TCB: From huge loss to massive profit in 2024

DAR ES SALAAM: Tanzania Commercial Bank (TCB) has returned to profitability in 2024 from a significant loss in the previous period as net interest income and other operating revenues surged.

According to its latest audited financial statement the lender’s profit before tax soared by an eye-watering 201 per cent, to approximately 44.81bn/- in 2024, up from 44.42bn/- loss recorded in 2023. This dramatic shift underscores a significant improvement in the bank’s operational efficiency and profitability.

The bottom line followed suit, with profit after tax surging by 170 per cent to 32.62bn/- in 2024, a substantial turnaround from the 46.28bn/- loss in 2023.

This positive trajectory is further reflected in the basic earnings per share, which moved from a negative 578/- in 2023 to a positive 406/- in 2024, indicating a significant increase in shareholder value.

A key driver of this impressive performance appears to be a strong growth in net interest income, which increased by 19.02 per cent to 120.90bn/-.

This was supported by a healthy 16.93 per cent rise in interest income to 178.86bn/-. While interest expense also increased by 12.79 per cent, the growth in income outpaced the expense, contributing positively to profitability.

Furthermore, other operating income witnessed a substantial surge of 378.56 per cent, reaching 10.47bn/-. This significant increase likely reflects successful strategies in fee generation or other non-core banking activities.

The combined effect of higher net interest income and other operating income propelled the operating income to a profit of 44.81bn/- in 2024, a dramatic reversal from the operating loss of 44.42bn/- in 2023.

However, the bank still faced challenges in managing its expenses. Non-interest expenses saw an increase of 9.25 per cent, and salaries and benefits rose by 11.81 per cent.

Additionally, impairment losses, while significantly lower than the previous year in absolute terms (5.16bn/- vs 15.07bn/-), still represent a cost impacting profitability.

The substantial decrease in bad debts written off (-100.06 per cent) also contributed positively to the bottom line compared to the previous year.

An examination of key financial ratios reveals the impact of this turnaround. The return on average assets (ROAA) and return on average shareholders’ funds (ROAE) both swung from negative to positive territory, indicating improved efficiency in utilizing assets and generating returns for shareholders.

TCB also demonstrated robust balance sheet growth. Total assets expanded by 25 per cent to 1.74tri/-, and customer deposits grew by a healthy 23.03 per cent to 1.17tri/-, reflecting increased customer trust and business activity. Loans, advances, and overdrafts also saw a significant increase of 24.79 per cent, indicating a growing lending portfolio.

While the non-performing loans to gross loans ratio saw a slight increase to 3.08 per cent, it remains within manageable levels for many financial institutions.

The bank’s capital adequacy, as indicated by the shareholders’ fund to total assets ratio, showed a notable increase to 8.67 per cent, suggesting a stronger capital base.