ZIMBABWE Stock Exchange-listed NMBZ Holdings has predicted a loss for the year ended December 31, 2013 due to an increase of impairment losses on loans and advances.
In a profit warning statement issued last Friday, NMBZ board chairperson Tendayi Mundawarara said the board had reviewed the banking subsidiary’s loan book and consequently increased the impairment losses on loans and advances observed that this would have a material impact on the results for the period under review.
A profit warning is usually done two or more weeks before an earnings announcement. Companies do this to soften the blow to investors.
This gives the investors and the market more time to adjust accordingly before the public release, ideally taking some of the sting out of the expected price adjustment.
If no profit warning is released, the earnings announcement is called a negative earnings surprise.
“The board of directors of NMBZ Holdings Limited together with its subsidiaries would like to inform the shareholders of the company and investors that the board has reviewed the banking subsidiary’s loan book and has consequently increased the impairment losses on loans and advances,” Mundawarara said.
“This will have a material impact on the results for the year ended 31 December 2013 and the group will record an attributable loss for this period.”
Mundawarara, however, said despite the impairment losses the capital position of the bank remained above the regulatory minimum.
He said the capital adequacy and liquidity ratios for the banking subsidiary also remained above the regulated minimum levels.
“In the meantime, the board wishes to advise shareholders of the company and investors to exercise caution when dealing in the shares of the company,” he said.
The group recorded attributable profit of $2,6 million for the half year ended June 2013 from $2,5 million over the same period in 2012.
The group said non-interest income amounted to $8 152 494 and this was mainly as a result of commissions and fee income which amounted to $7 590 765. While operating expenses amounted to $13 025 587 mainly driven by administration and staff-related expenditure.
The group’s total assets grew by 17% from $226 533 682 as at December 31, 2012 to $264 784 407 as at 30 June 2013.
While gross loans and advances increased by 20% from $152 417 375 as at December 31 2012 to $183 454 912 as at June 30 2013.
The group said impairment losses on loans and advances amounted to $1 887 537 for the current period from a prior year amount of $688 020 and the increase was mainly due to the liquidity and market challenges being faced by businesses.