The banking sector shares have under performed in this year under the weight of concern about quality of their assets. The sector with some 60 banks, represented by some eight listed institutions on the Dar es Salaam Stock Exchange (DSE), saw its stocks dropping from zero to 40 per cent since the start of the year.

Orbit Securities said in a Weekly Financial Markets Synopsis that the investors’ concerns were the quality loan books, “with non-performing loans [NPLs] getting worse for each reporting during the year”. The NPLs ended 2016 at 9.53 per cent, “slowly inching higher and higher to reach 12.52 per cent as reported end of September 2017”, Orbit report showed.

The level of NPLs exceeds the tolerable 5.0 per cent of industry limit. “The situation,” according to Orbit, “leaves investors interested in banking stocks wondering when loans quality deterioration will bottom up”. Tanzania Securities Daily Market report showed that the eight listed banks stocks have either depreciated or stagnated since January.

The shares of leading bank CRDB, was hit hard after it went down by 36 per cent in a year from 250/-to 160/-before Christmas. Despite share depreciation, CRDB counter “continued to post outstanding bids at the end of every trading session”, an indication of renewed appetite from investors, Orbit said.

Mkombozi Bank was second seeing its share price sharp drop by 11 per cent to 890/-. Mwalimu sunk by 3.85 per cent to 500/-and DCB 2.53 per cent to 380/-. Others, NMB bank, the second leading bank, Maendeleo bank, Yetu Microfinance and MuCoBa, stocks stagnated at same levels opened in January at 2,750/-, 600/-, 600/- and 400/- respectively.

Stock market analysts have it that as 2017 wind down, investors with keen interest in banking stocks are braced with another profitability-eroding potential mostly for financial institutions stocks early in January 2018, the effect of which will be observed after March 2018 reporting onward. This potential “shocker”, according to Orbit Synopsis, will come from adoption of IFRS 9 starting January 2018.