In a historic feat, Tanzania's two largest banks reported an impressive net profit increase, collectively reaching close to 1 trillion TZS in 2023. The substantial rise of 182.6 billion TZS compared to the previous year marked a significant milestone in the country's financial landscape.
The two banking giants, CRDB Bank and NMB Bank, showcased robust financial performance, recording a combined net profit of 965.7 billion TZS, up from 783.1 billion TZS in 2022. This achievement underscores their pivotal role in shaping Tanzania's banking sector and contributing to the nation's economic growth.
Analysis of the financial statements of commercial banks, released as of Tuesday, January 30, 2024, reveals that CRDB and NMB's assets experienced significant growth in 2023. Together, their assets and deposits constitute more than half of the total value in Tanzania's banking sector.
NMB Bank reported an impressive pre-tax profit of Sh775 billion, surpassing the 615.1 billion TZS recorded in the corresponding period of the previous year. Similarly, CRDB Bank achieved a notable increase in its pre-tax profit, reaching 599 billion TZS in 2023, up from 498 billion TZS in 2022.
The net profit for NMB Bank crossed the half-trillion mark, reaching 542 billion TZS in 2023 compared to 431.7 billion TZS in 2022. Likewise, CRDB Bank's net profit rose to 423.7 billion TZS from 351.4 billion TZS in 2022.
Both banks demonstrated strong revenue performance, with their funded income, primarily interest income, experiencing double-digit growth. CRDB Bank's funded income rose from 846 billion TZS in 2023 to 708 billion TZS in the previous year. NMB Bank experienced an increase in its funded income, reaching 938.6 billion TZS in 2023 from 789 billion TZS in 2022.
Maintaining high loan portfolio quality, NMB and CRDB consistently held non-performing loans at 3.2 percent and 2.8 percent, respectively, well within the regulatory benchmark of five percent.
Customer deposits for NMB Bank reached 8.4 trillion TZS in 2023, while CRDB Bank's deposits rose to 8.9 trillion TZS. Both banks witnessed significant growth in loans, advances, and overdrafts, with NMB and CRDB recording 28 percent and 23 percent increases, respectively, reaching 7.7 trillion TZS and 8.5 trillion TZS.
CRDB Bank's assets rose by 14 percent to 13.2 trillion TZS in 2023, while NMB Bank's assets increased by 19 percent to 12.2 trillion TZS.
The impressive profits achieved by the two leading banks are expected to translate into increased lending capacity and dividends for shareholders. However, concerns have been raised by some financial analysts regarding the potential risks associated with a duopoly in Tanzania's financial sector.
"We need to limit this dominance to have healthy competition and regulatory oversight," expressed a Dar es Salaam-based analyst. The analyst advocated for close monitoring by authorities to mitigate risks, promote financial inclusion initiatives, and encourage innovation and technology uptake.
Suggestions were made for joint initiatives among banks to foster a balanced and thriving financial sector. On a sectoral level, the net profit of Tanzania's two largest banks alone is more than four times higher than the cumulative sector net profit recorded five years ago, reflecting a remarkable turnaround in the financial fortunes of the banking industry.