TIDMNMB
RNS Number : 6276I
NMBZ Holdings Ld
27 March 2015
NMBZ HOLDINGS LIMITED
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
CONDENSED AUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2014
HIGHLIGHTS
31 December 2014 31 December
2013
Total income (US$) 48 078 454 50 135 302
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Operating profit before impairment
charge (US$) 7 442 884 12 693 945
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Attributable profit/(loss) (US$) 1 667 247 (3 321 823)
----------------- ------------
Basic earnings/(loss) per share
(US cents) 0.43 (1.00)
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Total deposits (US$) 235 362 677 211 215 066
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Total gross loans and advances
(US$) 217 463 319 194 777 798
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Total shareholders' funds (US$) 45 047 616 43 441 403
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Enquiries:
NMBZ HOLDINGS LIMITED
Benefit P Washaya, Acting Chief Executive Officer, NMBZ Holdings
Limited benefitw@nmbz.co.zw
Benson Ndachena, Chief Finance Officer, NMBZ Holdings Limited
bensonn@nmbz.co.zw
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Tel: +263-4-759 651/9
CHAIRMAN'S STATEMENT
INTRODUCTION
The Group recorded an attributable profit of US$1 667 247 which
was an improvement from an attributable loss of US$3 321 823
recorded in 2013. The improvement in the operating results was
underpinned by the current efforts being made by the Group to
contain non-performing loans, implementation of a new credit system
and the repositioning of the Bank in the financial services
sector.
GROUP RESULTS
Compliance with International Financial Reporting Standards,
Companies Act and Banking Act
The condensed financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS).
The financial statements have also been prepared in compliance with
the provisions of the Companies Act (Chapter 24:03) and the Banking
Act (Chapter 24:20).
Assessment of the economic environment
The economic slowdown which started in the last two quarters of
2013 persisted into 2014 and the economy has continued to be
characterised by company closures, deflation, lack of liquidity and
increasing default risk. The slowdown in the economy has further
worsened the default risk within the Banking sector with non-
performing loans having increased from an industry average of
15.92% as at 31 December 2013 to 20% as at 30 September 2014 before
coming down to 16% as at 31 December 2014 largely due to bank
closures.
Commentary on operating results
The profit before taxation was US$2 425 522 during the period
under review and this gave rise to an attributable profit of US$1
667 247. Total income for the period decreased by 4% from a prior
year of US$50 135 302 to US$48 078 454 which is comprised of
interest income of US$31 072 461 (2013 -US$33 181 704), fee and
commission income of US$15 121 536 (2013 - US$14 673 834), net
foreign exchange gains of US$1 822 432 (2013 - US$1 502 044) and
non - interest income of US$62 025 (2013-US$777 720).
Operating expenses amounted to US$27 984 051 and these were 11%
up from prior year and these were largely driven by administration
expenses, depreciation and staff related expenditure.
Impairment losses on loans and advances amounted to US$5 017 362
for the current period from a prior year of US$16 645 810 and the
decrease was mainly due to reduced write-offs in the current year.
The Board took a decision to write off loans and advances amounting
to US$5 912 371 during the year under review after recovery efforts
had not yielded the anticipated results.
Statement of financial position
The Group's total assets grew by 10% from US$259 483 112 as at
31 December 2013 to US$286 049 034 as at 31 December 2014. The
assets comprised mainly of loans, advances and other assets (US$203
363 052) (2013 - US$181 316 271), investment securities held to
maturity (US$3 874 525) (2013 - US$4 685 471), investment in
debentures (US$4 614 047) (2013 - US$3 984 723), cash and short
term funds (US$54 750 561) (2013 - US$48 871 983), investment
properties (US$4 453 300) (2013- US $4 385 300), non-current assets
held for sale (US$2 267 300) (2013 - US$2 303 300) and property and
equipment (US$6 345 267) (US$2013 - US$7 372 943). Gross loans and
advances increased by 12% from US$194 777 798 as at 31 December
2013 to US$217 463 319 as at 31 December 2014 mainly due to
increase in loans advanced to civil servants. The deposits
increased by 11% from US$211 215 066 as at 31 December 2013 to
US$235 362 677 as at 31 December 2014 as a result of an increase in
current and deposit accounts from customers. The Bank's liquidity
ratio closed the period at 32.38% and this was above the statutory
requirement of 30%.
Capital
The banking subsidiary's capital adequacy ratio at 31 December
2014 calculated in accordance with the guidelines of the Reserve
Bank of Zimbabwe (RBZ) was 19.32% (31 December 2013 - 17.28%). The
minimum required by the RBZ is 12%.
The Group's shareholders' funds have increased by 4% from US$43
441 403 as at 31 December 2013 to US$45 047 616 as at 31 December
2014 mainly as a result of the current year attributable
profit.
DIVIDEND
In view of the need to retain cash in the business for expansion
purposes and to strengthen the statutory capital requirements for
the banking subsidiary, the Board has proposed not to declare a
dividend.
CORPORATE SOCIAL INVESTMENTS
The Group is committed to playing an active role in the
communities it serves. Our social investments during the year were
channelled into special education needs, the disadvantaged,
vulnerable groups, protection of the environment, wild life
conservation, the arts and various sporting disciplines. The
activities and charities supported during the year included the
Kidzcan Foundation, ZIMRA Charity Ball, Friends of Hwange, Birdlife
Zimbabwe, Manicaland Tennis Tournament, Silverlinings School, HIFA
and the Dance Trust of Zimbabwe.
CORPORATE DEVELOPMENTS
The Group introduced mortgage lending in May 2014 and this is in
keeping with the aim of providing our clients with a full range of
financial services. In response to technological changes and the
evolving customer needs, the Group is continuously reviewing the
electronic delivery channels inorder to harness opportunities
presented for the convenience of our valued customers.
OUTLOOK AND STRATEGY
The Group has broadened the market catchment segment for the
banking subsidiary by tapping into the mass market. The new focus
will allow the Group to build a sustainable operation without
compromising the service excellence which is synonymous with the
Group.
A new branch will be opened in Kwekwe in the second quarter of
2015 and a further two branches will be opened in the third quarter
of 2015.
DIRECTORATE
Mr J A Mushore resigned as a director of NMBZ Holdings Limited
and NMB Bank Limited due to ill health with effect from 31 October
2014. Dr J T Makoni resigned as a director of NMBZ Holdings Limited
with effect from 31 December 2014. Mr D Malik resigned as a
director of NMBZ Holdings Limited and NMB Bank Limited with effect
from 22 September 2014. Mr J de la Fargue, an alternate to Mr J
Chenevix-Trench, resigned from the Board with effect from 31
December 2014. I would like to thank them all for the immense and
valuable contributions they made to the Board over the years.
Mr R Keighley was appointed to the Board with effect from 17
June 2014. I would like to welcome Mr R Keighley and wish him a
successful tenure on the Board. Subsequent to year end, the Board
appointed Mr Benedict Chikwanha as chairman of the Boards of NMB
Bank Limited and NMBZ Holdings Limited with effect from 19 March
2015. I would like to congratulate Mr Chikwanha on his appointment
and to wish him a fruitful tenure.
On a personal note, as I advised at the last Annual General
Meeting, I will be retiring from the Chair and from the Boards of
NMB Bank Limited and NMBZ Holdings Limited with effect from 18
March 2015. It has been an honour and a privilege to preside over
this exceptional institution for the past six years and I would
like to thank all of our staff, customers and other stakeholders
for the tremendous support that they have always given me over the
years. In particular, I would like to thank my colleagues on the
Board and members of senior management; I have greatly enjoyed
working with you since joining the Board in 2008. It is my fervent
hope and expectation that you will support my successor in the same
way that you have supported me. I wish each of you, and NMB, every
success in the future.
APPRECIATION
I would like to express my sincere gratitude and appreciation to
our valued clients, shareholders and the regulatory authorities for
their continued support during the period under review. My
appreciation also goes to my fellow Board members, management and
staff for their continued dedication and commitment which has
underpinned the achievement of these results in the face of an
increasingly difficult operating environment.
T N MUNDAWARARA
CHAIRMAN
18 March 2015
AUDITOR'S STATEMENT
These financial results should be read in conjunction with the
complete set of financial statements for the year ended 31 December
2014, which have been audited by KPMG Chartered Accountants
(Zimbabwe) and an unmodified opinion issued thereon. The auditor's
report on the financial statements which forms the basis of these
financial results is available for inspection at the Holding
Company's registered office.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
31 December 2014 31 December 2013
US$ US$
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Note
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Interest income 4 31 072 461 33 181 704
------- ----------------- -----------------
Interest expense (12 651 519) (13 006 505)
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Net interest income 18 420 942 20 175 199
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Fee and commission income 5.1 15 121 536 14 673 834
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Net foreign exchange gains 1 822 432 1 502 044
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-------------- --------------
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Revenue 35 364 910 36 351 077
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Non-interest income 5.2 62 025 777 720
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Share of profit of associate - 217 768
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Profit on disposal of associate - 580 136
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Operating expenditure 6 (27 984 051) (25 232 756)
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Impairment losses on loans,
advances
and debentures 17.3 (5 017 362) (16 645 810)
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--------------- ---------------
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Profit/(loss) before taxation 2 425 522 (3 951 865)
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Taxation (charge)/credit 7 (768 455) 630 042
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------------ -------------
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Profit/(loss) for the period 1 657 067 (3 321 823)
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Other comprehensive income,
net of
tax 5.3 10 180 -
------- ----------------- -----------------
------------ ------------
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Total comprehensive income/(loss)for
the year 1 667 247 (3 321 823)
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======== =========
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Earnings/(loss) per share
(US cents)
------- ----------------- -----------------
- Basic 9.3 0.43 (1.00)
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- Diluted basic 9.3 0.40 (0.86)
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2014
31 December 31 December
2014 2013
Note US$ US$
------- -------------------------- ---------------------------
SHAREHOLDERS' FUNDS
------- -------------------------- ---------------------------
Share capital 10.2.1 78 598 78 598
------- -------------------------- ---------------------------
Capital reserves 19 093 810 17 937 471
------- -------------------------- ---------------------------
Retained earnings 10 131 991 9 604 191
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-------------- -------------
------- -------------------------- ---------------------------
Total equity 29 304 399 27 620 260
------- -------------------------- ---------------------------
Redeemable ordinary shares 11 14 335 253 14 335 253
------- -------------------------- ---------------------------
Subordinated term loan 12 1 407 964 1 485 890
------- -------------------------- ---------------------------
----------------- ---------------
------- -------------------------- ---------------------------
Total shareholders' funds 45 047 616 43 441403
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LIABILITIES
------- -------------------------- ---------------------------
Deposits and other accounts 13 241 001 418 216 041 709
------- -------------------------- ---------------------------
---------------- --------------
------- -------------------------- ---------------------------
Total shareholders' funds and
liabilities 286 049 034 259 483 112
------- -------------------------- ---------------------------
========== =========
------- -------------------------- ---------------------------
ASSETS
------- -------------------------- ---------------------------
Cash and cash equivalents 15 54 750 561 48 871 983
------- -------------------------- ---------------------------
Current tax asset 1 436 974 1 739 210
------- -------------------------- ---------------------------
Investment securities held to
maturity 14.1 3 874 525 4 685 471
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Investment in debentures 16 4 614 047 3 984 723
------- -------------------------- ---------------------------
Loans, advances and other accounts 17 203 363 052 181 316 271
------- -------------------------- ---------------------------
Non-current assets held for
sale 18 2 267 300 2 303 300
------- -------------------------- ---------------------------
Quoted and other investments 14.3.1 208 681 335 998
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Investment in associates 24 - -
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Investment properties 4 453 300 4 385 300
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Intangible assets 19 1 950 733 1 664 369
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Property and equipment 20 6 345 267 7 372 943
------- -------------------------- ---------------------------
Deferred tax assets 2 784 594 2 823 544
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---------------- ---------------
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Total assets 286 049 034 259 483 112
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========== =========
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
Share Share Share Option Regulatory Retained
Capital Premium Reserve Reserve Profit Total
--------------- -------------- ------------------ --------------- ----------------- -----------------
US$ US$ US$ US$ US$ US$
--------------- -------------- ------------------ --------------- ----------------- -----------------
Balances at 1
January 2013 78 598 15 737 548 45 671 2 301 683 12 778 583 30 942 083
--------------- -------------- ------------------ --------------- ----------------- -----------------
Total loss for
the year - - - - (3 321 823) (3 321 823)
--------------- -------------- ------------------ --------------- ----------------- -----------------
Impairment
allowance for
loans and
advances - - - (147 431) 147 431 -
--------------- -------------- ------------------ --------------- ----------------- -----------------
--------- ------------- ----------------- -------------- ---------------- -------------
--------------- -------------- ------------------ --------------- ----------------- -----------------
Balances at 31
December
2013 78 598 15 737 548 45 671 2 154 252 9 604 191 27 620 260
--------------- -------------- ------------------ --------------- ----------------- -----------------
Total
comprehensive
income
for the year - - - - 1 667 247 1 667 247
--------------- -------------- ------------------ --------------- ----------------- -----------------
Impairment
allowance for
loans and
advances - - - 1 139 447 (1 139 447) -
--------------- -------------- ------------------ --------------- ----------------- -----------------
Share based
payments -
share
options
issued - - 16 892 - - 16 892
--------------- -------------- ------------------ --------------- ----------------- -----------------
--------- ------------- ------------ ------------- ------------- -------------
--------------- -------------- ------------------ --------------- ----------------- -----------------
Balances at 31
December
2014 78 598 15 737 548 62 563 3 293 699 10 131 991 29 304 399
--------------- -------------- ------------------ --------------- ----------------- -----------------
===== ======== ======= ======== ======== ========
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CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
31 December 31 December
2014 2013
US$ US$
------------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
------------------- ------------------
Profit /(loss) before taxation 2 425 522 (3 951 865)
------------------- ------------------
Non-cash items:
------------------- ------------------
-Depreciation 1 899 047 1 695 856
------------------- ------------------
-Amortisation of intangible assets 337 118 130 716
------------------- ------------------
-Impairment losses on loans, advances
and debentures 5 017 362 16 645 810
------------------- ------------------
-Investment properties fair value adjustment (37 800) (595 450)
------------------- ------------------
-Quoted and other investments fair value
adjustment 13 372 (9 892)
------------------- ------------------
-Profit on disposal of property and equipment (6 274) (30 022)
------------------- ------------------
-Loss on disposal of property and equipment
(included in staff 177 413 -
costs)
------------------- ------------------
-Profit on disposal of non-current assets
held for sale - (1 500)
------------------- ------------------
-Non-current assets held for sale fair
value adjustments (3 000) (21 000)
------------------- ------------------
-Impairment reversal on land and buildings (46 900) (4 803)
------------------- ------------------
-Share of associate profit - (217 768)
------------------- ------------------
-Profit on disposal of associate - (580 136)
------------------- ------------------
------------------ ---------------
------------------- ------------------
Operating cash flows before changes in
operating assets and
liabilities 9 775 860 13 059 946
------------------- ------------------
Changes in operating assets and liabilities
------------------- ------------------
Deposits and other accounts 24 959 709 21 039 076
------------------- ------------------
Loans, advances and other accounts (27 064 142) (51 362 087)
------------------- ------------------
Investment debentures (629 324) (3 984 723)
------------------- ------------------
---------------- -----------------
------------------- ------------------
Net cash generated/(utilised in) from
operations 7 042 103 (21 247 788)
------------------- ------------------
--------------- -----------------
------------------- ------------------
Taxation
------------------- ------------------
Corporate tax paid (422 299) (2 876 507)
------------------- ------------------
Capital gains tax paid (8 500) (264 574)
------------------- ------------------
-------------- -----------------
------------------- ------------------
Net cash inflow/(outflow) from operating
activities 6 611 304 (24 388 869)
------------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------- ------------------
Purchase of property and equipment (992 076) (1 506 369)
------------------- ------------------
Investment securities held to maturity 810 946 816 492
------------------- ------------------
Proceeds on disposal of property and equipment 10 177 35 634
------------------- ------------------
Acquisition of intangible assets (623 482) (1 170 868)
------------------- ------------------
Proceeds on disposal of associate - 1 850 000
------------------- ------------------
Expenses on disposal of associate - (26 175)
------------------- ------------------
Proceeds on disposal of non- current assets
held for sale 39 000 39 500
------------------- ------------------
Acquisition of investment property (30 200) (769 550)
------------------- ------------------
-------------- -----------------
------------------- ------------------
Net cash outflow from investing activities (785 635) (731 336)
------------------- ------------------
-------------- ----------------
------------------- ------------------
Net cash inflow/(outflow) before financing
activities 5 825 669 (25 120 205)
------------------- ------------------
------------- ----------------
------------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of redeemable ordinary
shares - 14 831 145
----------------- -------------------------
Share issue expenses - (495 892)
----------------- -------------------------
Proceeds from subordinated term loan - 1 400 000
----------------- -------------------------
Payment of interest on subordinated term (218 413) -
loan
----------------- -------------------------
Interest capitalised on subordinated
term loan 140 487 85 890
----------------- -------------------------
Proceeds on disposal of unquoted investment 130 835 -
----------------- -------------------------
------------- --------------
----------------- -------------------------
Net cash inflow from financing activities 52 909 15 821 143
----------------- -------------------------
------------- ---------------
----------------- -------------------------
Net increase/(decrease) in cash and cash
equivalents 5 878 578 (9 299 062)
----------------- -------------------------
Cash and cash equivalents at the beginning
of the year 48 871 983 58 171 045
----------------- -------------------------
---------------- ---------------
----------------- -------------------------
Cash and cash equivalents at the end
of the year (Note 15) 54 750 561 48 871 983
----------------- -------------------------
========== =========
----------------- -------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2014
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe
and is an investment holding company. Its registered office is 64
Kwame Nkrumah Avenue, Harare. Its principal operating subsidiary is
engaged in banking.
2. ACCOUNTING CONVENTION
Statement of compliance
The condensed financial statements are prepared in accordance
with International Financial Reporting Standards (IFRSs) and are
prepared in compliance with the provisions of the Companies Act
(Chapter 24:03) and the Banking Act (Chapter 24:20).
The condensed financial statements were approved by the Board of
Directors.
2.1 Basis of preparation
The condensed financial statements have been prepared under the
historical cost convention except for quoted and other investments,
investment properties and financial instruments which are carried
at fair value and land and buildings which are stated at revalued
amount. These condensed financial statements are reported in United
States of America dollars and rounded to the nearest dollar.
2.2 Basis of consolidation
The Group financial results incorporate the financial results of
the Company, its subsidiaries and associate company. Subsidiaries
are investees controlled by the Group. The Group controls an
investee if it is exposed to, or has rights to, variable returns
from its involvement with the investee. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date on which control commences until date when control
ceases. The financial results of the subsidiaries are prepared for
the same reporting period as the parent company, using consistent
accounting policies. All intra-group balances, transactions, income
and expenses; profits and losses resulting from intra-group
transactions that are recognised in assets and liabilities are
eliminated in full. When the Group loses control over a subsidiary,
it derecognises the assets and liabilities of the subsidiary, and
any related non-controlling interest and other components of
equity. Any resulting gain or loss is recognised in profit or loss.
Any interest retained in the former subsidiary is measured at fair
value when control is lost.
An associate is an entity over which the Group has significant
influence, as evidenced by the Group holding directly or indirectly
20% or more of the voting power of the investee, representation on
the Board and direct involvement with the policy making processes
of the investee. The investment in associate is accounted for using
the equity method.
2.3 Comparative financial information
The condensed financial statements comprise consolidated
statements of financial position, comprehensive income, changes in
equity and cash flows. The comparative consolidated statements of
comprehensive income, changes in equity and cash flows are for
twelve months.
2.4 Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
In the process of applying the Group's accounting policies,
management has made the following judgements which have the most
significant effect on the amounts recognised in the financial
statements:
2.4.1 Deferred tax
Provision for deferred taxation is made using the liability
method in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Temporary differences
arising out of the initial recognition of assets or liabilities and
temporary differences on initial recognition of business
combinations that affect neither accounting nor taxable profit are
not recognised. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date. Deferred income tax assets and
liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the reporting date.
In determining the amounts used for taxation purposes the
directors referred to applicable effective exchange rates at the
date of acquisition of assets or incurring of liabilities. The
Zimbabwe Revenue Authority (ZIMRA), announced methods to account
for the deferred tax arising on assets purchased in ZWD. These
methods require the preparer to first estimate the equivalent USD
value of those assets at the time of purchase. Since the
measurement of transactions in Zimbabwe dollars in the prior
periods is affected by several economic variables such as mode of
payment and hyperinflation, this is an area where the directors
have had to apply their judgement and acknowledge there could be
significant variations in the results achieved depending on
assumptions made.
2.4.2 Land and buildings
The properties were valued by professional valuers. The valuers
applied the rental yield method and comparable market evidence to
assess fair value of land and buildings. The determined fair value
of land and buildings is most sensitive to the estimated yield as
well as the long term vacancy rate. In addition, the property
market is currently not stable due to liquidity constraints and
hence comparable values are also not stable.
2.4.3 Investment properties and property and equipment
Investment properties were valued by professional valuers.The
professional valuers considered comparable market evidence of
recent sale transactions and those transactions where firm offers
had been made but awaiting acceptance. In addition, the property
market is currently not stable due to liquidity constraints and
hence comparable values are also not stable.
The directors exercised their judgment in determining the
residual values of the other property and equipment which have been
determined as nil.
2.4.4 Intangible assets
Intangible assets are initially recognised at cost. Subsequently
the assets are measured at cost less accumulated amortisation and
any impairment loss.
2.4.5 RBZ Bond
The RBZ Bond was valued at cost as there is currently no market
information to facilitate the application of fair value principles.
There is currently no active market for these bonds.
2.4.6 Impairment losses on loan and advances
The Group reviews all loans and advances at each reporting date
to assess whether an impairment loss should be recorded in profit
or loss. In particular, judgement by management is required in the
estimation of the amount and timing of future cash flows when
determining the impairment loss. In estimating these cash flows,
the Group makes judgements about the borrower's financial situation
and the net realisable value of collateral. These estimates are
based on assumptions about a number of factors and actual results
may differ, resulting in future changes to the allowance. Loans and
advances that have been assessed individually and found not to be
impaired and all individually insignificant loans and advances are
then assessed collectively, in groups of assets with similar risk
characteristics, to determine whether provision should be made due
to incurred loss events for which there is objective evidence but
whose effects are not yet evident. The collective assessment takes
account of data from the loan portfolio (such as credit quality,
levels of arrears, credit utilisation, loan to collateral ratios
etc.), concentrations of risks and economic data.
The impairment loss on loans and advances is disclosed in more
detail under note 8 and note 17.3 below.
2.4.7 Fair value adjustments of unquoted investments
Subject to contractual provisions, the fair value of unquoted
investments is established with reference to the net asset value
and the earnings capacity of the business. Valuations on the
earnings basis is calculated as the sustainable earnings for the
entity multiplied by discounted Price Earnings Ratio of a quoted
Company with similar operations in a similar environment.
The valuation of investment in unlisted companies has been
carried in the statement of financial position of the Bank based on
the audited net asset values of the investee companies.
2.4.8 Non-current assets held for sale
Non-current assets or disposal groups are held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use. These are measured
at the lower of the carrying amount and fair value less costs to
sell and they are not depreciated. If the non-current asset or
disposal group is scoped out of IFRS 5: Non-current assets held for
sale and discontinued operations then the measurement principles of
the relevant standard apply.
Non-current assets were valued by independent professional
valuers, PMA Real Estate (Private) Limited. All non-current assets
held for sale are measured at their fair values.
2.4.9 Going concern
The Directors have assessed the ability of the Group to continue
operating as a going concern and believe that the preparation of
these consolidated financial statements on a going concern basis is
still appropriate.
3. ACCOUNTING POLICIES
The selected principal accounting policies applied in the
preparation of these condensed financial statements are set out in
Note 2 and below. These policies have been consistently applied
unless otherwise stated.
3.1 Financial instruments
3.1.1 Classification
Financial assets and liabilities at fair value through profit
and loss include financial assets and liabilities held for trading
i.e. those that the Group principally holds for the purpose of
short-term profit taking as well as those that were, upon initial
recognition, designated by the entity as financial assets or
liabilities at fair value through profit and loss.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market other than those classified as held-for-trading and the
Group upon initial recognition designates as at fair value through
profit or loss and those the Group upon initial recognition
designates as available-for-sale.
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturity that the
Group has the positive intention and ability to hold to
maturity.
Financial assets available-for-sale are non-derivative financial
assets that are designated as available-for- sale or are not
classified as loans and receivables, held-to-maturity investments
or financial assets at fair value through profit or loss.
3.1.2 Recognition
The Group recognises financial assets at fair value through
profit and loss and available for sale assets on the date it
commits to purchase the assets. From this date any gains and losses
arising from changes in fair value of the assets are recognised in
the income statement and other comprehensive income
respectively.
Held-to-maturity investments and loans and receivables are
recognised at cost which is the fair value of the consideration
given on the day that they are transferred to the Group.
3.1.3 Measurement
Financial assets and liabilities are measured initially at fair
value. Subsequent to initial recognition, financial assets and
liabilities measured at fair value through profit and loss and
available-for-sale financial assets are measured at fair value,
except that any instrument that does not have a quoted market price
in an active market and whose fair value cannot be reliably
measured is stated at cost, less impairment losses.
Held-to-maturity investments and loans and receivables are
measured at amortised cost less impairment losses. Amortised cost
is calculated using the effective interest rate method. Premiums
and discounts, including initial transaction costs, are included in
the carrying amount of the related instrument and amortised based
on the effective interest rate of the instrument.
3.1.4 Fair value measurement principles
The fair value of financial instruments is based on their quoted
market price at the reporting date without any deduction for
transaction costs. If a quoted market price is not available, the
fair value of the instrument is estimated using pricing models or
discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future
cash flows are based on management's best estimates and the
discount rate is a market related rate at the reporting date for an
instrument with similar terms and conditions. Where pricing models
are used, inputs are based on market related measures at the
reporting date.
3.2 Investment properties
Investment properties are stated at fair value. Gains and losses
arising from a change in fair value of investment properties are
recognized in the income statement. The fair value is determined at
the end of each reporting period, by a registered professional
valuer.
3.3 Share - based payments
The Group issues share options to certain employees in terms of
the Employee Share Option Scheme. Share options are measured at
fair value at the date of grant. The fair value determined at the
date of grant of the options is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of shares
that will eventually vest. Fair value is measured using the
Black-Scholes option pricing model. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and other
behavioural considerations.
3.4 Property and equipment
International Accounting Standard 16 (IAS 16) stipulates that
the residual value and the useful life of an asset must be reviewed
at least each financial year-end. If the residual value of an asset
increases by an amount equal to or greater than the asset's
carrying amount, then the depreciation of the asset ceases.
Depreciation will resume only when the residual value decreases to
an amount below the asset's carrying amount.
3.5 Intangible assets
Intangible assets are initially recognised at cost.
Subsequently, the assets are measured at cost less accumulated
armotisation and any accumulated impairment losses.
3.6 Taxation
Income tax
Income tax expenses comprise current, AIDS levy and deferred
tax. It is recognised in profit or loss except to the extent that
it relates to items recognised directly in equity or in other
comprehensive income.
Current
Current tax comprises expected tax payable or receivable on the
taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. It is measured
using rates enacted or substantively enacted at the reporting date
in the country where the Bank operates and generates taxable income
and any adjustment to tax payable in respect of previous years.
Current income tax assets and liabilities for the current period
are measured at the amount expected to be recovered from or paid to
the taxation authorities.
Deferred taxation
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries
to the extent that it is probable that they will not reverse in the
foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow the manner in which the Bank expects, at the
reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Bank has not rebutted this
presumption.
Deferred tax (continued)
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to taxes levied by the same tax authority
on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised
simultaneously.
Additional taxes that arise from the distribution of dividends
by the Bank are recognised at the same time as the liability to pay
the related dividend is recognised. These amounts are generally
recognised in profit or loss because they generally relate to
income arising from transactions that were originally recognised in
profit or loss.
3.7 Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances, and
short term highly liquid investments with maturities of three
months or less when purchased. Cash and cash equivalents are
measured at amortised cost in the statement of financial
position.
3.8 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Bank and the revenue can be
reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received
or receivable, taking into account contractually defined terms of
payment and excluding taxes or duty. The specific recognition
criteria described below must also be met before revenue is
recognised.
3.9 Interest income
For all financial instruments measured amortised cost and
financial instruments designated at fair value through profit or
loss, interest income or expense is recorded using the effective
interest rate (EIR), which is the rate that exactly discounts the
estimated future cash payments or receipts through the expected
life of the financial instrument or a shorter period, where
appropriate, to the net carrying amount of the financial asset or
liability.
Interest income includes income arising out of the banking
activities of lending and investing.
3.10 Interest expense
Interest expense arises from deposit taking. The expense is
recognised in profit or loss as it accrues, taking into account the
effective interest cost of the liability.
3.11 Shareholders' funds
Shareholders' funds refers to the investment made by the
shareholders to the Group and it consists of share capital, share
premium, share options reserve, retained earnings, redeemable
ordinary shares and subordinated term loans.
4. INTEREST INCOME
31 December 31 December
2014 2013
US$ US$
-------------- ---------------
Loans and advances to banks 1 908 075 2 252 247
-------------- ---------------
Loans and advances to customers 28 879 078 30 615 147
-------------- ---------------
Investment securities 210 321 251 949
-------------- ---------------
Other 74 987 62 361
-------------- ---------------
------------- --------------
-------------- ---------------
31 072 461 33 181 704
-------------- ---------------
========= =========
-------------- ---------------
5. FEE AND COMMISSION INCOME, NON-INTEREST INCOME AND OTHER COMPREHENSIVE INCOME
5.1 FEE AND COMMISSION income
31December 31 December
2014 2013
US$ US$
----------------------- ------------------------
Retail banking customer fees 12 168 355 12 342 153
----------------------- ------------------------
Corporate banking credit related fees 227 064 358 712
----------------------- ------------------------
Financial guarantee income 140 520 208 203
----------------------- ------------------------
International banking commissions 1 755 909 1 756 199
----------------------- ------------------------
Other 829 688 8 567
----------------------- ------------------------
--------------- -------------
----------------------- ------------------------
15 121 536 14 673 834
----------------------- ------------------------
========= =========
----------------------- ------------------------
5.2 non-interest income
31 December 31 December
2014 2013
US$ US$
----------------------- ---------------
Quoted and other investments fair value
adjustments (13 372) 9 892
----------------------- ---------------
Fair value adjustment on non-current assets
held for sale 3 000 21 000
----------------------- ---------------
Fair value adjustment on investment properties 37 800 595 450
----------------------- ---------------
Profit on disposal of non-current assets
held for sale - 1 500
----------------------- ---------------
Profit on disposal of property and equipment 6 274 30 022
----------------------- ---------------
Other net operating income 28 323 119 856
----------------------- ---------------
-------------- -------------
----------------------- ---------------
62 025 777 720
----------------------- ---------------
======== =======
----------------------- ---------------
5.3 OTHER COMPREHENSIVE INCOME
31 December 31 December
2014 2013
US$ US$
------------ ---------------
Gross revaluation adjustment on land and 13 710 -
buildings
------------ ---------------
Tax effect (3 530) -
------------ ---------------
----------- --------------
------------ ---------------
Net revaluation adjustment 10 180 -
------------ ---------------
======= ========
------------ ---------------
6. Operating EXPENDITURE
31 December 31 December
2014 2013
US$ US$
--------------- ---------------
The operating profit is after charging
the following:-
--------------- ---------------
Administration costs 11 798 556 11 496 337
--------------- ---------------
Audit fees:
--------------- ---------------
- Current year 74 014 77 337
--------------- ---------------
- Prior year 140 433 128 938
--------------- ---------------
Staff costs -salaries, allowances and
related costs 12 696 085 11 708 375
--------------- ---------------
-termination benefits 1 085 698 -
--------------- ---------------
Amortisation of intangible assets 337 118 130 716
--------------- ---------------
Depreciation 1 899 047 1 695 856
--------------- ---------------
Impairment reversal on land and buildings (46 900) (4 803)
--------------- ---------------
-------------- --------------
--------------- ---------------
27 984 051 25 232 756
--------------- ---------------
========= ========
--------------- ---------------
7. taxation
31 December 31 December
2014 2013
Income tax expense/ (credit) US$ US$
------------- --------------
Current tax 703 432 533 722
------------- --------------
AIDS levy 21 103 14 609
------------- --------------
Deferred tax 35 420 (1 442 947)
------------- --------------
Capital gains tax 8 500 264 574
------------- --------------
------------ -------------
------------- --------------
768 455 (630 042)
------------- --------------
======= ========
------------- --------------
8. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment losses are applied to write off loans and advances in
part or in whole when they are considered partly or wholly
irrecoverable. The aggregate impairment losses which are made
during the year are dealt with as per paragraph 8.3.
8.1 Specific provisions
Specific provisions are made where the repayment of identified
loans and advances is in doubt and reflect estimates of the loss.
Loans and advances are written off against specific provisions once
the probability of recovering any significant amounts becomes
remote.
8.2 Portfolio provisions
The portfolio provision relates to the inherent risk of losses
which, although not separately identified, is known to be present
in any loan portfolio.
8.3 Regulatory Guidelines and International Financial Reporting Standards Requirements
The Banking Regulations 2000 gives guidance on provisioning for
doubtful debts and stipulates certain minimum percentages to be
applied to the respective categories of the loan book.
International Accounting Standard 39, Financial Instruments
Recognition and Measurement (IAS 39), prescribes the provisioning
for impairment losses based on the actual loan losses incurred in
the past applied to the sectoral analysis of book debts and the
discounting of expected cash flows on specific problem
accounts.
The two prescriptions are likely to give different results. The
Group has taken the view that where the IAS 39 charge is less than
the amount provided for in the Banking Regulations, the difference
is recognized directly in equity as a transfer from retained
earnings to a regulatory reserve and where it is more, the full
amount will be charged to the profit or loss.
8.4 Non-performing loans
Interest on loans and advances is accrued to income until such
time as reasonable doubt exists about its collectability,
thereafter and until all or part of the loan is written off,
interest continues to accrue on customers' accounts, but is not
included in income. Such suspended interest is deducted from loans
and advances in the statement of financial position. This policy
meets the requirements of the Banking Regulations 2000 issued by
the RBZ.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
for the year attributable to ordinary equity holders of NMBZ
Holdings Limited by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary equity holders of NMBZ Holdings Limited
adjusted for the after tax effect of: (a) any dividends or other
items related to dilutive potential ordinary shares deducted in
arriving at profit or loss attributable to ordinary equity holders
of the parent entity; (b) any interest recognised in the period
related to dilute potential ordinary shares; (c) any other changes
in income or expense that would result from the conversion of the
dilutive potential ordinary shares; by the weighted average number
of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares; that would be issued on the
conversion of all the dilutive potential ordinary shares into
ordinary shares.
9.1 Earnings/ (loss)
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Attributable earnings/(loss) 1 667 247 (3 321 823)
----------------- -----------------
9.2 Number of shares
9.2.1 Basic earnings per share
31 December 2014 31 December 2013
Weighted average number of ordinary
shares for
basic earnings per share 384 427 351 332 569 065
----------------- -----------------
9.2.2 Diluted earnings per share
31 December 2014 31 December 2013
Number of shares at beginning
of period 384 427 351 280 710 729
---------------------------------- --------------------------------
Shares issued - 103 716 622
---------------------------------- --------------------------------
Redeemable ordinary shares (note
11) 103 714 287
Shares issued on consolidation 2 385
---------------------------------- --------------------------------
Effect of dilution:
---------------------------------- --------------------------------
Share options granted but not
issued 4 128 434 907 200
---------------------------------- --------------------------------
Share options approved but not
granted 23 942 639 167 087
---------------------------------- --------------------------------
--------------- ----------------
---------------------------------- --------------------------------
412 498 424 385 501 638
---------------------------------- --------------------------------
========== ===========
---------------------------------- --------------------------------
9.3 Earnings/(loss) per share (US cents)
31 December 2014 31 December 2013
Basic earnings/(loss) per share 0.43 (1.00)
----------------- -----------------
Diluted earnings/(loss) per share 0.40 (0.86)
----------------- -----------------
10. SHARE CAPITAL
10.1 Authorised
31 December 31 December 31 December 31 December
2014 2013 2014 2013
Shares million Shares million US$ US$
--------------- --------------- ------------ -------------
Ordinary shares of US$0.00028
each 600 600 168 000 168 000
--------------- --------------- ------------ -------------
==== ==== ===== =====
--------------- --------------- ------------ -------------
10.2 Issued and fully paid
10.2.1 Ordinary shares
31 December 31 December 31 December 31 December
2014 2013 2014 2013
Shares Shares
million million US$ US$
------------ ------------ ------------ ------------
Ordinary shares 281 281 78 598 78 598
------------ ------------ ------------ ------------
--------- --------- --------- ---------
------------ ------------ ------------ ------------
281 281 78 598 78 598
------------ ------------ ------------ ------------
====== ====== ===== =====
------------ ------------ ------------ ------------
10.2.2 Redeemable ordinary shares
31 December 31 December 31 December 31 December
2014 2013 2014 2013
Shares Shares million
million US$ US$
------------ --------------- ------------ ------------
At 1 January 104 - 29 040 -
------------ --------------- ------------ ------------
Shares issued (note
11) - 104 - 29 040
------------ --------------- ------------ ------------
-------- -------- ---------- ----------
------------ --------------- ------------ ------------
104 104 29 040 29 040
------------ --------------- ------------ ------------
===== ===== ====== ======
------------ --------------- ------------ ------------
Of the unissued ordinary shares of 215 million shares (2013- 215
million), options which may be granted in terms of the NMBZ 2012
Employee Share Option Scheme (ESOS) amounted to 28 071 073 and as
at 31 December 2014, 4 128 434 share options had been issued.
Subject to the provisions of section 183 of the Companies Act
(Chapter 24:03), the unissued shares are under the control of the
directors.
11 REDEEMABLE ORDINARY SHARES
31 December 2014 31 December 2013
Balance at 1 January 14 335 253 -
----------------- -----------------
Transfer from share capital - 29 040
----------------- -----------------
Transfer from share premium - 14 306 213
----------------- -----------------
-------------- --------------
----------------- -----------------
14 335 253 14 335 253
----------------- -----------------
======== =========
----------------- -----------------
11. REDEEMABLE ORDINARY SHARES
On 30 June 2013 the Company received US$14 831 145 capital from
Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden
N.V. (FMO), Norwegian Investment Fund for Developing Countries
(Norfund) and AfricInvest Financial Sector Holdings (AfricInvest)
who were allocated 34 571 429 shares each (total of 103 714 287)
for individually investing US$4 943 715. This amount, net of share
issue expenses, was used to recapitalise the Bank in order to
contribute towards the minimum capital requirements set by the
Reserve Bank of Zimbabwe of US$100 million by 31 December 2020.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back
agreement with Norfund, FMO and AfricInvest, where these three
strategic investors have a right on their own discretion at any
time after the 5(th) anniversary but before the 9(th) anniversary
of its first subscription date, to request NMBZ to buy back all or
part of its NMBZ shares at a price to be determined using the
agreed terms as entailed in the share buy-back agreement. It is a
condition precedent that at any point when the share buy-back is
being considered, the proceeds used to finance the buy-back should
come from the distributable reserves which are over and above the
minimum regulatory capital requirements. Further, no buy-back
option can be exercised by any investor after the 9(th) anniversary
of the effective date.
The share buy-back agreement creates a potential obligation for
NMBZ Holdings Limited to purchase its own instruments. Thus shares
issued gave rise to a potential financial liability and are
classified as redeemable ordinary shares.
12. SUBORDINATED TERM LOAN
31 December 2014 31 December
2013
US$ US$
----------------- ----------------
At 1 January 1 485 890 -
----------------- ----------------
Loan issued - 1 400 000
----------------- ----------------
Interest capitalised 140 487 85 890
----------------- ----------------
Interest paid (218 413) -
----------------- ----------------
-------------- ---------------
----------------- ----------------
1 407 964 1 485 890
----------------- ----------------
========= =========
----------------- ----------------
In 2013, the Bank received a subordinated term loan amounting to
US$1.4 million from a Development Financial Institution which
attracts an interest rate of LIBOR plus 10% and has a seven year
maturity date from the first disbursement date.
The above liability would, in the event of the winding up of the
issuer, be subordinated to the claims of depositors and all other
creditors of the issuer. The Group has not had any defaults on the
principal and interest with respect to this subordinated loan
during the year ended 31 December 2014. However, there was a breach
regarding the cost to income ratio that stood at 78.9%, instead of
the 70% limit, as at 31 December 2014.
13. DepositS and other accounts
13.1 Deposits and other accounts
31 December 2014 31 December
2013
US$ US$
----------------- ----------------
Deposits from banks and other financial
institutions** 59 739 033 52 338 708
----------------- ----------------
Current and deposit accounts 175 623 644 158 876 358
----------------- ----------------
---------------- ---------------
----------------- ----------------
Total deposits* 235 362 677 211 215 066
----------------- ----------------
Trade and other payables* 5 638 741 4 826 643
----------------- ----------------
---------------- ---------------
----------------- ----------------
241 001 418 216 041 709
----------------- ----------------
========== =========
----------------- ----------------
*Deposits and other payables approximate the related carrying
amount due to their short term nature.
**Included in deposits from banks and other financial
institutions is a loan of US$3 915 269 due to Nederlandse
Financierings-Maatschappij Voor Ontiwikkelingslanden N.V. (FMO).
The Group has not had any defaults on the principal and interest
with respect to this loan during the year ended 31 December 2014.
There was a breach on the cost to income ratio that stood at 78.9%
instead of the 70% limit as at 31 December 2014. The Bank requested
for a waiver on the non-compliance ratio as at 31 December 2014 and
the waiver was granted on 6 March 2015.
13.2 Maturity analysis
31 December 2014 31 December
2013
US$ US$
------------------ ----------------
Less than 1 month 172 324 494 160 919 521
------------------ ----------------
1 to 3 months 32 017 300 28 819 465
------------------ ----------------
3 to 6 months 4 887 372 2 163 310
------------------ ----------------
6 months to 1 year 8 890 799 1 697 507
------------------ ----------------
1 to 5 years 17 242 712 17 615 263
------------------ ----------------
Over 5 years - -
------------------ ----------------
----------------- ---------------
------------------ ----------------
235 362 677 211 215 066
------------------ ----------------
=========== ==========
------------------ ----------------
13.3 Sectoral analysis of deposits
31 December 31 December
2014 2013
US$ % US$ %
------------------ --------- ---------------- --------
Agriculture 4 706 661 2 9 731 279 4
------------------ --------- ---------------- --------
Banks and other financial
institutions 59 739 033 25 52 338 708 25
------------------ --------- ---------------- --------
Distribution 21 893 891 9 21 091 778 10
------------------ --------- ---------------- --------
Individuals 31 127 616 13 28 425 938 13
------------------ --------- ---------------- --------
Manufacturing 28 354 313 12 26 723 790 13
------------------ --------- ---------------- --------
Mining companies 4 125 974 2 3 035 997 1
------------------ --------- ---------------- --------
Municipalities and parastatals 10 367 121 5 10 509 776 5
------------------ --------- ---------------- --------
Other deposits 30 124 932 13 20 727 019 10
------------------ --------- ---------------- --------
Services 38 488 209 16 32 933 385 16
------------------ --------- ---------------- --------
Transport and telecommunications
companies 6 434 927 3 5 697 396 3
------------------ --------- ---------------- --------
----------------- -------- --------------- -------
------------------ --------- ---------------- --------
235 362 677 100 211 215 066 100
------------------ --------- ---------------- --------
=========== ====== ========== =====
------------------ --------- ---------------- --------
14. FINANCIAL INSTRUMENTS
14.1 Investment securities held to maturity
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Government and public sector
Securities - RBZ Bonds 3 874 525 4 685 471
----------------- -----------------
======== ========
----------------- -----------------
The RBZ Bonds are valued at cost as there is currently no market
information to facilitate application of fair value principles.
14.2 Maturity analysis of investment securities held to maturity
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Less than 1 month - -
----------------- -----------------
1 to 3 months - -
----------------- -----------------
3 to 6 months 2 582 519 2 424 461
----------------- -----------------
6 months to 1 year 1 292 006 969 004
----------------- -----------------
1 year to 5 years - 1 292 006
----------------- -----------------
Over 5 years - -
----------------- -----------------
-------------- -------------
----------------- -----------------
3 874 525 4 685 471
----------------- -----------------
========= ========
----------------- -----------------
14.3 Fair values of financial instruments
The fair values of financial assets and financial liabilities
that are traded in active markets are based on quoted market prices
or dealer price quotations. For all other financial instruments,
the Group determines fair values using other valuation
techniques.
For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity,
concentration, uncertainty of market factors, pricing assumptions
and other risks affecting the specific instrument.
Valuation models
The Group measures fair values using the following fair value
hierarchy, which reflects the significance of the inputs used in
making the measurements.
-- Level 1: inputs that are quoted market prices (unadjusted) in
active markets for identical instruments.
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes
instruments valued using: quoted market prices in active markets
for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or
other valuation techniques in which all significant inputs are
directly or indirectly observable from market data.
-- Level 3: inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the
instruments.
The objective of valuation techniques is to arrive at a fair
value measurement that reflects the price that would be received to
sell the asset or paid to transfer the liability in an orderly
transaction between market participants at the measurement
date.
14.3.1 Financial instruments measured at fair value - fair value
hierarchy
31 Dec 2014 Level 1 Level 2 Level 3
US$ US$ US$ US$
--------------- -------------- ------------ -----------------
Trade investments 81 390 - - 81 390
--------------- -------------- ------------ -----------------
Quoted investments 127 291 127 291 - -
--------------- -------------- ------------ -----------------
-------------- ------------- ----------- ----------------
--------------- -------------- ------------ -----------------
208 681 127 291 - 81 390
--------------- -------------- ------------ -----------------
======== ======== ======= ===========
--------------- -------------- ------------ -----------------
During the reporting period ended 31 December 2014, there were
no transfers between Level 1 and Level 2 fair value measurements,
and no transfers into and out of Level 3 fair value measurements.
The trade investments were valued using the net asset value
method.
31 Dec 2014 Level 1 Level 2 Level 3
US$ US$ US$ US$
--------------- -------------- ------------ -----------------
Trade investments 190 148 - - 190 148
--------------- -------------- ------------ -----------------
Quoted investments 145 850 145 850 - -
--------------- -------------- ------------ -----------------
-------------- ------------- ----------- ----------------
--------------- -------------- ------------ -----------------
335 998 145 850 - 190 148
--------------- -------------- ------------ -----------------
======== ======== ======= =========
--------------- -------------- ------------ -----------------
During the reporting period ended 31 December 2013, there were
no transfers between Level 1 and Level 2 fair value measurements,
and no transfers into and out of Level 3 fair value measurements.
The trade investments were valued using the net asset value
method.
Level 3 fair value measurements
Reconciliation
31 December 2014
Trade investments
US$
------------------
Balances at 1 January 190 148
------------------
Total gain in profit or loss 5 188
------------------
Disposal (113 946)
------------------
-------------
------------------
Balance at 31 December 81 390
------------------
========
------------------
31 December 2013
Trade investments
US$
------------------
Balances at 1 January 195 790
------------------
Total loss in profit or loss (5 642)
------------------
-------------
------------------
Balance at 31 December 190 148
------------------
========
------------------
14.3.2 Financial instruments not measured at fair value
The below table sets out the fair values of financial
instruments not measured at fair value and analyses them by the
level in the fair value hierarchy into which each fair value
measurement is categorised.
31 December 2014
Total carrying
Level Level 2 Level 3 amount
------------ ------------------- --------------- ------------------
Assets US$ US$ US$ US$
------------ ------------------- --------------- ------------------
Cash and cash equivalents - 54 750 561 - 54 750 561
------------ ------------------- --------------- ------------------
Loans, advances
and other
accounts - 203 363 052 - 203 363 052
------------ ------------------- --------------- ------------------
Investment in debentures - 4 614 047 - 4 614 047
------------ ------------------- --------------- ------------------
Investment securities
held
to maturity - - 3 874 525 3 874 525
------------ ------------------- --------------- ------------------
---------- ----------------- -------------- -----------------
------------ ------------------- --------------- ------------------
- 262 727 660 3 874 525 266 602 185
---------------------------------------- ------------------- --------------- ------------------
====== ========== ======== ==========
------------ ------------------- --------------- ------------------
Liabilities
------------ ------------------- --------------- ------------------
Deposits and other
liabilities - 241 001 418 - 241 001 418
------------ ------------------- --------------- ------------------
---------- ------------------ ------------ -----------------
------------ ------------------- --------------- ------------------
- 241 001 418 - 241 001 418
---------------------------------------- ------------------- --------------- ------------------
====== =========== ======= ==========
---------------------------------------- ------------------- --------------- ------------------
14.3.2 Financial instruments not measured at fair value
31 December 2013
Total carrying
Level Level 2 Level 3 amount
Assets US$ US$ US$ US$
------------ ------------------- --------------- ------------------
Cash and cash equivalents - 48 871 983 - 48 871 983
------------ ------------------- --------------- ------------------
Loans, advances
and other
accounts - 181 316 271 - 181 316 271
------------ ------------------- --------------- ------------------
Investment in debentures - 3 984 723 - 3 984 723
------------ ------------------- --------------- ------------------
Investment securities
held
to maturity - - 4 685 471 4 685 471
------------ ------------------- --------------- ------------------
---------- ----------------- -------------- -----------------
------------ ------------------- --------------- ------------------
Total - 234 172 977 4 685 471 238 858 448
------------ ------------------- --------------- ------------------
====== ========== ======== ==========
------------ ------------------- --------------- ------------------
Liabilities
------------ ------------------- --------------- ------------------
Deposits and other
liabilities - 216 041 709 - 216 041 709
------------ ------------------- --------------- ------------------
---------- ------------------ ------------ -----------------
------------ ------------------- --------------- ------------------
- 216 041 709 - 216 041 709
---------------------------------------- ------------------- --------------- ------------------
====== =========== ======= ==========
---------------------------------------- ------------------- --------------- ------------------
14.3.2 Financial instruments not measured at fair value
The fair value of the financial assets and liabilities are
included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a
forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:
-- The fair values of cash and cash equivalents, advances and
other assets and deposits and other liabilities carrying amounts
approximate their fair values largely due to the short - term
maturities of these instruments.
-- Fair value of financial assets and liabilities at fair value
through profit or loss is derived from quoted market prices in
active markets. If quoted market prices are not available the fair
value is estimated using pricing models or discounted cash flow
techniques.
15. CASH AND CASH EQUIVALENTS
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Balances with the Central Bank 11 408 222 13 480 628
----------------- -----------------
Current, nostro accounts and cash 15 842 339 31 391 355
----------------- -----------------
Interbank placements 27 500 000 4 000 000
----------------- -----------------
--------------- -------------
----------------- -----------------
54 750 561 48 871 983
----------------- -----------------
========== ========
----------------- -----------------
16. INVESTMENT IN DEBENTURES
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Debentures 4 787 074 4 787 074
----------------- -----------------
Allowance for impairment loss (173 027) (802 351)
----------------- -----------------
-------------- -------------
----------------- -----------------
4 614 047 3 984 723
----------------- -----------------
========= ========
----------------- -----------------
The Bank has convertible debentures with a carrying amount of
US$4 787 074 with a maturity of 5 years from inception. The
debentures are at an interest of 10% per annum. The Bank has an
option to convert the debentures to equity or redeem the debentures
at par on or before the maturity date of 9 March 2018.
17. LOANS, ADVANCES AND OTHER ACCOUNTS
17.1 Total loans, advances and other accounts
17.1.1 Advances
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Fixed term loans 21 889 534 21 711 476
----------------- -----------------
Local loans and overdrafts 182 413 594 159 806 508
----------------- -----------------
--------------- --------------
----------------- -----------------
204 303 128 181 517 984
----------------- -----------------
Reclassification to debentures (4 614 047) (3 984 723)
----------------- -----------------
Other accounts 3 673 971 3 783 010
----------------- -----------------
--------------- ---------------
----------------- -----------------
203 363 052 181 316 271
----------------- -----------------
========= ==========
----------------- -----------------
17.1.2 Maturity analysis
31 December 2014 31 December
2013
US$ US$
----------------- -----------------
Less than 1 month 131 810 553 118 711 869
----------------- -----------------
1 to 3 months 24 022 035 18 082 940
----------------- -----------------
3 to 6 months 1 747 453 3 826 276
----------------- -----------------
6 months to 1 year 3 881 236 2 869 815
----------------- -----------------
1 to 5 years 56 002 042 51 286 898
----------------- -----------------
Over 5 years - -
----------------- -----------------
--------------- --------------
----------------- -----------------
Total advances 217 463 319 194 777 798
----------------- -----------------
Allowances for impairment losses
on
loans and advances (Note 17.3) (10 790 192) (11 685 201)
----------------- -----------------
Suspended interest (2 369 999) (1 574 613)
----------------- -----------------
--------------- ----------------
----------------- -----------------
204 303 128 181 517 984
----------------- -----------------
Reclassification to debentures (4 614 047) (3 984 723)
----------------- -----------------
Other accounts 3 673 971 3 783 010
----------------- -----------------
--------------- --------------
----------------- -----------------
203 363 052 181 316 271
----------------- -----------------
========= ==========
----------------- -----------------
17.2 Sectoral analysis of utilizations
31 December 2014 % 31 December %
2013
Agriculture and horticulture 17 523 451 8 11 208 448 6
------------------ --------- ---------------- ---------
Conglomerates 10 030 909 5 9 190 491 4
------------------ --------- ---------------- ---------
Distribution 55 359 765 26 46 458 831 24
------------------ --------- ---------------- ---------
Food & beverages 442 295 - 480 502 -
------------------ --------- ---------------- ---------
Individuals 58 353 526 27 46 499 825 24
------------------ --------- ---------------- ---------
Manufacturing 29 100 980 13 36 880 202 19
------------------ --------- ---------------- ---------
Mining 5 044 850 2 1 584 085 1
------------------ --------- ---------------- ---------
Services 41 607 543 19 42 475 414 22
------------------ --------- ---------------- ---------
----------------- -------- --------------- --------
------------------ --------- ---------------- ---------
217 463 319 100 194 777 798 100
------------------ --------- ---------------- ---------
========== ===== ========= =====
------------------ --------- ---------------- ---------
The material concentration of loans and advances is with
individuals at 27% (2013 - 24%) and distribution at 26% (2013 -
24%).
17.3 Allowance for impairment losses on loans, advances and
debentures
31 December 2014 31 December 2013
Specific Portfolio Total Specific Portfolio Total
---------------- ------------- -------------- ------------- ---------- ---------------
US$ US$ US$ US$ US$ US$
---------------- ------------- -------------- ------------- ---------- ---------------
At 1 January 11 427 356 257 845 11 685 201 7 164 064 105 735 7 269 799
---------------- ------------- -------------- ------------- ---------- ---------------
Charge against 16 645
profits 5 112 012 (94 650) 5 017 362 16 493 700 152 110 810
---------------- ------------- -------------- ------------- ---------- ---------------
Bad debts written (12 230 (12230
off (5 912 371) - (5 912 371) 408) - 408)
---------------- ------------- -------------- ------------- ---------- ---------------
--------------- ------------ ------------- ------------ --------- --------------
---------------- ------------- -------------- ------------- ---------- ---------------
11 685
At 31 December 10 626 997 163 195 10 790 192 11 427 356 257 845 201
---------------- ------------- -------------- ------------- ---------- ---------------
========== ======== ========= ======== ====== ========
---------------- ------------- -------------- ------------- ---------- ---------------
17.4 Non-performing loans, advances and debentures
31 December 31 December
2014 2013
US$ US$
--------------- --------------------
Total non-performing loans and advances 38 581 699 38 730 878
--------------- --------------------
Allowances for impairment loss on loans
and advances (10 626 997) (11 427 356)
--------------- --------------------
Allowance for impairment losses on debentures
(Note 16) 173 027 802 351
--------------- --------------------
Suspended interest (2 369 999) (1 574 613)
--------------- --------------------
-------------- -------------
--------------- --------------------
Residue 25 757 730 26 531 260
--------------- --------------------
========= ========
--------------- --------------------
The residue on these accounts represents recoverable portions
covered by realisable security, which includes guarantees,
cessation of debtors, mortgages over residential properties,
equities and promissory notes all fair valued at US$23 465 162
(2013 - US$27 308 066).
17.5 Loans to related parties
31 December 2014 31 December 2013
US$ US$
----------------- -------------------------
Non-executive directors - 7 000
----------------- -------------------------
Executive directors 51 610 723 140
----------------- -------------------------
Officers 3 316 060 2 712 934
----------------- -------------------------
Directors' companies - 4 727 129
----------------- -------------------------
Officers' companies 10 169 26 320
----------------- -------------------------
-------------- -------------
----------------- -------------------------
3 377 839 8 196 523
----------------- -------------------------
Fair value adjustments (180 394) (198 931)
----------------- -------------------------
-------------- ------------
----------------- -------------------------
3 197 445 7 997 592
----------------- -------------------------
========= ========
----------------- -------------------------
18. NON-CURRENT ASSETS HELD FOR SALE
31 December 2014 31 December 2013
US$ US$
----------------- -------------------------
At 1 January 2 303 300 2 225 300
----------------- -------------------------
Transfer from investment property - 95 000
----------------- -------------------------
Disposals (39 000) (38 000)
----------------- -------------------------
Fair value adjustment 3 000 21 000
----------------- -------------------------
-------------- -------------
----------------- -------------------------
2 267 300 2 303 300
----------------- -------------------------
========= ========
----------------- -------------------------
The Group is in possession of land with a fair value of US$2 225
300 at year end. The Group entered into a sale agreement for a
portion of the land in 2012, however the execution and finalisation
of the sale under this contract has been pending since then, due to
unexpected delays in obtaining certain regulatory approvals. The
disposal process is now expected to be completed within the next
twelve months after the reporting date. The disposal will improve
the Group's cash flows. The fair value adjustment on recognition as
non-current asset held for sale is included under non-interest
income (note 5).
19 INTANGIBLE ASSETS
Work in Computer
Progress Software Total
------------- ------------- ---------------
US$ US$ US$
------------- ------------- ---------------
Cost
------------- ------------- ---------------
Balance at 1 January 2013 - - -
------------- ------------- ---------------
Reclassification from property, plant
and equipment - 740 615 740 615
------------- ------------- ---------------
Acquisitions - 1 170 868 1 170 868
------------- ------------- ---------------
------------ ------------ --------------
------------- ------------- ---------------
Balance at 1January 2014 - 1 911 483 1 911 483
------------- ------------- ---------------
Acquisitions 208 673 414 809 623 482
------------- ------------- ---------------
------------ ------------ -------------
------------- ------------- ---------------
Balance at 31 December 2014 208 673 2 326 292 2 534 965
------------- ------------- ---------------
----------- ------------ ------------
------------- ------------- ---------------
Accumulated amortisation and impairment
------------- ------------- ---------------
Balance at 1 January 2013 - - -
------------- ------------- ---------------
Reclassification from property,plant
and equipment - 116 398 116 398
------------- ------------- ---------------
Amortisation for the year - 130 716 130 716
------------- ------------- ---------------
----------- ------------ -----------
------------- ------------- ---------------
Balance at 1 January 2014 - 247 114 247 114
------------- ------------- ---------------
Amortisation for the year - 337 118 337 118
------------- ------------- ---------------
--------- ----------- ------------
------------- ------------- ---------------
Balance at 31 December 2014 - 584 232 584 232
------------- ------------- ---------------
======= ----------- ------------
------------- ------------- ---------------
Carrying amount
------------- ------------- ---------------
At 31 December 2014 208 673 1 742 060 1 950 733
------------- ------------- ---------------
======== ======= =========
------------- ------------- ---------------
At 1 January 2014 - 1 664 369 1 664 369
------------- ------------- ---------------
======== ======== =========
------------- ------------- ---------------
At 1 January 2013 - - -
------------- ------------- ---------------
======== ========= =========
------------- ------------- ---------------
20. PROPERTY AND EQUIPMENT
Capital work Computers Motor Vehicles Furniture Freehold land Total
in progress and equipment buildings
US$ US$ US$ US$ US$ US$
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Cost
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
At 1 January
2013 - 2 696 533 3 322 357 2 484 201 2 815 724 11 318 815
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Additions - 340 606 682 969 459 413 23 381 1 506 369
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Revaluation gain - - - - 4 803 4 803
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Disposals - (9 862) (2 198) (29 250) - (41 310)
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Reclassifications - (740 615) - - - (740 615)
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
--------------- --------------- ------------- ------------- ------------ --------------
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
At 1 January
2014 - 2 286 662 4 003 128 2 941 364 2 843 908 12 048 062
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Additions 101 375 319 048 392 366 179 287 - 992 076
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Revaluation gain - - - - 60 610 60 610
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Disposals - (4) (234 069) (3) - (234 076)
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
---------------- -------------- ------------- -------------- -------------- -------------
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
At 31 December
2013 101 375 2 605 706 4 161 425 3 093 648 2 904 518 12 866 672
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
---------------- -------------- -------------- -------------- ------------- --------------
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Accumulated
depreciaton
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
At 1 January
2013 - 846 183 985 396 1 254 054 45 723 3 131 356
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Charge for the
year - 308 164 910 994 435 589 41 109 1 695 856
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Disposals - (8 637) (1 966) (25 092) - (35 695)
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Transfer to
intangible
assets - (116 398) - - - (116 398)
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
------------- ------------- ----------- ----------- ---------- ------------
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
At 1 January
2014 - 1 029 312 1 894 424 1 664 551 86 832 4 675 119
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Charge for the
year - 356 749 1 030 894 456 604 54 800 1 899 047
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Transfer to
intangible - - - - - -
assets
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Disposals - (6) (52 754) (1) - (52 761)
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
--------------- --------------- --------------- --------------- ---------------- --------------
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
At 31 December
2014 - 1 386 055 2 872 564 2 121 154 141 632 6 521 405
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
--------------- ----------------- -------------- -------------- ---------------- -------------
----------------- ------------------ ---------------- ---------------- ----------------- ---------------
Carrying amount
At 31 December 2014 101 375 1 219 651 1 288 861 972 494 2 762 886 6 345 267
----------- ---------- ---------- ---------- ---------- ----------
========== ======== ======== ======== ======== =======
----------- ---------- ---------- ---------- ---------- ----------
At 1 January 2014 - 1 257 350 2 108 704 1 249 813 2 757 076 7 372 943
----------- ---------- ---------- ---------- ---------- ----------
========== ======== ======= ======== ======== ========
----------- ---------- ---------- ---------- ---------- ----------
At 1 January 2013 - 1 850 350 2 336 961 1 230 147 2 770 001 8 187 459
----------- ---------- ---------- ---------- ---------- ----------
========== ======== ======== ======== ======== ========
----------- ---------- ---------- ---------- ---------- ----------
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2014 on the
basis of valuations carried out by independent professional
valuers, PMA Real Estate (Private) Limited. The valuation which
conforms to International Valuation Standards, was in terms of the
policy as set out in the accounting policies section. All movable
assets are measured at their carrying amounts which are arrived at
by the application of a depreciation charge on their cost values
over the useful lives of the assets.
The valuation of land and buildings was arrived by applying
yield rates of 9.5% on rental levels of between US$5 - US$7 per
square metre.
The carrying cost less accumulated depreciation of the land and
buildings had revaluations not been performed would be US$3 343 677
as at 31 December 2014 (2013 -US$3 419 586).
Level 3
The fair value of immovable properties of US$2 762 886 has been
categorised under Level 3 in the fair value hierarchy based on the
inputs used for the valuation technique highlighted above.
The following table shows reconciliation between the opening and
closing balances for level fair values:
31 December 2014
US$
-----------------
At 1 January 2 757 076
-----------------
Additions -
-----------------
Revaluation gain 60 610
-----------------
Depreciation (54 800)
-----------------
---------------
-----------------
Balance at 31 December 2 762 886
-----------------
==========
-----------------
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of investment properties, as well as the
significant unobservable inputs used.
Valuation Technique Significant Unobservable Inter-relationship
Inputs between key unobservable
inputs and fair value
measurement
The estimated fair
* The Investment Method was applied on all income * Expected market rental growth (weighted average -1%) value would increase/(decrease)
producing properties. Market capitalisation rates if:
were derived from market sales evidence and were * expected market rental growth were higher/ (lower);
determined in consultation with other investors and * Void period (average 5 months after the end of each
property brokers in the market. lease)
* void periods were shorter /(longer);
* The Direct Comparison Method was applied on all * Occupancy rate (60-100%), weighted average (95%)
residential properties, after PMA Real Estate * the occupancy rates were higher/ (lower).
(Private) Limited identified various properties that
have been sold or which were on sale and situated in * Average market yield was (9%).
comparable areas using the Main Space Equivalent
(MSE) principle. The total (MSE) of comparable areas
was then used to determine the value per square metre
of (MSE).
----------------------------------------------------------- ----------------------------------------------------------
21. CAPITAL COMMITMENTS
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Capital expenditure contracted for 190 000 1 157 882
----------------- -----------------
Capital expenditure authorised but
not yet
contracted for 3 815 868 2 294 978
----------------- -----------------
--------------- -------------
----------------- -----------------
4 005 868 3 452 860
----------------- -----------------
======== ========
----------------- -----------------
The capital expenditure will be funded from the Group's own
resources.
22. CONTINGENT LIABILITIES
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Guarantees 6 246 933 869 778
----------------- -----------------
Commitments to lend 33 341 817 41 195 923
----------------- -----------------
Irrevocable Letters of Credit 900 000 1 550 000
----------------- -----------------
-------------- -------------
----------------- -----------------
40 488 750 43 615 701
----------------- -----------------
========= ========
----------------- -----------------
23. ASSETS UNDER CUSTODY
During the year, the Bank received Treasury Bills from the
Reserve Bank of Zimbabwe amounting to US$2 706 327 on behalf of its
clients in relation to the Tobacco Retention Scheme. These Treasury
Bills are currently held off balance sheet.
24. INVESTMENT IN ASSOCIATES
24.1 Investment in Altiwave Investments (Private) Limited
The Bank has a 25.5% interest in Altiwave Investments (Private)
Limited which is the holding company of Lobels (Private) Limited.
The investment arose from a Scheme of Arrangement agreed to by
Lobels Holdings (Private) Limited shareholders and creditors
(banks, suppliers and employees). Lobels Holdings (Private) Limited
is in the bread and confectionery business.
Altiwave Investments (Private) Limited is a company that is not
listed on any public exchange. The following table illustrates the
summarised unaudited financial information of the Bank's investment
in Altiwave (Private) Limited.
Associate's statement of financial position
31 December 2014 31December 2013
US$ US$
------------------------- ------------------------------------------------------
Current assets 15 974 685 7 867 222
------------------------- ------------------------------------------------------
Non-current assets 14 361 606 15 487 433
------------------------- ------------------------------------------------------
Current liabilities (12 993 517) (10 717 574)
------------------------- ------------------------------------------------------
Non-current liabilities (32 385 340) (30 857 571)
------------------------- ------------------------------------------------------
---------------- --------------
------------------------- ------------------------------------------------------
Equity (15 042 566) (18 220 490)
------------------------- ------------------------------------------------------
========== =========
------------------------- ------------------------------------------------------
Share of associate's equity
(25.5%) (3 835 854) 4 646 225
------------------------- ------------------------------------------------------
========== =======
------------------------- ------------------------------------------------------
Associate's revenue and profit
------------------------- ------------------------------------------------------
Revenue 87 153 020 64 753 584
------------------------- ------------------------------------------------------
========= ========
------------------------- ------------------------------------------------------
Profit 5 348 411 1 759 363
------------------------- ------------------------------------------------------
========= ========
------------------------- ------------------------------------------------------
Share of associate's profit
(25.5%) 1 363 845 448 638
------------------------- ------------------------------------------------------
========= ========
------------------------- ------------------------------------------------------
Reconciliation of carrying amount
of
investment
in Associate:
------------------------- ------------------------------------------------------
Balance at 1 January - -
------------------------- ------------------------------------------------------
Increase in investment - 510
------------------------- ------------------------------------------------------
Share of profit in associate 1 363 845 448 638
------------------------- ------------------------------------------------------
Allowance for impairment (1 363 845) (449 148)
------------------------- ------------------------------------------------------
-------------- -------------
------------------------- ------------------------------------------------------
- -
------------------------- ------------------------------------------------------
========= ========
------------------------- ------------------------------------------------------
The investment in Altiwave Investments (Private) Limited has
been fully impaired as the company had negative equity as at 31
December 2014.
24.2 Investment in African Century Limited
The Group had a 24.79% interest in African Century Limited,
which is involved in the provision of lease finance. The Investment
was disposed off on the 29(th) of May 2013 for a consideration of
US$1 850 000.
African Century Limited is a company that is not listed on any
public exchange. The following table illustrates summarised audited
financial information of the Group's investment in African Century
Limited.
Associate's revenue and profit
31 December 2014 31December 2013
US$ US$
------------------------ ------------------------
Revenue - 2 208 806
------------------------ ------------------------
========== ========
------------------------ ------------------------
Profit - 878 451
------------------------ ------------------------
========== ========
------------------------ ------------------------
Share of associate's profit (24.79%) - 217 768
------------------------ ------------------------
========== =======
------------------------ ------------------------
Carrying amount of the investment - -
------------------------ ------------------------
========= ========
------------------------ ------------------------
Reconciliation of carrying amount
of investment
------------------------ ------------------------
Balance at 1 January - 1 025 919
------------------------ ------------------------
Share of profit in associate - 217 768
------------------------ ------------------------
Disposal of investment - (1 243 687)
------------------------ ------------------------
-------------- -------------
--------------------------------------------------------------- ------------------------
Balance at 31December - -
------------------------ ------------------------
========= ========
--------------------------------------------------------------- ------------------------
25. EXCHANGE RATES
The following exchange rates have been used to translate the
foreign currency balances to United States dollars at period
end:-
Mid-rate Mid-rate
31 December 31 December
2014 2013
----- ------------ ------------
US$ US$
----- ------------ ------------
British Pound Sterling GBP 1.5564 1.6014
----- ------------ ------------
South African Rand ZAR 11.5764 9.9487
----- ------------ ------------
European Euro EUR 1.2159 1.3697
----- ------------ ------------
Botswana Pula BWP 9.5057 8.5034
----- ------------ ------------
26. EVENTS AFTER REPORTING DATE
26.1 Disposal of Lobels Debentures
Subsequent to year end, the Bank entered into an agreement to
dispose the debentures, at par value, it holds in Lobels as well as
its shares in Altiwave Investments (Private) Limited (note 23.1).
The sale is expected to be complete by the end of the first quarter
of 2015.
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
31 December 2014 31 December 2013
Note US$ US$
------ ----------------------------- ------------------------------
Interest income 31 072 461 33 181 704
----------------------------- ------------------------------
Interest expense (12 651 722) (13 006 789)
----------------------------- ------------------------------
---------------- --------------
------ ----------------------------- ------------------------------
Net interest income 18 420 739 20 174 915
----------------------------- ------------------------------
Fee and commission income 1 822 432 14 673 834
----------------------------- ------------------------------
Net foreign exchange gains 15 121 536 1 502 044
----------------------------- ------------------------------
-------------- --------------
------ ----------------------------- ------------------------------
Revenue 35 364 707 36 350 793
----------------------------- ------------------------------
Non-interest income a 59 769 761 579
------ ----------------------------- ------------------------------
Share of profit of associate - -
------ ----------------------------- ------------------------------
Operating expenditure b (27 967 159) (25 271 736)
------ ----------------------------- ------------------------------
Impairment losses on loans,
advances and debentures (5 017 362) (16 645 810)
----------------------------- ------------------------------
-------------- --------------
------ ----------------------------- ------------------------------
Profit /(loss) before taxation 2 439 955 (4 805 174)
----------------------------- ------------------------------
Taxation (charge)/credit (767 222) 973 175
----------------------------- ------------------------------
--------------- -------------
------ ----------------------------- ------------------------------
Profit /(loss) for the period 1 672 733 (3 831 999)
----------------------------- ------------------------------
Other comprehensive income, c 10 180 -
net of tax
------ ----------------------------- ------------------------------
------------- -------------
------ ----------------------------- ------------------------------
Total comprehensive income/(loss)
for the
period 1 682 913 (3 831 999)
----------------------------- ------------------------------
========= ========
------ ----------------------------- ------------------------------
Earnings/(loss) per share (US
cents):
------ ----------------------------- ------------------------------
-Basic d 10.20 (23.22)
------ ----------------------------- ------------------------------
STATEMENT OF FINANCIAL POSITION
as at 31 December 2014
31 December 2014 31 December 2013
Note US$ US$
------ ------------------- ---------------------------------------
SHAREHOLDER'S FUNDS
------ ------------------- ---------------------------------------
Share capital e 16 506 16 506
------ ------------------- ---------------------------------------
Share Premium 31 474 502 31 474 502
------------------- ---------------------------------------
Regulatory Reserve 3 293 699 2 154 252
------------------- ---------------------------------------
Retained earnings 9 346 445 8 802 979
------------------- ---------------------------------------
--------------- ---------------
------ ------------------- ---------------------------------------
Total shareholder's funds 44 131 152 42 448 239
------------------- ---------------------------------------
LIABILITIES
------ ------------------- ---------------------------------------
Deposits and other liabilities 240 971 888 216 020 406
------------------- ---------------------------------------
Subordinated term loan 1 407 964 1 485 890
------------------- ---------------------------------------
----------------- ----------------
------ ------------------- ---------------------------------------
Total liabilities 242 379 852 217 506 296
------------------- ---------------------------------------
---------------- ---------------
------ ------------------- ---------------------------------------
Total shareholder's funds
and liabilities 286 511 004 259 954 535
------------------- ---------------------------------------
========== =========
------ ------------------- ---------------------------------------
ASSETS
------ ------------------- ---------------------------------------
Cash and cash equivalents f 54 750 561 48 871 983
------ ------------------- ---------------------------------------
Current tax assets 1 361 456 1 657 722
------------------- ---------------------------------------
Investment securities held
to maturity 3 874 525 4 685 471
------------------- ---------------------------------------
Amount owing from Holding
Company 610 604 747 044
------------------- ---------------------------------------
Investment in debentures 4 614 047 3 984 723
------------------- ---------------------------------------
Loans, advances and other
accounts 203 418 514 181 371 734
------------------- ---------------------------------------
Non-current assets held for
sale 2 267 300 2 303 300
------------------- ---------------------------------------
Unquoted investments 81 390 76 202
------------------- ---------------------------------------
Investment in associate - -
------ ------------------- ---------------------------------------
Investment properties g 4 453 300 4 385 300
------ ------------------- ---------------------------------------
Intangible assets 1 950 733 1 664 369
------------------- ---------------------------------------
Property and equipment 6 345 267 7 372 943
------------------- ---------------------------------------
Deferred tax asset 2 783 307 2 833 744
------------------- ---------------------------------------
------------------ ---------------
------ ------------------- ---------------------------------------
Total assets 286 511 004 259 954 535
------------------- ---------------------------------------
=========== =========
--------------------------------------- ------------------- ---------------------------------------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
Share Share Regulatory Retained Earnings
Capital Premium Reserve Total
US$ US$ US$ US$ US$
--------- --------------- ---------------- ------------------ ---------------
Balances 1 January 2013 16 502 15 577 932 2 301 683 12 487 547 30 383 664
--------- --------------- ---------------- ------------------ ---------------
Total loss for the year - - - (3 831 999) (3 831 999)
--------- --------------- ---------------- ------------------ ---------------
Shares issued 4 15 896 570 - - 15 896 574
--------- --------------- ---------------- ------------------ ---------------
Impairment allowance for loans and
advances - - (147 431) 147 431 -
--------- --------------- ---------------- ------------------ ---------------
-------- ------------- --------------- ---------------- --------------
--------- --------------- ---------------- ------------------ ---------------
Balances at 31 December 2013 16 506 31 474 502 2 154 252 8 802 979 42 448 239
--------- --------------- ---------------- ------------------ ---------------
Total comprehensive income for the
year - - - 1 682 913 1 682 913
--------- --------------- ---------------- ------------------ ---------------
Impairment allowance for loans and
advances - - 1 139 447 (1 139 447) -
--------- --------------- ---------------- ------------------ ---------------
-------- -------------- --------------- ------------- --------------
--------- --------------- ---------------- ------------------ ---------------
Balances at 31 December 2014 16 506 31 474 502 3 293 699 9 346 445 44 131 152
--------- --------------- ---------------- ------------------ ---------------
===== ======== ========= ======== =========
--------- --------------- ---------------- ------------------ ---------------
STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
31 December 31 December
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES US$ US$
----------------- -------------------
Profit/(loss) before taxation 2 439 955 (4 805 174)
----------------- -------------------
Non-cash items
----------------- -------------------
-Impairment losses on loans, advances
and debentures 5 017 362 16 645 810
----------------- -------------------
-Non-current assets held for sale fair
value adjustment (3 000) (21 000)
----------------- -------------------
-Investment properties fair value adjustment (37 800) (595 450)
----------------- -------------------
-Profit on disposal of property and equipment (6 274) (30 022)
----------------- -------------------
-Loss on disposal of property and equipment
(included in 177 413 -
staff costs)
----------------- -------------------
-Profit on disposal of non-current assets
held for sale - (1 500)
----------------- -------------------
-Quoted and other investments fair value
adjustment (5 188) 6 311
----------------- -------------------
-Impairment reversal on land and buildings (46 900) (4 803)
----------------- -------------------
-Depreciation 1 899 047 1 695 856
----------------- -------------------
-Amortisation of intangible assets 337 118 130 716
----------------- -------------------
-------------- --------------
----------------- -------------------
Operating cash flows before changes in
operating
----------------- -------------------
assets and liabilities 9 771 733 13 020 744
----------------- -------------------
Changes in operating assets and liabilities
----------------- -------------------
Deposits and other liabilities 24 951 482 21 039 162
----------------- -------------------
Amount owing from holding company 136 440 209 117
----------------- -------------------
Investment in debentures (629 324) (3 984 723)
----------------- -------------------
Loans, advances and other accounts (27 064 142) (51 532 186)
----------------- -------------------
--------------- ---------------
----------------- -------------------
Net cash generated/(utilised in) from
operations 7 166 189 (21 247 886)
----------------- -------------------
--------------- ---------------
----------------- -------------------
Taxation
----------------- -------------------
Capital gains tax paid (1 750) (1 975)
----------------- -------------------
Corporate tax paid (422 299) (2 876 507)
----------------- -------------------
-------------- ---------------
----------------- -------------------
Net cash inflow/(outflow)from operating
activities 6 742 140 (24 126 368)
----------------- -------------------
-------------- ---------------
----------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
----------------- -------------------
Proceeds on disposal of non-current assets
held for sale 39 000 39 500
----------------- -------------------
Proceeds on disposal of property and equipment 10 177 35 637
----------------- -------------------
Purchase of intangible assets (623 482) (1 170 868)
----------------- -------------------
Purchase of property and equipment (992 076) (1 506 369)
----------------- -------------------
Improvements to investment property (30 200) (769 550)
----------------- -------------------
Maturity of investment securities held
to maturity 810 945 816 492
----------------- -------------------
---------------- ------------------
----------------- -------------------
Net cash outflow from investing activities (785 636) (2 555 158)
----------------- -------------------
-------------- ----------------
----------------- -------------------
Net cash inflow/(outflow) before financing
activities 5 956 504 (26 681 526)
----------------- -------------------
--------------- ----------------
----------------- -------------------
STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
31 December 31 December
2014 2013
CASH FLOWS FROM FINANCING ACTIVITIES US$ US$
--------------- ----------------
Proceeds from subordinated term loan - 1 400 000
--------------- ----------------
Payment of interest on subordinated term (218 413) -
loan
--------------- ----------------
Interest capitalised on subordinated term
loan 140 487 85 890
--------------- ----------------
Proceeds from issue of shares - 15 896 574
--------------- ----------------
-------------- ---------------
--------------- ----------------
Net cash (outflow)/inflow from financing
activities (77 926) 17 382 464
--------------- ----------------
-------------- ---------------
--------------- ----------------
Net increase/(decrease) in cash and cash
equivalents 5 878 578 (9 299 062)
--------------- ----------------
Cash and cash equivalents at beginning
of the year 48 871 983 58 171 045
--------------- ----------------
-------------- ---------------
--------------- ----------------
Cash and cash equivalents at the end of
the year (note f) 54 750 561 48 871 983
--------------- ----------------
======== ========
--------------- ----------------
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2014
There are no material differences between the Bank and the
Holding company as the Bank is the principal operating subsidiary
of the Group. The notes to the financial statements under NMBZ
Holdings Limited are therefore the same as those of the Bank in
every material respect.
a. NON-INTEREST income
31 December 2014 31 December 2013
----------------- -----------------
US$ US$
----------------- -----------------
Quoted and other investments fair value adjustments 5 188 (6 311)
----------------- -----------------
Profit on disposal of non-current assets held for sale - 1 500
----------------- -----------------
Profit on disposal of property and equipment 6 274 30 022
----------------- -----------------
Fair value adjustment of non-current assets held for
sale 3 000 21 000
----------------- -----------------
Fair value adjustment on investment properties 37 800 595 450
----------------- -----------------
Other operating income 7 507 119 918
----------------- -----------------
-------------- ----------------
----------------- -----------------
59 769 761 579
----------------- -----------------
======== =========
----------------- -----------------
b. Operating EXPENDITURE
31 December 2014 31 December 2013
----------------- -----------------
US$ US$
----------------- -----------------
The operating profit is after
recognising the following:
----------------- -----------------
Administration costs 12 365 273 12 210 534
----------------- -----------------
Audit fees:
----------------- -----------------
- Current year 74 014 77 337
----------------- -----------------
- Prior year 140 433 128 938
----------------- -----------------
Impairment reversal on land
and buildings (46 900) (4 803)
----------------- -----------------
Depreciation 1 899 047 1 695 856
----------------- -----------------
Amortisation of intangible assets 337 118 130 716
----------------- -----------------
Directors' remuneration 923 008 1 892 296
----------------- -----------------
- Fees for services as directors 316 255 105 190
----------------- -----------------
- Other emoluments 606 753 1 787 106
----------------- -----------------
Staff costs -salaries, allowances
and related costs 11 189 468 9 140 862
----------------- -----------------
-termination benefits 1 085 698 -
----------------- -----------------
-------------- --------------
----------------- -----------------
27 967 159 25 271 736
----------------- -----------------
======== ========
----------------- -----------------
c. OTHER COMPREHENSIVE INCOME
31 December 2014 31 December 2013
----------------------- ---------------------
US$ US$
----------------------- ---------------------
Gross revaluation adjustment on
land and 13 710 -
buildings
----------------------- ---------------------
Tax effect (3 530) -
----------------------- ---------------------
-------------- ------------
----------------------- ---------------------
10 180 -
----------------------- ---------------------
======== ======
----------------------- ---------------------
d. EARNINGS PER SHARE
The calculation of earnings per share is based on the following
figures:
d.1 Earnings/(loss)
31 December 2014 31 December 2013
US$ US$
----------------- -----------------
Attributable earnings/(losses) 1 682 913 (3 831 999)
----------------- -----------------
d.2 Number of shares
Weighted average shares in issue 16 506 050 16 503 813
d.3 Earnings/(loss) per share (US cents)
Basic 10.20 (23.22)
e. SHARE CAPITAL
e.1 Authorised
The authorised ordinary share capital at 31 December 2014 is at
the historical cost figure of US$25 000 (2013 - US$25 000)
comprising 25 million ordinary shares of US$0.001each.
e.2 Issued and fully paid
The issued share capital at 31 December 2014 is at the
historical cost figure of US$16 506 (2013 - US$16 506) comprising
16.506 million (2013 - 16.506 million) ordinary shares of US$0.001
each
f. CASH AND CASH EQUIVALENTS
31 December 31 December
2014 2013
US$ US$
-------------- ----------------
Balances with the Central Bank 11 408 222 13 480 628
-------------- ----------------
Current, nostro accounts and cash 15 842 339 31 391 355
-------------- ----------------
Interbank placements 27 500 000 4 000 000
-------------- ----------------
------------- ---------------
-------------- ----------------
54 750 561 48 871 983
-------------- ----------------
========= =========
-------------- ----------------
g. INVESTMENT PROPERTIES
31 December 31 December
2014 2013
US$ US$
-------------- --------------
At 1 January 4 385 300 3 115 300
-------------- --------------
Improvements 30 200 769 550
-------------- --------------
Transfer to non-current assets held
for sale - (95 000)
-------------- --------------
Fair value adjustments 37 800 595 450
-------------- --------------
------------- -------------
-------------- --------------
At 31 December 4 453 300 4 385 300
-------------- --------------
======== ========
-------------- --------------
Investment properties comprise a commercial property and
residential properties that are leased out to third parties and
land held for capital appreciation.
Measurement of fair value
Fair value hierarchy
The fair value of the Bank's investment properties as at 31
December 2014 has been arrived at on the basis of valuations
carried out by independent professional valuers, PMA Real Estate
(Private) Limited. The valuation which conforms to International
Valuation Standards, was in terms of the policy as set out in the
accounting policies section and was derived with reference to
market information close to the date of the valuation.
The Bank has no restrictions on the realisability of all
investment properties and no contractual obligations to purchase,
construct or develop the investment properties or for repairs,
maintenance and enhancements.
Rental income amounting to US$36 160 (2013 - US$47 618) was
received and no operating expenses were incurred on the investment
properties in the current year due to the net leasing arrangement
on the properties.
Level 2
The fair value for investment properties of US$2 659 300 has
been categorised under Level 2 in fair value hierarchy based on the
inputs used for the valuation technique highlighted above.
The following table shows reconciliation between the opening and
closing balances for Level 2 fair values:
31 December 2014
US$
---------------------------
At 1 January 2 575 300
---------------------------
Improvements 10 200
---------------------------
Fair value adjustments 73 800
---------------------------
-------------
---------------------------
Balance at 31 December 2 659 300
---------------------------
========
---------------------------
The values were arrived at by applying a market rate of US$34
per square metre.
Level 3
The fair value for investment properties of US$1 794 000 has
been categorised under Level 3 in fair value hierarchy based on the
inputs used for the valuation technique highlighted above.
The following table shows reconciliation between the opening and
closing balances for Level 3 fair values:
31 December 2014
US$
--------------------------------------------------------
At 1 January 1 810 000
--------------------------------------------------------
Improvements 20 000
--------------------------------------------------------
Fair value adjustments (36 000)
--------------------------------------------------------
-------------
--------------------------------------------------------
Balance at 31 December 1 794 000
--------------------------------------------------------
========
--------------------------------------------------------
The values were arrived at by applying yield rates of 9.5% on
rental values of between US$5 - US$7 per square metre. The
properties are leased out under operating leases to various
tenants.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of investment properties, as well as the
significant unobservable inputs used.
Valuation Technique Significant Unobservable Inter-relationship between
Inputs key unobservable inputs
and fair value measurement
The estimated fair value
* The Investment Method was applied on all income * Expected market rental growth (weighted average -1%); would increase/ (decrease)
producing properties. Market capitalisation rates if:
were derived from market sales evidence and were * expected market rental growth were higher/(lower);
determined in consultation with other investors and * Void period (average 5 months after the end of each
property brokers in the market. lease);
* void periods were shorter/(longer);
* The Direct Comparison Method was applied on all * Occupancy rate (60 -100%), weighted average 95%);
residential properties, after PMA Real Estate * the occupancy rates were higher/ (lower).
(Private) Limited identified various properties that
have been sold or which were on sale and situated in * Average market yield was 9%.
comparable areas using the Main Space Equivalent
(MSE) principle. The total (MSE) of comparable areas
was then used to determine the value per square metre
of (MSE).
------------------------------------------------------------ ---------------------------------------------------------
h. CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These financial statements are the responsibility of the
directors. This responsibility includes the setting up of internal
control and risk management processes, which are monitored
independently. The information contained in these financial
statements has been prepared on the going concern basis and is in
accordance with the provisions of the Companies Act (Chapter
24:03), the Banking Act (Chapter 24:20) and International Financial
Reporting Standards.
2. CORPORATE GOVERNANCE
The Bank adheres to principles of corporate governance derived
from the King III Report, the United Kingdom Combined Code and RBZ
corporate governance guidelines. The Bank is cognisant of its duty
to conduct business with due care and in good faith in order to
safeguard all stakeholders' interests.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and
expertise on the Board. Non-executive directors are of such calibre
as to provide independence to the Board. The Chairman of the Board
is an independent non-executive director. The Board is supported by
mandatory committees in executing its responsibilities. The Board
meets at least quarterly to assess risk, review performance and
provide guidance to management on both operational and policy
issues.
The Board conducts an annual peer based evaluation on the
effectiveness of its activities. The process involves the members
evaluating each other collectively as a board and individually as
members. The evaluation, as prescribed by the RBZ, takes into
account the structure of the board, effectiveness of committees,
strategic leadership, corporate social responsibility, attendance
and participation of members and weaknesses noted. Remedial plans
are invoked to address identified weaknesses with a view to
continually improve the performance and effectiveness of the Board
and its members.
3.1 Directors' attendance at NMB Bank Limited Board meetings
Human
Asset and Resources,
Liability Remuneration
Management Loans and
Board of Audit Risk Committee Review Nominations Credit
Directors Committee Management (ALCO) Committee Committee Committee
Finance
& Strategy
Committee
Mr. T. N.
Mundawarara 9 9 4 4 4 4 10 10
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. A. M. T.
Mutsonziwa 9 6 4 2 4 3
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. J.A Mushore* 3 2 3 2 3 2 4 2 4 2 8 7
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. B. P.
Washaya 4 4 4 4 4 4 4 4 10 9
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. B. W.
Madzivire 9 9 4 4 4 4
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Ms. M. Svova*** 9 9 4 4 9 9
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. J.
Chigwedere 9 8 4 4 4 4
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. B.
Chikwanha** 9 9 3 3 4 4
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. J.
Chenevix-Trench 9 9 4 4 4 4 10 10
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. B. Zwinkels 9 9 4 4 4 0 4 4
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. C. Ndiaye 9 9 4 3 4 3 3 3
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Mr. R. Keighley 9 9 4 4 4 4
---- ------- --------- --- --------- ---- -------- ---- ------- ---- --------- ---- -------
Meetings planned
KEY
*Resigned from the Board with effect from 31 October 2014.
**Appointed to the Risk Management Committee with effect from 19
March 2014.
***Appointed to the Credit Committee with effect from 6 March
2014.
4. RISK MANAGEMENT
The Board of Directors has overall responsibility for the
establishment and oversight of the Bank's risk management
framework. The Board has established the Board Asset and Liability
Management Committee (ALCO) and Board Risk Committee, which are
responsible for defining the Bank's risk universe, developing
policies and monitoring implementation. The Bank strengthened its
risk management function by appointing a Chief Risk Officer in
September 2013 with overall responsibility over all risks in the
Bank. The Bank has complied with Basel II implementation timelines
set by the Reserve Bank of Zimbabwe.
Risk management is linked logically from the level of individual
transactions to the Bank level. Risk management activities broadly
take place simultaneously at the following different hierarchy
levels:
a) Strategic Level: This involves risk management functions
performed by senior management and the board of directors. It
includes the definition of risk, ascertaining the Bank's risk
appetite, formulating strategy and policy for managing risk and
establishes adequate systems and controls to ensure overall risk
remains within acceptable levels and is adequately compensated.
b) Macro Level: It encompasses risk management within a business
area or across business lines. These risk management functions are
performed by middle management.
c) Micro Level: This involves "On-the-line" risk management
where risks are actually created. These are the risk management
activities performed by individuals who assume risk on behalf of
the organization such as Treasury Front Office, Corporate Banking,
Retail banking etc. The risk management in these areas is confined
to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing
pillars, namely:
a) adequate board and senior management oversight;
b) adequate strategy, policies, procedures and limits;
c) adequate risk identification, measurement, monitoring and information systems; and
d) comprehensive internal controls and independent reviews.
4.1 Credit risk
Credit risk is the risk that a financial contract will not be
honoured according to the original set of terms. The risk arises
when borrowers or counterparties to a financial instrument fail to
meet their contractual obligations. The Bank reviewed its credit
risk management structures aimed at enhancing credit risk and asset
quality. The Bank's general credit strategies centre on sound
credit granting process, diligent credit monitoring and strong loan
collection and recovery. There is a separation between loan
collection and recovery. There is a separation between loan
granting and credit monitoring to ensure independency and effective
management of the loan portfolio. The Board has put in place
sanctioning committees with specific credit approval limits. The
Credit Management department does the initial review of all
applications before recommending them to the Executive Credit
Committee and finally the Board Credit Committee depending on the
loan amount. The Bank has in place a Board Loans Review Committee
responsible for reviewing the quality of the loan book and adequacy
of loan loss provisions.
The Bank implemented an end to end credit risk management
solution. The system automated the Bank's credit process from
origination, appraisal, monitoring and collections. In the last
half of 2014, the Bank did a gradual roll-out of the credit risk
system to allow for a smooth transition and rigorous assessment of
the system's impact on the Bank's processes and procedure. The
project will be finalised in the first quarter of 2015.
Management of credit risk is the responsibility of Credit
Management, Credit Monitoring, Credit Administration and Recoveries
departments with the following responsibilities:
Credit Management
-- Responsible for evaluating & approving credit proposals from the business units.
-- Together with business units, has primary responsibility on the quality of the loan book.
-- Reviewing credit policy for approval by the Board Credit Committee.
-- Reviewing business unit level credit portfolios to ascertain
changes in the credit quality of individual customers or other
counterparties as well as the overall portfolio and detect unusual
developments.
-- Approve initial customer internal credit grades or recommend
to the Credit Committees for approval.
-- Setting the credit risk appetite parameters.
-- Ensure the bank adheres to limits, mandates and its credit policy.
-- Ensure adherence to facility covenants and conditions of
sanction e.g. annual audits, gearing levels, management
accounts.
-- Manage trends in asset and portfolio composition, quality and
growth and non-performing loans.
-- Manage concentration risk both in terms of single borrowers
or group as well as sector concentrations and the review of such
limits.
Credit Monitoring and Financial Modelling
-- Independent Credit Risk Management.
-- Independent on-going monitoring of individual credit and portfolios
-- Triggers remedial actions to protect the interests of the
Bank, if appropriate (e.g. in relation to deteriorated
credits).
-- Monitors the on-going development and enhancement of credit
risk management across the Bank.
-- Reviews the Internal Credit Rating System.
-- On-going championing of the Basel II methodologies across the Bank.
-- Ensures consistency in the rating processes and performs
independent review of credit grades to ensure they conform to the
rating standards.
-- Confirm the appropriateness of the credit risk strategy and
policy or recommends necessary revisions in response to
changes/trends identified.
-- Conduct stress tests on the various risks the Bank is exposed
to and assessing how resilient the Bank is to these various shocks
under various scenarios
Credit Administration
-- Prepares and keeps custody of all facility letters
-- Security registration
-- Safe custody of security documents
-- Ensures all conditions of sanction are fulfilled before
allowing drawdown or limit marking
-- Review of credit files for documentation compliance e.g. call
reports, management accounts.
Recoveries
The recoveries unit is responsible for all collections and
ensures that the bank maximizes recoveries from Non-Performing
Loans (NPLs).
4.2 Market risk
This is the exposure of the Bank's on and off balance sheet
positions to adverse movement in market prices resulting in a loss
in earnings and capital. The market prices will range from money
market (interest rate risk), foreign exchange and equity markets in
which the Bank operates. The Bank has in place a Management Asset
and Liability Committee (ALCO) which monitors market risk and
recommends the appropriate levels to which the Bank should be
exposed at any time. Net Interest Margin is the primary measure of
interest rate risk, supported by periodic stress tests to assess
the Bank's ability to withstand stressed market conditions. On
foreign exchange risk, the bank monitors currency mismatches and
make adjustments depending on exchange rate movement forecast. The
mismatches are also contained within 10% of the Bank's capital
position.
ALCO meets on a monthly basis and operates within the prudential
guidelines and policies established by the Board ALCO. The Board
ALCO is responsible for setting exposure thresholds and limits, and
meets on a quarterly basis.
4.3 Liquidity risk
Liquidity risk is the risk of financial loss arising from the
inability of the Bank to fund asset increases or meet obligations
as they fall due without incurring unacceptable costs or losses.
The Bank identifies this risk through maturity profiling of assets
and liabilities and assessment of expected cash flows and the
availability of collateral which could be used if additional
funding is required.
The daily liquidity position is monitored and regular liquidity
stress testing is conducted under a variety of scenarios covering
both normal and more severe market conditions. All liquidity
policies and procedures are subject to review and approval by the
Board ALCO.
The key measure used by the Bank for managing liquidity risk is
the ratio of net liquid assets to deposits to customers. The Bank
also actively monitors its loans to deposit ratio against a set
threshold in a bid to monitor and limit funding risk. Liquidity
risk is monitored through a daily treasury strategy meeting. This
is augmented by a monthly management ALCO and a quarterly board
ALCO.
4.4 Operational risk
This risk is inherent in all business activities and is the risk
of loss arising from inadequate or failed internal processes,
people, systems or from external events. The Bank utilises monthly
Key Risk Indicators to monitor operational risk in all units.
Further to this, the Bank has an elaborate Operational Loss
reporting system in which all incidents with a material impact on
the well-being of the Bank are reported to risk management. The
risk department conducts periodic risk assessments on all the units
within the Bank aimed at identifying the top risks and ways to
minimise their impact. There is a Board Risk Committee whose
function is to ensure that this risk is minimized. The Risk
Committee with the assistance of the internal audit function and
the Risk Management department assesses the adequacy of the
internal controls and makes the necessary recommendations to the
Board.
4.5 Legal and compliance risk
Legal risk is risk from uncertainty due to legal actions or
uncertainty in the applicability or interpretation of contracts,
laws or regulations. Legal risk may entail such issues as contract
formation, capacity and contract frustration. Compliance risk is
the risk arising from non - compliance with laws and regulations.
To manage this risk permanent relationships are maintained with
firms of legal practitioners and access to legal advice is readily
available to all departments. The Bank has an independent
compliance function which is responsible for identifying and
monitoring all compliance issues and ensures the Bank complies with
all regulatory and statutory requirements.
4.6 Reputational risk
Reputation risk is the risk of loss of business as a result of
negative publicity or negative perceptions by the market with
regards to the way the Bank conducts its business. To manage this
risk, the Bank strictly monitors customers' complaints,
continuously train staff at all levels, conducts market surveys and
periodic reviews of business practices through its internal audit
department. The directors are satisfied with the risk management
processes in the bank as these have contributed to the minimization
of losses arising from risky exposures.
4.7 Strategic risk
This refers to current and prospective impact on a Bank's
earnings and capital arising from adverse business decisions or
implementing strategies that are not consistent with the internal
and external environment. To manage this risk, the Bank always has
a strategic plan that is adopted by the board of directors.
Further, attainment of strategic objectives by the various
departments is monitored periodically at management level. Further,
there is an ALCO, Finance and Strategy Committee at board level
responsible for monitoring overall progress towards attaining
strategic objectives for the Bank.
The directors are satisfied with the risk management processes
in the Bank as these have contributed to the minimisation of losses
arising from risky exposures.
4.8 Risk Ratings
4.8.1 Reserve Bank of Zimbabwe Ratings
The Reserve Bank of Zimbabwe conducted an onsite inspection on
the Group's banking subsidiary in 2013 and detailed below were the
final ratings. Subsequent to this, a further review was done in
2014 during which the RBZ indicated that the bank had attended to
their satisfaction on all matters raised in the 2013
inspection.
4.8.1.1 CAMELS* Ratings
Latest RBS** Previous RAS Previous RAS
CAMELS Component Ratings Ratings Ratings
30/06/2013 31/01/2008 30/06/2007
Capital Adequacy 2 4 4
------------- ------------- -------------
Asset Quality 4 2 3
------------- ------------- -------------
Management 3 3 3
------------- ------------- -------------
Earnings 2 3 3
------------- ------------- -------------
Liquidity 2 3 3
------------- ------------- -------------
Sensitivity to Market
Risk 2 3 3
------------- ------------- -------------
Composite Rating 3 3 4
------------- ------------- -------------
*CAMELS is an acronym for Capital Adequacy, Asset quality,
Management, Earnings, Liquidity and Sensitivity to Market Risk.
CAMELS rating system uses a rating scale of 1-5, where '1' is
Strong, '2' is Satisfactory, '3' is Fair, '4' is Weak and '5' is
Critical.
**RBS stands for Risk-Based Supervision
4.8.1.2 Summary RAS ratings
Latest RAS*** Previous RBS Previous RBS
RAS Component Ratings Ratings Ratings
30/06/2013 31/01/2008 30/06/2007
Overall Inherent Risk Moderate Moderate High
-------------- ------------- -------------
Overall Risk Management Acceptable Acceptable Weak
Systems
-------------- ------------- -------------
Overall Composite Risk Moderate Moderate High
-------------- ------------- -------------
Direction of Overall Composite Stable Stable Increasing
Risk
-------------- ------------- -------------
*** RAS stands for Risk Assessment System.
4.8.1.3 Summary risk matrix -30 June 2013 on - site
examination
Level of Inherent Adequacy of Overall Composite Direction
Type of Risk Risk Risk Management Risk of Overall
Systems Composite
Risk
Credit High Weak High Increasing
------------------ ----------------- ------------------ ------------
Liquidity Moderate Acceptable Moderate Stable
------------------ ----------------- ------------------ ------------
Interest Rate Moderate Acceptable Moderate Stable
------------------ ----------------- ------------------ ------------
Foreign Exchange Low Acceptable Low Stable
------------------ ----------------- ------------------ ------------
Strategic Risk Moderate Acceptable Moderate Stable
------------------ ----------------- ------------------ ------------
Operational Risk Moderate Acceptable Moderate Stable
------------------ ----------------- ------------------ ------------
Legal & Compliance Moderate Strong Moderate Stable
------------------ ----------------- ------------------ ------------
Reputation Moderate Strong Moderate Stable
------------------ ----------------- ------------------ ------------
Overall Moderate Acceptable Moderate Stable
------------------ ----------------- ------------------ ------------
KEY
Level of Inherent Risk
Low - reflects a lower than average probability of an adverse
impact on a banking institution's capital and earnings. Losses in a
functional area with low inherent risk would have little negative
impact on the banking institution's overall financial
condition.
Moderate - could reasonably be expected to result in a loss
which could be absorbed by a banking institution in the normal
course of business.
High - reflects a higher than average probability of potential
loss. High inherent risk could reasonably be expected to result in
a significant and harmful loss to the banking institution.
Adequacy of Risk Management Systems
Weak - risk management systems are inadequate or inappropriate
given the size, complexity and risk profile of the banking
institution. Institution's risk management systems are lacking in
important ways and therefore a cause of more than normal
supervisory attention. The internal control systems will be lacking
in important aspects particularly as indicated by continued control
exceptions or by the failure to adhere to written policies and
procedures.
Acceptable - management of risk is largely effective but lacking
to some modest degree. While the institution might be having some
minor risk management weaknesses, these have been recognized and
are being addressed. Management information systems are generally
adequate.
Strong - management effectively identifies and controls all
types of risk posed by the relevant functional areas or per
inherent risk. The board and senior management are active
participants in managing risk and ensure appropriate policies and
limits are put in place. The policies comprehensively define the
bank's risk tolerance, responsibilities and accountabilities are
effectively communicated.
Overall Composite Risk
Low - would be assigned to low inherent risk areas. Moderate
risk areas may be assigned a low composite risk where internal
controls and risk management systems are strong and effectively
mitigate much of the risk.
Moderate - risk management systems appropriately mitigates
inherent risk. For a given low risk area, significant weaknesses in
the risk management systems may result in a moderate composite risk
assessment. On the other hand, a strong risk management system may
reduce the risk so that any potential financial loss from the
activity would have only a moderate negative impact on the
financial condition of the organization.
High - risk management systems do not significantly mitigate the
high inherent risk. Thus, the activity could potentially result in
a financial loss that would have a significant impact on the bank's
overall condition.
Direction of Overall Composite Risk
Increasing - based on the current information, risk is expected
to increase in the next 12 months.
Decreasing - based on current information, risk is expected to
decrease in the next 12 months.
Stable - based on the current information, risk is expected to
be stable in the next 12 months.
4.8.2 External Credit Ratings
The external credit ratings were given by Global Credit Rating
(GCR), a credit rating agency accredited with the Reserve Bank of
Zimbabwe.
Security class 2014 2013
Long term BB+ BBB-
The current rating expires in August 2015.
5. REGULATORY COMPLIANCE
There were no instances of regulatory non compliance in the
period under review. The Bank remains committed to complying with
and adhering to all regulatory requirements.
6. CAPITAL MANAGEMENT
The primary objective of the Bank's capital management is to
ensure that the Bank complies with the RBZ requirements. In
implementing the current capital requirements, the RBZ requires the
Banking subsidiary to maintain a prescribed ratio of total capital
to total risk weighted assets.
Regulatory capital consists of Tier 1 capital, which comprises
share capital, share premium, retained earnings (including current
year profit), statutory reserve and other equity reserves.
The other component of regulatory capital is Tier 2 capital,
which includes subordinated term debt, revaluation reserves and
portfolio provisions.
Tier 3 capital relates to an allocation of capital to market and
operational risk.
Various limits are applied to elements of the capital base. The
core capital (Tier 1) shall comprise not less than 50% of the
capital base and the regulatory reserves and portfolio provisions
are limited to 1.25% of total risk weighted assets.
The Bank's regulatory capital position at 31 December was as
follows:
31 December 2014 31 December 2013
US$ US$
----------------------- -----------------
Share capital 16 506 16 506
----------------------- -----------------
Share premium 31 474 502 31 474 502
----------------------- -----------------
Retained earnings 9 346 446 8 802 979
----------------------- -----------------
Fair value gain on investment properties (2 964 628) (2 925 868)
----------------------- -----------------
--------------- --------------
----------------------- -----------------
37 872 826 37 368 119
----------------------- -----------------
Less: capital allocated for market
----------------------- -----------------
and operational risk (467 320) (1 240 678)
----------------------- -----------------
Credit to insiders (10 169) (4 734 129)
----------------------- -----------------
-------------- --------------
----------------------- -----------------
Tier 1 capital 37 395 337 31 393 312
----------------------- -----------------
Tier 2 capital (subject to limit
as per Banking Regulations) 7 294 677 6 823 855
----------------------- -----------------
Fair value gain on investment properties 2 964 628 2 925 868
----------------------- -----------------
Subordinated debt 1 407 964 1 485 890
----------------------- -----------------
Regulatory reserve (limited to
1.25% of risk weighted assets) 2 758 890 2 154 252
----------------------- -----------------
Portfolio provisions (limited to
1.25% of risk weighted assets) 163 195 257 845
----------------------- -----------------
--------------- --------------
----------------------- -----------------
Total Tier 1 & 2 capital 44 690 014 38 217 167
----------------------- -----------------
Tier 3 capital (sum of market and
operational risk capital) 467 320 1 240 678
----------------------- -----------------
--------------- --------------
----------------------- -----------------
Total capital base 45 157 334 39 457 845
----------------------- -----------------
========= =========
----------------------- -----------------
Total risk weighted assets 233 766 816 228 275 322
----------------------- -----------------
========= =========
----------------------- -----------------
Tier 1 ratio 16.00%% 13.75%%
----------------------- -----------------
Tier 2 ratio 3.12% 2.99%
----------------------- -----------------
Tier 3 ratio 0.20% 0.54%
----------------------- -----------------
Total capital adequacy ratio 19.32% 17.28%
----------------------- -----------------
RBZ minimum required 12.00% 12.00%
----------------------- -----------------
7. SEGMENT INFORMATION
For management purposes, the Bank is organised into five
operating segments based on products and services as follows:
Retail Banking Individual customer's deposits and consumer
overdrafts, credit card facilities and
funds transfer facilities.
Corporate Banking Loans and other credit facilities and
deposit and current accounts for corporate
and institutional customers.
Treasury Money market investment, securities trading,
accepting and discounting of instruments
and foreign currency trading.
International Banking Handles the Bank's foreign currency denominated
banking business and manages relationships
with correspondent.
Corporate Finance Corporate restructuring, empowerment
transactions investment advisory services,
structured finance and capital raising.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss which in certain
respects is measured differently from operating profit or loss in
the financial statements. Income taxes are managed on a bank wide
basis and are not allocated to operating segments.
Interest income is reported net as management primarily relies
on net interest revenue as a performance measure, not the gross
income and expense.
Transfer prices between operating segments are on arm's length
basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or
counterparty amounted to 10% or more of the Bank's total revenue in
2014 and 2013.
The following table presents income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
For the year ended 31 December 2014
Retail Banking Corporate Treasury International Corporate Unallocated Total
Banking Banking Banking Finance
31 December US$ US$ US$ US$ US$ US$ US$
2014
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Income
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Third party 21 813 485 19 173 640 3 940 624 1 755 909 986 037 406 503 48 076 198
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Impairment
losses on
loans,
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
advances and
debentures (1 062 257) (3 955 105) - - - -- (5 017 362)
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
------------- -------------- ------------ ------------- ------------- -------------- -------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Net operating
income 20 751 228 15 218 535 3 940 624 1 755 909 986 037 406 503 43 058 836
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
-------------- -------------- ------------ ------------- -------------- --------------- --------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Results
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Interest and
similar
income 9 645 130 18 806 056 2 118 193 - 156 389 346 693 31 072 461
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Interest and
similar
expense (2 766 972) (8 818 002) (1 066 748) - - - (12 651 722)
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
-------------- -------------- ------------- ------------ ------------ -------------- -------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Net interest
income 6 878 158 9 988 054 1 051 445 - 156 389 346 693 18 420 739
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
-------------- --------------- ------------- ------------ -------------- --------------- -------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Fee and
commission
income 12 168 355 367 584 - 1 755 909 829 688 - 15 121 536
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Depreciation
of property
and equipment 874 507 150 236 51 713 49 100 28 152 745 339 1 899 047
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Amortisation
of
intangible
assets - - - - - 337 118 337 118
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Segment
profit/(loss) 2 265 727 (2 944 200) 2 030 053 167 485 514 387 406 503 2 439 955
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Income tax
charge - - - - - (767 222) (767 222)
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Other
comprehensive
income,
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
net of tax - - - - - 10 180 10 180
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
------------- --------------- ------------- -------------- ------------ --------------- ------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Profit/(loss)
for the year 2 265 727 (2 944 200) 2 030 053 167 485 514 387 (350 539) 1 682 913
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
======== ========= ======== ======== ======== ======== =======
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Assets and
liabilities
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Capital
expenditure 536 358 2 636 4 957 13 306 - 1 058 301 1 615 558
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Total assets 73 534 753 148 614 532 46 786 313 95 275 1 526 165 15 953 966 286 511 004
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
Total
liabilities 71 428 790 73 143 586 90 995 762 - - 6 811 714 242 379 852
--------------- ---------------- -------------- --------------- --------------- ---------------- ---------------
The following table presents income and profit and certain asset
and liability information regarding the bank's operating segments
and service units:
Retail Corporate Treasury International Corporate
Banking Banking Banking Banking Finance Unallocated Total
31 December US$ US$ US$ US$ US$ US$ US$
2013
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Income
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Third party 21 444 523 21 749 625 4 006 239 1 756 443 8 567 1 153 764 50 119 161
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Impairment
losses on
loans,
advances
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
and
debentures (658 002) (15 987 808) - - - - (16 645 810)
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
------------- -------------- ------------ ------------- ------------- -------------- -------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Net operating
income 20 786 521 5 761 817 4 006 239 1 756 443 8 567 1 153 764 33 473 351
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
-------------- -------------- ------------ ------------- -------------- --------------- -------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Results
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Interest and
similar
income 7 363 929 22 925 394 2 504 195 - - 388 186 33 181 704
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Interest and
similar
expense (2 368 543) (9 120 441) (1 517 805) - - - (13 006 789)
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
-------------- -------------- ------------- ------------ ------------ -------------- ---------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Net interest
income 4 995 386 13 804 953 986 390 - - 388 186 20 174 915
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
-------------- --------------- ------------- ------------ -------------- --------------- --------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Fee and
commission
income 12 342 153 566 915 - 1 756 199 8 567 - 14 673 834
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Depreciation
of property
and equipment 744 735 135 675 41 694 46 718 28 082 698 952 1 695 856
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Amortisation
of intangible
assets - - - - - 130 716 130 716
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Segment
profit/(loss) 4 557 210 (11 415 432) 1 544 477 (111 864) (533 329) 1 153 764 (4 805 174)
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Income tax
credit - - - - 973 175 973 175
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
------------- --------------- ------------- -------------- ------------ --------------- -------------
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Profit/(loss)
for the
year 4 557 210 (11 415 432) 1 544 477 (111 864) (533 329) 2 126 939 (3 831 999)
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
======== ========= ======== ======== ======== ======== ========
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Assets and
liabilities
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Capital
expenditure 1 058 456 133 532 132 113 12 027 2 763 1 338 345 2 677 236
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Total assets 54 124 890 144 209 819 41 326 313 121 897 68 854 20 102 762 259 954 535
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
Total
liabilities 72 525 463 77 182 723 61 092 072 - - 6 706 038 217 506 296
--------------- ---------------- -------------- --------------- --------------- ---------------- ----------------
8. GEOGRAPHICAL INFORMATION
The Bank operates in one geographical market, Zimbabwe.
Registered Offices
4(th) Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1(st) Street/Kwame Nkrumah Avenue Leopold Takawira Street
Harare Bulawayo
Zimbabwe Zimbabwe
Telephone +263 4 759651 +263 9 70169
Facsimile +263 4 759648 +263 9 882068
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Investor Services
PLC
1 Armagh Avenue The Pavilions
36 St Andrew Square Bridgewater Road
(Off Enterprise Road) Bristol
Eastlea BS99 9ZZ
P O Box 11 United Kingdom
Harare
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
END
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