CFO Fred Nshekanabo celebrates growth in SME portfolio at CRDB

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At a recent results briefing, Fred Nshekanabo, the CFO of Tanzania’s largest bank CRDB, celebrated the growth recorded with respect to loans to small and medium-sized entities (SMEs). The financial results for the bank for the year ended 31 December 2023 shows a diversified split.

At a recent results briefing, Fred Nshekanabo, the CFO of Tanzania’s largest bank CRDB, celebrated the growth recorded with respect to loans to small and medium-sized entities (SMEs). The financial results for the bank for the year ended 31 December 2023 shows a diversified split.

“Lending to the corporate segment commands 46 percent and personal lending is at 35 percent. We are happy to report growth recorded with respect to SMEs, which is part of our strategic focus. This segment grew to 12 percent of our total portfolio compared to the 10 percent in 2022. There has also been notable growth in agriculture, manufacturing and construction sectors,” Fred said.

CRDB’s overall balance sheet grew by 14 percent closing with total assets of Tsh13.2 trillion compared to Tsh11.6 trillion in 2022. This was driven by growth in the loan book which grew by 23 percent from the previous year. Customer deposits grew by 8 percent driven by growth from both the corporate and retail segments.

The non-performing loan (NPL) ratio remained consistent at 2.8 percent which is below the regulatory limit of 5 percent.

“As we shared in the half year results, our NPL coverage slipped from 80 percent to 51 percent as a result of one of the corporate clients in agriculture slipping into NPL zone, but [it] has adequate collateral. We continue to engage the customer and because of the collateral held, we expect an improvement in 2024,” Fred explained.

“The funding mix remained similar to the prior year with customer deposits contributing 69 percent, borrowings 17 percent and equity 14 percent. In terms of our capital position, the bank’s core capital ratio stands at 16.1 percent while total capital ratio is 17.4 percent, which are both above the regulatory limits of 12.5 percent and 14.5 percent. respectively. We are confident we will still be above the requirements when the guidelines on the implementation of Basel 2 and 3 are affected by the Central Bank of Tanzania in April 2025,” he added.

The CRDB group closed at a profit after tax of Tsh423.5 billion which represents a 21 percent year-on-year growth. This is despite the increase in interest expense arising from global trends where dollar denominated debt has become more expensive.

“We opened three subsidiaries namely a bank in Democratic Republic of Congo, the CRDB Foundation and CRDB Insurance Company. These new entities increased our operating expenses by 16 percent. The DRC operations commenced operations in July 2023 and recorded a loss of Tzs 4 billion. Management continues to mobilise low-cost deposits in the country and we are focusing on rolling out alternative channels to improve profitability,” Fred said.

Unlike DRC, the group’s Burundi operations are performing phenomenally well with growth of over 31 percent. The formation of CRDB Foundation has seen the group grant Tsh2.4 billion in seed capital to more than 800 youth and women.

“We have had to reprice our loan portfolio and change our pricing modalities in response to what is happening in the market. Our major projected capital expenditure for 2024 will be IT based to align our digital transformation investment. We expect to complete the overhaul of our core banking system this year and to improve our cybersecurity capabilities,” Fred said.

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