A Regional Review. CRDB Bank's Market Dominance and Investment Potential
June 27, 2024
As first published in , follow them for insightful articles across the region.
Friends,
In contrast to other countries such as Uganda and Kenya, where more than two or four banks hold a significant market share in the banking industry, Tanzania's banking sector is dominated by two powerhouse banks. These banks collectively control over 80% of the market share. Their total assets are indicative of the overall performance of the banking industry. Both banks are listed on the Dar es Salaam Stock Exchange. In the upcoming articles, we will examine some of these banks to determine whether they represent a worthwhile investment for those interested in the East African Stock Exchange market. This is particularly relevant at a time when Tanzania is experiencing rapid development and emerging from its previous state, largely due to the leadership of the current president and the subsequent impact on the financial markets, the economy, and its growth trajectory.
We will begin with CRDB Bank, a publicly listed company on the Stock Exchange and the largest bank in Tanzania. CRDB Bank controls over 40% of the market share and is the most profitable bank in the country. We will explore its performance over the years.
Price Performance of CRDB Bank PLC:
Over a 14-year period, CRDB Bank reached its highest share price of 575 Tanzanian shillings in April 2024. The bank has seen consistent growth over the last four years, following a slump between 2015 and 2020. Since 2020, the bank has been on a growth trajectory that is expected to continue. An investment in the bank's shares in July 2020, when the price was 100 Tanzanian shillings, would have yielded a 500% return on capital gains alone, not to mention the dividends received. This impressive performance suggests that the bank's share price could potentially double every year, as it has done consistently for the past four years, with the trend anticipated to continue through 2024 and 2025.
From a revenue standpoint, CRDB Bank has doubled its total revenue from operations over a decade. Starting from a modest 650 billion Tanzanian shillings, the bank's operating profits and income before taxes have shown a remarkable upward trajectory. The income before taxes grew from approximately 200 billion Tanzanian shillings in 2014 to around 600 billion in 2021, and is currently estimated at 800 to 900 billion in 2023. This projection of significant future profits reflects a company in robust financial health and suggests that CRDB Bank is a solid investment opportunity.
From the balance sheet perspective, the total assets of CRDB Bank have tripled over a period of 10 years, growing from 6.7 trillion Tanzanian shillings to approximately 13 trillion in 2021, and currently standing at 19 trillion in 2023. With a healthy loan portfolio and a low non-performing loan ratio of around 3%, the bank's coverage ratios are favorable, and its exponential growth in profits is noteworthy.
As one of the leading companies on the Dar es Salaam Stock Exchange, CRDB Bank, with its substantial control of nearly 40% of the market share in the expansive Tanzanian banking industry, represents an attractive investment opportunity, especially at a time when Tanzania's economy is on the rise and a good look for those looking to diversify and invest in other regional markets.
Alex thanks for the CRDB article.