NCBA Tanzania, the banking subsidiary of NCBA Group, has released its third-quarter financial report for 2023, showing remarkable growth in a series of bank fundamentals. 

In results released this week, the bank reported that in the 3 months from June 2023, operating income grew by 145% from a loss of TZS8.4 billion in Q2 2023 to a positive of TZS3.8 billion in September 2023. 

After-tax Income also improved by 152.4% from a loss of TZS9.6 billion to a profit of TZS5 billion. 

This was fuelled by a 16.3% growth in net lending, from TZS237.1 billion to TZS275.7 billion. And a 13% growth in deposits from TZS240 billion to TZS271 billion. 

This is all underpinned by a 7.34% growth in total assets from TZS478.7 billion to TZS513.8 billion.

The remarkable Q3 growth continues the recovery trajectory the bank has been on since the year began, under the leadership of Claver Serumaga who joined the bank in December 2022.

With more than 19 years of banking experience spanning Uganda, Kenya and now Tanzania, Claver was prior to NCBA Tanzania, the Deputy Managing Director of Bank of Africa Kenya (BOAK) where he played a significant role in steering the bank to profitability. Before that, he was the Chief Digital Officer at Bank of Africa Group, based at the Group’s headquarters in Casablanca Morocco and in that role, led the Group’s Digital Transformation Strategy across 16 countries in Africa in the year 2017. He has also served Bank of Africa in Uganda in a General Manager, Business Development role. Another senior position he held in Uganda, was at Orient Bank (now I&M Bank Uganda), where he was the Head of Retail Banking and Marketing.  

NCBA Tanzania Q3 2023 financial highlights.

A Fellow of the CIM (Chartered Institute of Marketing-UK) Serumaga also holds an Executive MBA (Management) from the Graduate School of Business, University of Cape Town.

Getting out of the woods

“These figures underscore NCBA’s adaptability and unwavering focus on turning around the bank,” the bank said in a statement. 

NCBA Tanzania’s performance was erratic, both before and after the 2020 merger⏤ NCBA Tanzania was formed after the 2019 merger of two Nairobi-headquartered banking groups⏤ Commercial Bank of Africa Limited and NIC Group Plc, which merger was subsequently rolled out to subsidiaries in the region, including Tanzania in 2020.

Post-merger, the bank’s quest to recover from years of losses, was negatively affected by the onset of Covid-19 which in particular further increased its loan-loss provisioning and widened its loss position. The 2023 profit- both before and after tax, will be the first in over 7 years. 

Since taking over the bank, Serumaga has implemented the now-famous turnaround strategy anchored on a new Target Operating Model (TOM). 

“Under the new TOM, the Bank was set on a new strategic path to become a significant player in the Tanzanian economy by focusing on key growth sectors of the economy including Oil and Gas, Trade, FMCG, Transport, Manufacturing, Tourism and Construction,” Serumaga told CEO East Africa Magazine in an online interview.

“This strategic approach enabled the bank to move away from a very diversified and sub-optimal business model that was previously targeting a wide base of customers without a clear competitive proposition to a new approach that is centred around the corporate customer business model. This ensures that the clients are aligned with our key strengths including regional presence,” he added. 

Redefining Corporate Banking: Claver speaks during the September 2023 launch of the bank’s Maisha ni Hesabu – Numbers that Matter” campaign targeted at the corporate banking segment, with a focus on innovation and sustainability. The bank owes its turnaround to its new Target Operating Model (TOM) which moves away from targeting almost everyone to a corporate customer business model that among others leverages the NCBA Group’s strengths in key growth sectors such as Oil and Gas, Trade, FMCG, Transport, Manufacturing, Tourism and Construction. 

The bank has also had to deal with other sticky issues such as improving the inefficient cost structure that necessitated rationalising 4 branches and 100 staff in 2022 as well as reducing the high non-performing loans ratio of 20% which had an elevated cost of risk of 5%. This has since been reduced to 11% as of the end of September 2023 and is expected to further reduce to within the regulatory requirement of 5 % in the next 12 months.

The bank also benefitted from a shareholder capital infusion of TZS 35 billion last year to support the strategic implementation of the new recovery strategy.

“From these efforts, the Bank has generated a total operating profit of TZS 9.2 billion as compared to an operating loss of TZS 21.8 billion for the same period last year. The Net interest income and non-interest income are higher by 31% and 28% respectively as compared to the same period last year while our operating costs are less by 8% as compared to the same period last year,” Serumaga said. 

“On top of a better operating profit, our recovery strategy on the written-off book has also yielded a better result as compared to the same period last year, all of these have contributed to better results as compared to the comparative period in the previous year,” he added.

Serumaga also attributed the turnaround to both the overall growth of the economy and a conducive business environment in Tanzania. This is in addition to the the support and interventions of various stakeholders including the Shareholders, the Board of Directors, NCBA Group’s continuous technical support as well as support by the regulator,  customers, and staff.  

About the Author

Muhereza Kyamutetera is the Executive Editor of CEO East Africa Magazine. I am a travel enthusiast and the Experiences & Destinations Marketing Manager at EDXTravel. Extremely Ugandaholic. Ask me about #1000Reasons2ExploreUganda and how to Take Your Place In The African Sun.