Tanzania: Three banks that dominate banking business

[Invisible]

By Costantine Sebastian
The Citizen Newspaper
Nov 16, 2009

Three banks command the lion's share of banking business in Tanzania controlling nearly half of the sector's total assets, gross loans and deposits as well as 41 per cent of the total capital, The Citizen can authoritatively reveal today.

According to the Bank of Tanzania (BoT), the institutions dictating the banking terms are CRDB Bank, National Microfinance Bank (NMB) and NBC Bank Limited.

By the end of last year, CRDB was the market leader with a 17 per cent grip of the sector's total assets, 19 per cent of the total loans, 19 per cent of deposits and 14 per cent of the sector's total capital.

The top two, CRDB and NMB, had total assets amounting to Sh3,588.9 billion by the end of the third quarter of this year. They last week announced that their assets had reached Sh1,859.87 billion and Sh1,729.03 billion respectively during the nine months of 2009.

Mzumbe University don, Mr Honest Ngowi says the dominance of the sector by a few banks was not healthy especially when the banks are foreign owned. Such an arrangement, he explains, is not good for the sector, the borrowing public and the national economy at large.

"A healthy economy is one where no few banks control a substantial share of the market, especially when these banks are foreign-owned indeed, one wonders why we have such high borrowing interest rates in a competitive financial market with about 40 banking financial institutions and a long litany of non-banking financial institutions," he told The Citizen.

BoT figures show that the assets of CRDB, NMB and NBC were Sh1,451.97 billion, Sh1,391.93 billion and Sh1,142 billion respectively at the end of last year.

Its directorate of banking supervision (DBS) says in a report that the aggregate balance sheet of the banking sector grew by 21 per cent in 2008 to Sh8,442 billion from Sh6,981 billion in 2007.

"The assets grew by Sh1,461 billion from Sh6,981 as at December 31, 2007 to Sh8,442 billion at December, 2008 Deposits from customers constituted 96 per cent of total deposits,"the DBS report released early this month reads in part.

The gross loan portfolio of the banking sector as at December 31, 2008 amounted to Sh4,426.16 billion compared to Sh2,99.02 billion recorded in 2007 depicting an increase of 47.93 per cent.

The report says that non performing loans accounted for 6.17 per cent compared to 6.31 per cent recorded in 2007.

CRDB's deposits mounted to about Sh1,267.73 billion while NMB and NBC Bank had Sh1,213.55 billion and Sh908.17 billion respectively. By the end of September this year, CRDB and NMB had mobilized from customers deposits worth Sh1,486.94 billion and Sh1,484.23 billion respectively.

The managing director of CRDB Bank, Dr Charles Kimei, said in an interview on Friday that the bank's total loan portfolio was Sh836 billion in 2008 representing 19 per cent of total loans granted by all banks.

The bank's latest financials show that at Sept 30, 2009, its loans, advances and overdrafts amounted to about Sh985 billion compared to nearly Sh1,645 billion extended during the first six months of this year.

"In easy language, 19 per cent of all loans given to various sectors are in the books of CRDB,"Dr Kimei said noting that most of the bank's lending goes into financing farming activities. "About 30 per cent of the loans we extended last year or Sh300 billion was in agriculture with a substantial portion of that, which was more than 40 per cent, being in agricultural production."

BoT's director of banking supervision, Mr Joe Massawe, said that at December 31, 2008, the banking sector was composed of 36 banking institutions that consisted of 25 commercial banks and 11 financial institutions.

Out of these, four were fully owned by the government, 13 were 100 per cent locally owned and 13 were in full foreign control whereas the ownership of 10 was both local and foreign.

Commercial banks dominate the banking sector market with a 96 per cent control of the total assets. DBS figures show that last year the 10 largest banks accounted for 83 per cent of the assets, 83 per cent of the loans and 84 per cent of the deposits.

"Three largest banks had, as at December 31, 2008, 47 per cent of the sector's total assets, 48 per cent of the total gross loans, and 50 per cent of the deposits,"the directorate notes in the report adding: "55 per cent of the sector's assets were held by foreign owned banks."

The report further says that the market share of foreign banks increased from 53 per cent in 2003 to 56 per cent in 2006 before dropping to 54 per cent last year.

According to it, the decline in the market share of foreign banks in assets was accelerated by growth and expansion of domestic banks and establishment of new banking institutions.

"Foreign owned banks are expected to lose much share of the sector's assets due to fast growing domestic banks coupled with licensing of community banks which require relatively less capital compared to national wide commercial banks," it asserts.

Mr Massawe said that despite the challenges posed by the financial crisis, the year 2008 was overall a good year for the Tanzanian banking system. He said the banks were adequately capitalized and the liquidity position of the sector was generally satisfactory.

He told The Citizen in an exclusive interview that the sector has up to now remained strong although Tanzania has been a victim of the second round effects of the crisis.

 

[NGULI]

Thanks,
Mabenki ni wanyonyaji wakubwa kwa masikini esp. TZ whereby we are leading if not mistaken in the world by having the high interst rates je ndio kuendeleza maskini huko? na huo uizi umehamia kwa saccoss

 

[bnhai]

Mh that is monopoly. Na aina ya uwekezaji wa mabenki yetu unafanana. They are highly correlated, we wait and see siku itafika unless waongeze diversification. Pia we need more banks, benki tatu ni chache mno kushikilia uchumi tena zoote zikiwa na foreign ownership

 

[nguvumali]

bado ni benki za Nyerere ndo zinawakimbiza wageni, unajua hizo benki zina ejoy economies of scale, ndo maana mpaka leo naamini bei tuliyowauzia wale makaburu NBC ni gharama za jina peke yake bila mtaji. inauma sana , wadosi hawa wanafaidi jasho la wazazi wetu kwa gharama za maamuzi ya kibabe ya MKAPA na WENZIE.

 

[nzalendo]

bado ni benki za nyerere ndo zinawakimbiza wageni, unajua hizo benki zina ejoy economies of scale, ndo maana mpaka leo naamini bei tuliyowauzia wale makaburu nbc ni gharama za jina peke yake bila mtaji. Inauma sana , wadosi hawa wanafaidi jasho la wazazi wetu kwa gharama za maamuzi ya kibabe ya mkapa na wenzie.

tuelimishwe njia nyingine za kuhifadhi fedha zi lazima iwe bank kwa hali ya nchi yetu kwa sasa.

 

[Nyauba]

bado ni benki za Nyerere ndo zinawakimbiza wageni, unajua hizo benki zina ejoy economies of scale, ndo maana mpaka leo naamini bei tuliyowauzia wale makaburu NBC ni gharama za jina peke yake bila mtaji. inauma sana , wadosi hawa wanafaidi jasho la wazazi wetu kwa gharama za maamuzi ya kibabe ya MKAPA na WENZIE.

bado tunauwezoo kuwa na locally owned bank which meets local financing needs na makaburuu na wenzaoo tukawasukuma sanaa tuu sokoniii..

KCB as govt owned bank kule KWA JIRANI ZETU inatamba sasa kama regional bank as well as pan african bank!!! wapi local bank tz inachanja mbuga kuexpoloit domestic market na kwenda regional!!! CRDB kuna kaharufuu ila mipango yao sijui maana customer service ni gizaaaaaaaaaaaaaaaaaaaaaaaaaaaa.............leave alone how the local capacity is growing and sustainably managed!!!!

 

[MovingForward]

Toeni mapendekezo na maoni juu ya mstakabali wa sekta ya bank hapa nchini. Tuwe tunaongea kwa data. Ambao wangependa kupata data za kutosha, watembelee tovuti ya Bank Kuu, kuna taarifa za kiuchumi za kila mwezi na kila Robo Mwaka, Quarterly/Monthly Economic Reports kwa sasa zipo za mpaka September 2009. Tukisoma na kuzielewa vyema tunaweza kuchangia mawazo mazuri.

Wakaguzi wa banks na taasisi nyingine za fedha wanaweza kushare nasi taarifa nzuri na kutoa maoni yao. Siyo lazima wataje benki kwa majina, lakini ninaamini wanaweza kuja na data nzuri zaidi. Vinginevyo maoni ya wengi hapo juu ni too vague. Hayana data wala hayajazamia kwa kina juu ya report iliyotolewa hapo juu.

Tukitumie chombo hiki vyema.

Critical thinking and evaluation are two strong arms that may uphold the nation!- sisimizi

 

[MaxShimba]

Toeni mapendekezo na maoni juu ya mstakabali wa sekta ya bank hapa nchini. Tuwe tunaongea kwa data. Ambao wangependa kupata data za kutosha, watembelee tovuti ya Bank Kuu, kuna taarifa za kiuchumi za kila mwezi na kila Robo Mwaka, Quarterly/Monthly Economic Reports kwa sasa zipo za mpaka September 2009. Tukisoma na kuzielewa vyema tunaweza kuchangia mawazo mazuri.

Wakaguzi wa banks na taasisi nyingine za fedha wanaweza kushare nasi taarifa nzuri na kutoa maoni yao. Siyo lazima wataje benki kwa majina, lakini ninaamini wanaweza kuja na data nzuri zaidi. Vinginevyo maoni ya wengi hapo juu ni too vague. Hayana data wala hayajazamia kwa kina juu ya report iliyotolewa hapo juu.

Tukitumie chombo hiki vyema.

Critical thinking and evaluation are two strong arms that may uphold the nation!- sisimizi

Asante Mkuu.

 

[reandle]

Thanks,
Mabenki ni wanyonyaji wakubwa kwa masikini esp. TZ whereby we are leading if not mistaken in the world by having the high interst rates je ndio kuendeleza maskini huko? na huo uizi umehamia kwa saccoss

Hakuna benki ya biashara inayoanzishwa kwa ajili ya kuwaendeleza maskini mkuu!!

 

[AM_07]

b the way ,hizo hela za kuweka benki ziko wapi

 

[mpangwa1]

Our banks are just used as money store where you have pay monthly for storing your money unlike other countries' banks were you get monthly interest. I don't get their operational logic.

 

[Jile79]

Grrrrrrrr..............ni hatari kwa banking system kuwa monopolized by just three banks

 

[nimechafukwa]

Nbc ipo???.nina wasiwasi Bank mbovu kwel hyo