BANK OF AFRICA – TANZANIA Limited (BOA-TANZANIA) recorded a pre-tax profit of TZS 6 billion (2019: Loss of TZS 16.1 billion) during the year ended 31 December 2020. The profit is attributed to the increased investment in Government securities which resulted into increased interest income & gains on securities trading, decreased impairment charges and the reduction in operating expenses through cost initiatives measures such as the reduction in the number of staff & closure of loss-making branches.
Impairment charges on loans and advances declined from TZS 14 billion in 2019 to TZS 2.7 billion – equivalent to 80.6% decline. This follows an improved quality of the loan portfolio as evidenced by the decline of Non-Performing Assets Ratio from 9.2% at the end of 2019 to 7.5% at the end of 2020. This was a result of management’s exercise of more stringent credit appraisal processes coupled with strengthening of the Recovery & Risk Prevention functions. The credit selection, appraisal and approval processes, complemented by strong relationships with customers have ensured that potential credit delinquencies are identified and managed at an early stage.
The Bank’s net loan book dropped by 6.8% from TZS 275 billion at the end of 2019 to TZS 256.1 billion at the end of 2020. The drop was due to a strategic move by the Bank to contain credit risk following the outbreak of Covid-19 ; hence not lending to certain sectors e.g. Transportation as business was expected to be low due to travel restrictions.
Customers deposits for the Bank stood at TZS 363.7 billion as at the end of 2020 (2019: TZS 389.4 billion), being a drop of 6.6% over the previous year. The drop in deposits was due to the efforts to contain expensive deposits and hence the Bank off-loaded expensive FDR’s to reduce Interest expense.
Both Bank’s tier I & II capital ratios remained at the same levels of 16.9% (2019: 17%) at the end of 2020.
Both of these ratios are well within the regulatory limits of 12.5% for Tier I ratio and 14.5% for Tier II ratio.