The National Bank of Commerce (NBC) has recorded a total income of TZS 176.5bn for the twelve months ended 31st December 2010. This represents a 7% increase year on year compared to TZS 164.2bn recorded for the same period in 2009. This modest revenue growth is mainly a result of strong growth of our asset book which grew by 10% during the year 2010 resulting into a total interest income of TZS 123.9bn. Our asset book is made of both loans and advances to private sector and investment in government securities. Interest income contributed 70% of our income while non-interest income was 30% of the total income. Our non-interest income was driven by Treasury income as well as service fees and commissions.Despite the challenging economic environment following the historical global recession recorded in 2008/2009, NBC was able to continue with its role of financial intermediation and grew its deposit liabilities by 16.53% during the year. We also continued with the expansion of our delivery channels in order to get closer to our customers and serve them conveniently. Our branch network grew to 54 branches, our ATM network which is both VISA and MasterCard enabled grew to 224 throughout the country and our point of sales reached a 250 mark over the last 12 months.On the costs side you will be interested to know that during the year 2010 NBC embarked on a huge IT replatforming project where we implemented a new core banking system with a view of improving our customer service delivery. This also necessitated a change in our ATM technology. We also procured a new Treasury dealing system for our financial markets activities during the year. All these initiatives coupled with our business as usual operating costs resulted into a rather unusual increase in our costs of 35% for the year. We believe that these investments were necessary for the sustainable growth of the bank.
The global recession that happened in 2008/2009 negatively impacted a substantial part of our loans and advances portfolio resulting into credit impairments of TZS 34bn. This was mainly driven by a deterioration of a significant portion of our Retail credit portfolio. It is also important to note that during the year we adopted a new group impairment model in order to align with our group (ABSA) standards and also to ensure that we are in line with the prudential guidelines provided by the Bank of Tanzania. The abnormal growth of our operating cost coupled with an increase in our credit impairment resulted into an all time low level of profit before tax of TZS 5.4bn. Despite the above challenges experienced during the year 2010, NBC maintained a healthy capital position and remained adequately capitalized according to Bank of Tanzania capital adequacy requirements.
