NMB Bank projected performance shows that interest income and non-interest income will continue to rise in the next five years parallel to GDP growth.
According to the Tanzania Securities Limited (TSL), NMB Equity Research report, as of July this year, the banking industry is anticipated to grow in tandem with the country’s GDP.
“The banking industry is anticipated to grow in tandem with Tanzania’s GDP,” TSL report shows adding “NMB, which now holds a sizable market share, is expected to grow at the same pace as that of GDP”.
However, NMB which now holds a sizable market share is expected to grow at the same pace as that of GDP.
The report also showed that overall, the banking sector’s loans to GDP ratio stands at 14.3 per cent. It is assumed that it will stay constant.
Furthermore, TSL said: “it was assumed that NMB’s market share in terms of loans and advances would be at 23 per cent.”
Hence, loans and deposits were forecasted based on the historical loan to deposit ratio of 75 per cent which is predicted to grow to reach 80 per cent coming 2027.
Interest income projected as a percentage of the total loans and advances where in 2023 and 2024 will be 16 per cent of the total loans and advances, while for the rest of the five years, the ratio is projected to stand at 15 per cent.
Thus, on average, the projected Interest income will grow at an average rate of 4 per cent for the five years to 1.13tri/-in 2027.
On other hand, net Interest income is projected to grow as much as interest income. Net interest income will grow at an average rate of 4.0 per cent from 820.27bn/- this year to 944.98bn/- in 2027.
“The increase in net interest income will result in an increase in operating income,” the report showed.
The lender’s operating income is projected to grow from 1.19tri/- this year to 1.68tri/- in 2027.
Moreover, total operating expenses are projected to increase from 511.92bn/- this year to 777.59bn/- in 2027. The increases are largely due to an increase in staff costs.
Additionally, profit before tax is expected to grow at a rate above 4.0 per cent each year. Profit before tax will increase from 685.86bn/- this year to 903.75bn/- in 2027. Net profit will grow at the same rate as profit before tax.
The bank’s performance will enhance the shareholders’ value by raising earnings per share (EPS) from 960/21 this year to 1,265/26 in 2027 and the dividend per share, which is forecasted to be 316/87 this year and 417/53 in 2027.