Tanzania’s CRDB Bank to trim non-performing loan ratio

Bloomberg

CRDB Bank Plc, the largest bank in Tanzania, expects to reduce its non-performing loan ratio to meet a central bank threshold as it shifts its focus to the retail business, Managing Director Charles Kimei said.
The lender’s ratio of non-performing loans will fall to 6 percent this year from 8.1 percent a year earlier, when tobacco marketing groups failed to repay loans, according to a report handed out at the annual general meeting in the Tanzanian city of Arusha. The level was 5 percent in 2014.
The decline will also be driven by gradual repositioning to retail from corporate lending, Kimei told shareholders of the Dar es Salaam-based bank.
CRDB, which is classified by the Tanzania central bank as significant to the financial system, posed a risk to the industry when the loan ratio is at 8 percent, Kimei told investors on April 14.
Kimei said the bank would consider acquiring one of two units of Barclays Africa Group Ltd. in the country, which the London-based parent is seeking to sell, if the “opportunity arises.”
“What’s important is the quality of the asset base and skilled staff. That would help us expand,” Kimei said in an interview at the meeting.
While the bank’s Burundi unit posted its first profit last year, plans to expand into neighboring countries have been challenging.
“We decided we can’t stay in Tanzania while others are coming to eat into our market. We went to Burundi but we have had challenges in Lubumbashi (DR Congo). We still have to get authorization and we are still working on that,” Kimei told shareholders.
The bank provides commercial banking services to individuals, small-to-medium-sized businesses and large corporations. As of December 2013, CRDB Bank’s total assets were valued at approximately US$2.154 billion.
In September 2013, the bank’s shareholders’ equity stood at about US$223.6 million.
According to reliable sources in Tanzania, at that time, the CRDB Bank was the second-largest commercial bank in Tanzania, by assets, and only behind FBME Bank. Not only this, but it was also the second-best
capitalised commercial bank at that time, only behind the National
Microfinance Bank.
CRDB Bank was formed when the former Cooperative Rural Development Bank which had been wholly government-owned, was privatised, recapitalised and restructured.