DURING the quarter that ended December 2019, CRDB Bank posted an 11 per cent increase in net interest income to 136.45bn/- from 123.23bn/- in the previous comparative quarter that ended in December 2018.
This increase was contributed by the rise in interest income by 9.17bn/- to 163.70bn/- and a simultaneous decline in interest expenses by 4.04bn/- to 27.2bn/- from 31.2bn/-.
Non-interest income soared by 22 per cent to 65.2bn/- from 53.6bn/- recorded in the previous quarter mainly due to a rise in earnings from fees and commissions to 54.87bn/- from 42.78bn/-.
Non-interest expenses increased by 13.6bn/- to 135.15bn/-from 121.53bn/-, being spearheaded by salaries and benefits at 69.81bn/- from 55.41bn/- in the comparable quarter 2018. The bottom-line increased by 136 per cent to 28bn/- from 11.8bn/- in Q 4- 2018.
Cumulatively, the bank registered an 87 per cent increase in net profit to 120.17bn/-, up from 64.13bn/- for the cumulative one-year period that ended in December 2018.
The balance sheet grew by 6.45 per cent supported by the bank’s investments in government securities which increased by 11 per cent during the period to 1.41tri/- from 1.27tri/-, while loans and overdrafts increased marginally by 3.1 per cent to 3.38tri/- from 3.26tri/- in Q 3- 2019.
Customer deposits have increased by 7 per cent to 5.15tri/- in Q 4 from 4.81tri/- in Q 3 of 2019.
Gross loans and advances to total deposits decreased to 68.2 per cent from 71.7 per cent while loans and advances to total assets decreased to 51.2 per cent from 52.3 per cent in the previous comparative quarter, which indicates that the bank’s financing base strengthened during the period.
Non-performing loans to total gross loans dropped to 5.5 per cent from 7.5 per cent in Q 3 2019, indicating improved loan management.
Commentary on the results As of the end of 2019, the bank posted improved results once again with an increase in net profit after tax for the cumulative period that ended in December 2019 to 120bn/- from 64.13bn/- which is an 87 per cent increase.
Quarter on quarter, the group recorded 135 per cent increase in net profit. These results give credence to the vision of the new management team at CRDB Bank led by Managing Director Abdulmajid Nsekela who rejoined the bank in October 2018.
Among the changes that are evident, since his arrival, is the reduction in the number of branches from 255 in 2017 to 234 at the end of 2018 (although the number has since risen to 240), a reduction in the non-performing loans ratio from 12.6 per cent in 2017 to 5.5 per cent at the end of 2019, containment of impairment charges on loans and advances that had registered a compound annual growth rate (CAGR) of 49 per cent between 2013 and 2017 (reaching 153bn/-), entrenching innovations through digital channels by developing financial delivery via digital payment platforms that are close to where people live, diversification of revenue sources with fees and commissions making an increasing contribution and thus improved returns.
The gross profit margin rose to 26 per cent from 15 per cent while net profit margin doubled to about 17 per cent from 8 per cent in the previous corresponding quarter of 2018. Return on equity (ROE) increased to 17 per cent from 6 per cent while return on assets (ROA) increased to 2.7 per cent from 1.5 per cent in the previous quarter.
Nonperforming loans declined to 5.5 per cent from 7.5 per cent three months earlier. At the bourse, CRDB Bank continues trading as the most liquid stock with its price increased to close at 130/- as of February 4, 2020 from 95/- at the beginning of 2020.
The stock lastly traded at 130/- around May 2019 and since then it has been going down until the double digit of 95/- at the end of 2019. These outstanding results released on the last week of January could see the bank fetch higher demand and ultimately drive the price further upward with the expectation of sustained performance.
With the cumulative profit increase by 87 per cent to 120bn/- it is possible that the bank might increase its dividend for 2019. Regardless of the dividend decision, we still recommend a BUY for the stock as these results backup the company’s fundamentals whose share value is higher than the current market price.
This financial statement has been prepared by Dar es Salaam- based Tanzania Securities Limited that can be reached at info@ @ tanzaniasecurities.co.tz