- NCBA Group has announced a $16.6 million investment in its Tanzanian subsidiary to boost its capital to deal with losses that resulted from the effects of COVID-19
- This capital is NCBA Bank and Tanzania Limited’s efforts to improve the performance of the regional subsidiaries with lower profitability
- The financial service provider has made $8.3 million investment in Tanzania so far
Tanzania- NCBA Group, a financial services conglomerate in East and West Africa, has announced that it is investing $16.6 million in its Tanzanian subsidiary this year to shore up its capital which was eroded by losses and a rise in defaults due to the economic fallout caused by Covid-19.
The new capital injection into NCBA Bank and Tanzania Limited is part of efforts to improve the performance of the regional subsidiaries that have recorded lower profitability compared to the mainstay Kenyan market.
“We have made $8.3 million investment in Tanzania so far to support capital and we intend to continue with more investment and make another close to $8.3 million by the end of the year,” said NCBA’s chief executive John Gachora.
He further added that they had closed four branches this year and do not plan to open the branches but reconfigure the business to go after corporates.
“We need to lend them more money and therefore need more capital to do so. The investment is really to support business growth in Tanzania,” he further said.
The Tanzanian subsidiary made a net loss of $9.2 million in the year ended December 2021, larger than the $6.4 million net loss recorded the year before.
The performance was attributed to an increase in bad loans and provisions for the same. The subsidiary’s non-performing loans ratio stood at 20.3 per cent, which is significantly above the recommended level of five per cent.
The bank was also slightly above other capital requirements, constraining its ability to lend more.
The new funds are expected to recapitalise the business and put it on an expansion path. The recapitalisation is being accompanied by a review of operations and client focus to fast-track the move to profitability.
NCBA Bank and Tanzania is now pivoting to serve large businesses while closing excess branches in specific locations.
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