------------
Subordinated debt 1 414 661 1 414 144
------------------------------------------ ------------------ ----------------------
Regulatory reserve (limited to 1.25%
of risk
weighted assets) 2 125 900 2 277 191
------------------------------------------ ------------------ ----------------------
Portfolio provisions (limited to
1.25% of risk
weighted assets) 1 056 620 1 007 847
------------------------------------------ ------------------ ----------------------
____________ ___________
------------------------------------------ ------------------ ----------------------
Total Tier 1 & 2 capital 51 998 597 49 907 878
------------------------------------------ ------------------ ----------------------
Tier 3 capital (sum of market and
operational risk capital) 890 681 722 035
------------------------------------------ ------------------ ----------------------
----------------- -------------
------------------------------------------ ------------------ ----------------------
Total capital base 52 889 278 50 629 913
------------------------------------------ ------------------ ----------------------
=========== =========
------------------------------------------ ------------------ ----------------------
Total risk weighted assets 254 601 595 262 803 080
------------------------------------------ ------------------ ----------------------
=========== =========
------------------------------------------ ------------------ ----------------------
Tier 1 ratio 17.40% 16.02%
------------------------------------------ ------------------ ----------------------
Tier 2 ratio 3.03% 2.97% ------------------------------------------ ------------------ ---------------------- Tier 3 ratio 0.35% 0.27% ------------------------------------------ ------------------ ---------------------- Total capital adequacy ratio 20.78% 19.26% ------------------------------------------ ------------------ ---------------------- RBZ minimum required capital adequacy ratio 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
loans and overdrafts, mortgages, credit
card facilities and funds transfer facilities.
Corporate Banking Loans, leasing and other credit facilities
and deposit and current accounts for
corporate and institutional customers.
Treasury Money market investment, securities trading,
accepting and discounting of instruments
and foreign currency trading.
International Banking Handles the Bank's foreign currency denominated
banking business and manages relationships
with correspondent banks.
Corporate Finance Corporate restructuring, empowerment
transactions investment advisory services,
structured finance and capital raising.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects is measured differently from operating profit or loss in the financial statements. Income taxes are managed on a bank wide basis and are not allocated to operating segments.
Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense.
Transfer prices between operating segments are on arm's length basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Bank's total revenue in 2016 and 2015.
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2016
Retail Corporate International Corporate
---------------
Banking Banking Treasury Banking Finance Unallocated Total
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
US$ US$ US$ US$ US$ US$ US$
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Income
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Third party 14 426 255 8 717 248 1 836 021 237 164 427 275 459 140 26 103 103
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Impairment
losses
on
financial
investments (1 511 975) (1 658 188) - - (21 233) - (3 191 396)
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
------------ ------------ ------------ ------------ ------------- ------------- ----------------
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Net operating
income 12 914 280 7 059 060 1 836 021 237 164 406 042 459 140 22 911 707
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
------------ ------------ ------------ ------------ ------------- ------------- --------------
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Results
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Interest and
similar 17 451
income 7 896 019 7 576 400 1 482 812 - 246 354 249 652 237
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Interest and
similar
expense (2 686 981) (2 259 791) (822 504) - (40 086) - (5 809 362)
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
------------ ------------ ------------ ------------ -------------- -------------- --------------
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Net interest
income 5 209 038 5 316 609 660 308 - 206 268 249 652 11 641 875
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
------------- ------------ ------------ ------------ ------------- ------------- -------------
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Fee and
commission
income 6 530 233 636 211 - 237 164 180 921 - 7 584 529
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Depreciation
of property
and
Equipment 518 706 27 973 16 708 20 307 11 873 104 480 700 047
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Amortisation
of intangible
Assets - - - - - 259 253 259 253
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Segment
profit/
(loss) 583 086 1 835 371 1 062 905 (468 200) 92 659 459 142 3 564 963
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Income tax
expense - - - - - (918 856) (918 856)
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
-------------- ------------ ------------ ------------- ------------- ------------ ------------
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
Profit/(loss)
for
the year 583 086 1 835 371 1 062 905 (468 200) 92 659 (459 714) 2 646 107
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
======= ======= ======= ======= ====== ======= =======
--------------- --------------- -------------- ------------- -------------- --------------- --------------- -----------------
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2016
Retail Corporate International
----------------------
Banking Banking Treasury Banking Leasing Unallocated Total
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
US$ US$ US$ US$ US$ US$ US$
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
Assets and
Liabilities
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
Capital expenditure 733 610 36 614 - 236 63 103 874 978 1 708 541
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
312 541
Total assets 115 719 583 110 290 176 64 610 748 23 516 2 908 663 18 988 484 170
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
260 217
Total liabilities 48 954 591 76 347 480 125 747 881 - - 9 167 651 603
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 30 June 2015
Retail Corporate International Corporate
--------------
Banking Banking Treasury Banking Finance Unallocated Total
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
US$ US$ US$ US$ US$ US$ US$
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Income
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Third party 14 999 680 9 807 204 2 328 752 790 538 708 997 191 601 28 826 772
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Impairment
losses
on loans,
advances and
debentures (855 842) (1 788 467) - - - - (2 644 309)
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
------------ ------------ ------------ ------------ ------------- ------------- ----------------
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Net operating
income 14 143 838 8 018 737 2 328 752 790 538 708 997 191 601 26 182 463
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
------------ ------------ ------------ ------------ ------------- ------------- --------------
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Results
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Interest and
similar 17 583
income 6 157 800 9 433 479 1 719 533 - 153 897 118 918 627
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Interest and
similar (1 079 (7 881
expense (1 543 670) (5 257 518) 971) - - - 159)
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
------------ ------------ ------------ ------------ -------------- -------------- --------------
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Net interest
income 4 614 130 4 175 961 639 562 - 153 897 118 918 9 702 468
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
------------- ------------ ------------ ------------ ------------- ------------- -------------
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Fee and
commission
income 8 841 880 373 725 - 790 538 555 100 - 10 561 243
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Amortisation
of
intangible
assets - - - - - 254 471 254 471
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Depreciation
of property
and
Equipment 497 990 56 865 22 619 25 210 14 076 288 057 904 817
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Segment
profit/
(loss) 4 004 463 (1 305 672) 1 087 714 (214 095) 469 572 191 600 4 233 582
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Income tax
expense - - - - - (1 041 627) (1 041 627)
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
-------------- ------------ ------------ ------------- ------------- ------------- ------------
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
Profit/
(loss) for
the period 4 004 463 (1 305 672) 1 087 714 (214 095) 469 572 (850 027) 3 191 955
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
======== ======= ======= ======= ======= ======== =======
-------------- --------------- ------------- ------------- -------------- --------------- --------------------- -----------------
The following table presents income, profit and certain asset and liability information regarding the Bank's operating segments and service units:
For the six months ended 31 December 2015
Retail Corporate International
----------------------
Banking Banking Treasury Banking Corporate Unallocated Total
Finance
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
US$ US$ US$ US$ US$ US$ US$
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
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
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
284 724
Total liabilities 76 966 500 83 704 208 117 254 881 - - 6 798 533 122
---------------------- ------------ ------------ ------------ -------------- ---------- ------------ ----------
7. GEOGRAPHICAL INFORMATION
The Bank operates in one geographical market, Zimbabwe.
Registered Offices
4(th) Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1(st) Street/Kwame Nkrumah Avenue Leopold Takawira Street Harare Bulawayo Zimbabwe Zimbabwe Telephone +263 4 759651 +263 9 70169 Facsimile +263 4 759648 +263 9 68535 Website: http://www.nmbz.co.zw Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Services PLC
1 Armagh Avenue The Pavilions (Off Enterprise Road) Bridgewater Road Eastlea Bristol P O Box 11 BS 999 ZZ
Harare United Kingdom
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
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