New era dawns for Twiga Bancorp

The bank has better future predictions now that it is expected to be out of the woods following the government’s decision to finally rescue it from its financial quagmire.

Twiga Bancorp was in a sticky situation, leaving it on the brink of collapse a few years back, but of late it has not only started to make profit but also slithered its way in the good books of auditors.

Strategies to improve the TBCL’s fortunes have included recruitment of a top management team and appointment of new board members last year.

Speaking in an exclusive interview with The Banker on Monday, chief executive officer Cosmas Kimario said Twiga Bancorp has received clean audit certificates from the Office of the Controller and Auditor General and PwC for the first time in five years.

Kimario said the bank has also posted profit for the first time since 2010 and the burden of bad loans was beginning to ease. According to him, collections of non-performing loans (NPLs) stood at 8.0bn/- between January 2015 and May 2016.

“Twiga Bancorp’s operating profit up to May 2016 was 869m/-,” he said.

The good news follows rumours in financial circles that the government had threatened to close the bank for perennial loss-making. Dismissing rumours that the bank was to close shop, treasury registrar Lawrence Mafuru told journalists in Dar es Salaam last week that government has commissioned a study on capitalising TBCL to enable it expand its operations.

According to him, the bank had capital challenges for it to better serve customers throughout the country. Kimario told The Banker that a new era has dawned for the bank.

“The achievement comes after the bank and the new management developed a Five Year Strategic Plan, which mainly aims to transform the bank into a middle-sized bank by profitability come 2020,” he said.

The plan is built around five goals, which are all aimed at offering excellence services to its clients. Kimario said NPLs ratio that had reached 34 per cent in early 2015 has now been reduced significantly to around 23 per cent in May.

“The bank is performing well especially from January 2015 when the shareholder, the ministry of finance and the board of directors took a bold decision in December 2014 to change its organisation structure and replace its management team,” he said.

Kimario said that since the new management took over in January 2015 customer deposits grew by 91.75 per cent by May 2016 leading to its assets base to balloon by over 85.30 per cent during the period.

Figures he gave show that the assets base reached 94.5bn/- at the end of May compared to 51.0bn/- in January 2015 whereas customer deposits in 2015 amounted to 53.2bn/- but have since then surged to 102.1bn/-.

Lending during the period increased to 46.8bn/- from 38.3bn/-.

According to Bank of Tanzania figures, the Twiga Bancorp’s assets base was about 69.99bn/- in 2014 while the deposits amounted to 50.9bn/- compared to 48.3bn/- in 2013. The 2014 Directorate of Banking Supervision Annual Report also shows that the bank had four branches, nine ATMs and 79 employees.

“Twiga Bancorp Limited’s loan book grew by 22 per cent from January 2015 to May 2016. The bank’s target clientele base is one of the differentiating factors when compared to other competitors. Our key focus is on micro, small and medium enterprise customers,” Kimario said.

“The bank has recruited and trained key personnel capable of offering this product timely and efficiently. For instance, the bank officially launched its group lending scheme in February 2016. Since then loans of over 2.5bn/- have been given to different customers mainly women food vendors, Bajaj and Boda Boda operators as well as small scale farmers in the country,” he added.

A quick decision making process is also one of its key strengths. Decisions are made timely between the management and the board of directors, which effectively reduce the turnaround time to our customers, Kimario said.

The CEO went further to explain that Twiga Bancorp has established a relationship management concept within its sales function which seeks to protect and support customers at all times wherever they are, as well as enhancing the bank’s cutting edge technology infrastructure which supports its customers around the clock.

“Our customers should expect better and improved products built around our motto of ‘quality service is our pride,’” he said.

Being state-owned, TBCL intends to direct its efforts to support government efforts to reduce poverty among Tanzanians at all levels. Kimario said this mission will only be achieved through generating profits and paying dividends to the shareholder while also increasing financial services to needy Tanzanians especially those who have been left out of the financial sector for years on end such as SMEs.

The government has assured the bank’s customers that their deposits are safe and there are no plans to close it as it was being rumoured. Mafuru said the capital problem will be sorted out when the capitalisation study is completed.

“Soon after the new management and the board of directors were appointed, we have seen Twiga Bancorp operations improving after adoption of the Five Year Strategic Plan,” he said.

He said President Magufuli did not say the bank should be closed but directed that measures should be taken to solve the problems it faces. The bank was licensed by BoT in 1998.