QUESTION: What are the reasons behind the loss? Answer: AccessBank Tanzania has been profitable between 2012 and 2014. In order to prepare the bank for the future way of banking, for instance to become more digitally available for the sake of better services to customers, the management together with the Board of Directors decided to conduct significant investments. The first product and services released in 2015 are the RAHISI account powered by AccessMobile, a fully free account connected to ABT’s mobile banking solution and AccessBank WAKALA agent network. These developments have incurred capital expenditures as well as additional funding and operating expenses which have negatively influenced the bottom line. We are confident that Access Bank Tanzania will resume its previous profitability trajectory in 2016, as already evidenced by the profit made during the first quarter of the New Year (2016). Question: Why the bank increased the amount for impairment losses on loans and advances while it’s NPLs is 3.8 per cent, well below the market benchmark of 5 per cent? Answer: Since its inception, AccessBank Tanzania has demonstrated a strong asset quality, evidenced by low NPLs and write-off rates compared to industry benchmarks both internationally and within in the Tanzanian banking sector. Obviously, it is impossible to avoid temporary fluctuations of portfolio quality in the context of a dynamically expanding product range and a very fast-growing loan book. In 2015, the AccessBank Tanzania decided (upon consultation with its parent company and external auditors) to revise its loan loss provisioning methodology in 2015 to align it with the international AccessHolding group standards. This approach has led to an increase in impairment expenses and the overall loan loss provisioning rates. Question: Why foreign currency dealings registered further negative earnings? Answers: AccessBank Tanzania has historically had a low share of non-interest income vis-à-vis total revenues, which is essentially an indication of low fees and charges on its financial services. In 2015, the drop of this position was however triggered by accounting effects linked to hedging transactions in connection with borrowings or deposits from foreign lenders. In previous years, such effects were normally shown in the line item “interest expenses” (where they materially belong) but due to a change in the construction of these hedges, most of the expenses had to be booked as a loss on foreign exchange dealings. We wish to clarify that the Bank has not encountered any FX trading losses as we are not engaged in speculative dealings of any nature and have kept our net open position within regulatory limits throughout the year, as evidenced in our daily statutory filings of the FX position to the Bank of Tanzania. Question: How will AccessBank going to correct this loss in 2016? Answer: The development costs and investments undertaken in 2015 are expected to bring positive results from 2016. For example, RAHISI powered by AccessMOBILE now accounts for more than 25,000 customers with a cumulated balance of more than 5.0bn/- billion, which is an appreciable source of funding. The agent network WAKALA will pursue it growth for the best of AccessBank Tanzania capacity to serve unbanked people in more isolated zones. ABT also engaged in a restructuring of its funding strategy to optimize the corresponding cost. First results have already appeared on first quarter of this year (2016) with a positive trend on profitability, confirming the relevance of the strategic choices made in 2015. Question: What are future plans of AccessBank in 2016 and beyond? Answer: ABT will pursue the expansion of its branches network. We will continue up scaling the digital and other alternative distribution channels as a means to increase our outreach. RAHISI powered by AccessMOBILE will receive additional features allowing savings groups to use this solution and shift from traditional cash box management to fully digital. The strategy of AccessBank Tanzania for the years to come is fully supported by its parent company Access Microfinance Holding AG as well as other reputable international shareholders including the African Development Bank, KfW Development Bank and the International Finance Corporation, member of the World Bank Group. The Shareholders have recently approved (and already partly disbursed) a capital increase of 8.0bn/-in order to support the continued expansion of the Bank. Generally, ABT pursues a highly labour-intensive business model as we strongly believe in the importance of direct service to the customer at their doorstep. The quality and strength of our customer services has been recognized by ABT’s leading ranks in a recent regional banking survey by KPMG. We are proud to be the fourth largest employer in the Tanzanian banking sector and one of the most active providers of training and employment for young professionals in the financial industry. The staff expenses mentioned by you are mostly explained (around 140 more people) by the development of new product lines in existing branches (agro lending) and opening of an outlet attached to our branch of Kahama. Further, the above described investments in the development in digital products and services included the recruitment of 40 additional staff member in Head Office, in particularly in the Business Development Department and the Customer Support Centre. Originally published on DailyNews Tanzania]]>
