Bank-Tanzania - CRDB Bank said yesterday that it expects to post an increase of 30 per cent this year following roll-out plans which include branch expansion. The bank's last year net profit, according to its Managing Director, Dr Charles Kimei, was badly affected by the provision of 30bn/- that was set aside to cover for any probable loss after a number of clients failed to service their debts due to the world economic crisis. "There are clear indications that the bank will generate good profit as we are planning to expand further and we are happy the world financial crisis is now over", he said. He said that if it was not for the global crisis and hefty provision for impaired loses, CRDB net profit last year could have reached 100bn/- but settled at the 48.37bn/- mark.

"We are also happy that there won't be such provision to cover for any losses this year" Dr Kimei said when presenting the bank's 2010 financial results to investors and other stakeholders.

The bank future strategy is to decrease the provision cap to 2.0 per cent, beginning this calendar year. The global financial crisis hit most commercial banks in the country to impact negatively on their profitability.

The overall bank sector profit dropped to 192bn/- in 2010 compared to 217bn/- the previous year. Dr Kimei said there is mismatch between the bank sector's expansion and profitability while the industry growth accelerated in the last five years.

He said there is potential for several years of further strong growth in consumer and corporate lending as the loan and advances have reached 5.38trn/- which is 56 per cent of total industry deposits.

"Retail deposits and loans have increased strongly, albeit from low level as disposable income increases. But financial services are still reaching a low proportion of the population-about 12 of population is banked," Mr Kimei said.

The industry's loans and deposits on GDP ratios are at 19.6 and 35.2 per cent respectively, which are below other peer emerging countries such as Kenya. While, the depth of financial intermediation-total assets to GDP ratio-is still quite low in the country at 44.5 per cent last December.

This is due to low level of household income and saving which is limited by branch network. He said that the bank plans to increase the number of branches currently at 71, supported by 162 Automated Teller Machines (ATMs) countrywide.

"Our share of market in term of branches is still too low, as we control only 14.2 per cent of the total branches countrywide," Dr Kimei said. Currently, there are 430 bank branches in Tanzania. Nevertheless, CRDB in the last five years maintained its leadership position as the biggest bank in terms of assets.

In 2005 the bank's assets were 898bn/- but grew handsomely to 2.316trn/- in 2010. The National Microfinance Bank (NMB) comes second with its assets reaching 2.11trn/- as the National Commercial Bank (NBC) settling at the third slot on 1.47bn/- while Standard Chartered 1.078trn/-is fourth.

Abduel Elinaza

Tanzania Daily News/13/04/2011