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CRDB targets to earn 10pc profits from Burundi, insurance broker

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A minimum of 10 percent profit will come from CRDB Bank Plc’s subsidiaries this year as the largest, home-grown retailer posts a 120.1bn/- net profit for the year ending December 2019.

CRDB Bank Plc’s new headquarters in Dar es Salaam currently undergoing finishing touches. File photo.

A minimum of 10 percent profit will come from CRDB Bank Plc’s subsidiaries this year as the largest, home-grown retailer posts a 120.1bn/- net profit for the year ending December 2019.

The net profit which represents an 87 percent growth compared to last year’s profit of 64bn/- had the two subsidiaries, CRDB Bank Burundi SA and CRDB Insurance Broker Limited contributing 4 percent to the group’s profit.

The banking industry’s largest retail bank dissolved another subsidiary, CRDB Microfinance Services Limited during the year in what CRDB Bank Group’s Managing Director, Abdulmajid Nsekela described as restructuring aimed at improving efficiency.

 Nsekela attributed the impressive performance to sustained reforms targeted at revitalizing the business by creating new efficiencies and synergies to power growth. “All our key performance indicators are in the green. This is because we are taking our propositions seriously and we are working to elevate our customer experience by providing services efficiently and reliably,” he said in Dar es Salaam this week while announcing the results.

He pointed out that the two subsidiaries contributed to the growth thanks to the transformation initiatives being implemented by the holding company. “We expect that in the coming year, our subsidiaries will contribute at least 10 percent of Group profits,” Nsekela affirmed.

Separately, the results indicate that CRDB Bank Burundi SA’s net profit leapfrogged by 146 percent to 6.4bn/- buoyed by growth in customer deposits and improved earnings from government securities. It’s the highest ever profit that the subsidiary has posted since it was established in 2012 with total assets growing by 26 percent to 258.9bn/- from three branches within the capital, Bujumbura.

The results also indicate that CRDB Insurance Broker Limited recorded a 17 percent growth in net profit to 1.5bn/- from 1.3bn/- made in 2018 with total income generated by the insurance subsidiary standing at 7.8bn/- representing 26 percent growth. The growth was mainly driven by a rise in the uptake of insurance products mainly in medical care, education and tourism.

The CRDB Bank results further show that customer deposits grew by 11 percent to 5.2trn/- mainly fuelled by strong growth from the retail segment supported by a wide distribution network and augmented by CRDB Wakala agents.

During the year, the banking conglomerate recruited more than 9,000 CRDB Wakalas (formerly FahariHuduma agents) to bring the total number of agents to 14,761, in addition to 237 physical branches and 553 ATMs spread across the country.

Gross group assets also appreciated by 9 percent to 6.6trn/- signalling a robust balance sheet, which further cements its market leadership position as the preferred financial services provider in the country.

“WE ARE LEADING THE WAY IN EMPOWERING BUSINESSES TO STIMULATE ECONOMIC GROWTH,”  NSEKELA CHARGED. 

In its quest to facilitate economic growth, the banking group grew its loan portfolio by 8 percent to 3.4trn/- from 3.1trn/- during the period under review which represented a 20 percent market share of the industry’s net loans and advances.

This growth was primarily motivated by sustained effort to provide affordable credit to the Small and Medium Enterprises (SMEs) and consumer sectors. “We have launched several innovative financing solutions for different sectors and customer segments aiming at addressing financial challenges that impede growth,” the group CEO stated.

During the year under review, CRDB Bank also launched Jiwezeshe, a credit facility for micro-entrepreneurs (machingas), aimed at providing cheap loans to enable them to boost their businesses. “We took advantage of the government’s initiative to recognize the ‘Machinga’ as an opportunity to financially include them because we believe that they play a significant role in facilitating trade,” Nsekela explained. 

Additionally, the banking group also improved its asset quality by reducing bad loans (NPLs) from 8.3 to 5.5 percent, which is the biggest improvement, compared to an industry average currently pegged at 11 percent.

“We implemented several initiatives including modernizing and streamlining our credit processes; on loan origination, monitoring and collection, to improve turnaround time and quality of the portfolio,” said Frederick Nshekenabo, CRDB Bank’s Group Chief Finance Officer, Frederick Nshekenabo noting that return of equity improved to 14.7 percent against 8 percent currently prevailing industrial average. “Our earnings remained strong with the group expanding its overall market share in Tanzania to slightly above 20 percent,” he added while noting that mitigation

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