Tanzania: Postal Bank in Upward Trend Gets Set for Listing At DSE

By Alvar Mwakyusa

The Tanzania Postal Bank (TPB)'s profitability trend continued improving last year with a pre-tax profit of 12.02bn/- hence sending positive signals as it prepares to list at the Dar es Salaam Stock Exchange (DSE).

Listing of the financial institution at the bourse will enable it expand its capital and operations amid competition from other banks in the country. The listing will be possible now that the legislation for its incorporation was amended last year.

Towards the end of Budget Session of the National Assembly in July, last year, the Parliament passed the Tanzania Postal Bank (Repeal and Transitional Provisions) Act, 2015 which paves the way for the bank to transform.

The Act will enable TPB to raise funds from the public - listing at DSE. The Act seeks to incorporate the bank under the Companies Act in line with the Banking and Financial Institutions Act, (BAFIA), 2006.

The TPB was the only bank in the country operating under the Act of Parliament contrary to BAFIA, which requires all banks to be incorporated under the Companies Act. During the third quarter in September last year, the bank recorded profits amounting to 1.88bn/ compared to 1.15bn/- posted in the corresponding quarter 2014.

Similarly, the TPB posted outstanding profit for September 2015 of 6.35bn/- up from 5.07bn/- recorded in the corresponding period last year. According to audited financial results for financial year 2014, the bank posted a pre-tax profit of 10.28bn/-.

The Bank of Tanzania (BoT), requires financial institutions to make public their audited reports. The government of Tanzania owns 85.87 per cent followed by the Tanzania Posts Corporation (TPC), with 8.22 per cent while the Revolutionary Government of Zanzibar and Tanzania Posts and Telecommunications Savings Credit Society have 3.04 per cent and 2.87 per cent, respectively.

According to the financial report for 2015, profits were pushed up mainly by net income interest that garnered 35.13bn/- against 28.97bn/- of 2014. The revenue from net income jumped up as the results of loan portfolio that increased by 28.5 per cent to 251.9bn/- from 196bn/-.

The loan portfolio increase as well pushed up the ratio of loans to deposits to 80.19 per cent from 75.36 per cent while non- performing loan ratio stayed below the industrial rate at 4.31 per cent. "The loan portfolio also enables assets to grow by 24.5 per cent to 370.81bn/- in 2015 from 297.76bn/- in 2014.

The increase of customer deposits gave the ban an extra room to extend more loans in 2015 after deposits clocked 307.88bn/- from 240.14bn/- an increase of 28.2 per cent," read part of the report. TBP profitability was also attributed to revenue from non interest income that increased to 24.82bn/- in 2015 from 18.46bn/- in 2014.

The non-interest was pushed up mainly from fees and commissions portfolio that went up to 15.35bn/- from 14.74bn/- while foreign currency dealings fetched 4.2bn/- up from 862m/-. During the year, the bank opened one more branch to increase its physical outreach to 29 branches thus pushing total number of staff to 647 from 574 people.

The number of staff increased total expenses to 42.25bn/- from 35.05bn/-, this was driven up due to the raise of salaries and benefits climbed by 25.6 per cent to 23.69bn/-. Cumulatively, the bank posted net interest income worth 25.23bn/- in September 2015, compared to 20.97bn/- of the corresponding period a year before.

During the period, loans, advances and overdraft increased to 247.58bn/- compared to 241.51bn/- posted in the quarter of June 2015. Gross loans and advances to total deposits grew by 85.20 per cent compared to the growth of 88.95 per cent in the quarter of June 2015.

Similarly loans and advances to total assets grew by 70.51 per cent compared to the growth of 72.39 per cent in the previous quarter. The bank managed to maintain low non-performing loans to total gross loans to 3.35 per cent same as in the preceding quarter.

Furthermore, customer deposits increased to 294.33bn/- in the quarter under review compared to 263.66b/- of the previous quarter. Deposits from other banks and financial institutions slowed to 4bn/- compared to 14.2bn/- of the preceding quarter.

As part of the financial sector reforms, the TPB was established by the Tanzania Postal Bank Act number 11 of 1991 as amended by Act No.11 of 1992. It was established as a successor to the then Tanganyika Post Office Savings, which was established by the Post Office Savings Bank Ordinance of 1925 and became operational in 1927.

The Chief Executive Officer (CEO), of TPB, Mr Sabasaba Moshingi, has expressed satisfaction after the institution managed to cross the ten billions mark, since it was established some two decades ago. The bank made a historic profit of pre-tax profit of 10.28bn/- in 2014, well above 6.99bn/- recorded in 2013.

"The achievement was the result of innovation in our lending products", the CEO remarked, adding, "our cooperation with pension funds and good customer relations". In 2014, the bank set aside 150m/- for Corporate Social Responsibility (CSR), that went to health, education and school desks, and street children centers etc.

SOURCE:TANZANIA DAILY NEWS