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Losses deepen at struggling Mwalimu Bank

MWALIMU Commercial Bank (MCB) net loss has increased by 35 per cent last year after revenues declined as the bank struggles to get on its feet.

The bank, originated from teachers union, saw its net loss sunk to 5.528bn/- from 4.067bn/- in 2017.

The shares of the bank, listed on Dar es Salaam Stock Exchange (DSE) alternative market, have shown no movement, remaining at 500/- yesterday.

Tanzania Securities, Investment Analyst, Happy Msale, said in a report the three-year-old bank “seems to be struggling” to get on its feet to break even after raising 31bn/- through an IPO in 2015.

“However it seems that the bank entered the market during a challenging time, when most banks are reporting increasing non-performing loans and lower earnings.”

Ms Msale in a report said that staff costs and infrastructure costs are the main drivers of the loss, with the cost to income ratio of the bank reported to increase from 225 per cent in 2017 to 295 per cent in 2018.

“Given the prevailing market condition, the bank will likely take longer to break even,” she said. MCB said in its annual report last year that it plans to raise more than 30bn/- longterm financing mid this year so that it could beef up deposit mobilization.

“If it is able to raise these funds, then it may be able to give more retail loans to teachers, the government and the general public.

“Whether the financing will be successful is dependent on many factors, given that is a small tier bank and it is yet to report a profit,” she said.

The success of move may be caked by the fact that the bank was oversubscribed by more than 24 percent in its 2015 IPO.

The bank net interest income declined to 2.68bn/- in 2018 from 3.16bn/- in 2017 while loans increased to 17.88bn/- from 11.19bn/-.

The bank assets grew down to 30.69bn/- last year from 37.79bn/- in the previous year. The customer deposits increased to 7.95bn/- from 5.48bn/- in 2017.

TANZANIA set to become the ...

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Author: DAILY NEWS Reporter

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