ISSN 0856 – 8537 DIRECTORATE OF BANKING SUPERVISION ANNUAL REPORT 2017 21ST EDITION For any enquiries contact: Directorate of Banking Supervision Bank of Tanzania 2 Mirambo Street 11884 Dar Es Salaam TANZANIA Tel: +255 22 223 5482/3 Fax: +255 22 223 4194 Website: www.bot.go.tz TABLE OF CONTENTS ....................................................................................................... Page LIST OF CHARTS ........................................................................................................................... iv ABBREVIATIONS AND ACRONYMS ............................................................................................ v MESSAGE FROM THE GOVERNOR ........................................................................................... vi FOREWORD BY THE DIRECTOR OF BANKING SUPERVISION .............................................. vii CHAPTER ONE .............................................................................................................................. 1 OVERVIEW OF THE BANKING SECTOR .................................................................................... 1 1.1 Banking Institutions ................................................................................................................. 1 1.2 Branch Network ....................................................................................................................... 1 1.3 Agent Banking ......................................................................................................................... 2 1.4 Market Share ........................................................................................................................... 2 1.5 Electronic Payment Services .................................................................................................. 3 1.6 Employment in the Banking Sector ......................................................................................... 4 1.7 Mortgage Finance ................................................................................................................... 4 1.8 Representative offices ............................................................................................................. 4 CHAPTER TWO ............................................................................................................................. 5 PERFORMANCE OF THE BANKING SECTOR ............................................................................ 5 2.1 Overview of the Economy ....................................................................................................... 5 2.2 Balance Sheet Structure of the Banking Sector ..................................................................... 6 2.2 Financial Soundness Indicators ............................................................................................ 16 2.3 Risk Assessment ............................................................................................. 21 2.4 Stress Testing ................................................................................................. 21 CHAPTER THREE ........................................................................................................................ 22 MAJOR ACTIVITIES ..................................................................................................................... 22 3.1 Overview ................................................................................................................................ 22 3.2 Structure of the Directorate of Banking Supervision ............................................................ 22 3.3 Licensing................................................................................................................................ 22 3.4 Supervision ............................................................................................................................ 22 3.5 Regulatory and Supervisory frameworks .............................................................................. 23 3.7 Credit Reference Operations ................................................................................................ 23 3.8 Establishment of Secured Transaction Law and Collateral Registry ................................... 24 3.9 Supervision of Social Security Schemes .............................................................................. 24 3.10 Bureau De Change Supervision ........................................................................................... 24 3.11 Financial Leasing .................................................................................................................. 25 3.12 Bank Closures ....................................................................................................................... 25 3.13 Capacity Building ................................................................................................................... 25 Directorate of Banking Supervision Annual Report, 2017 ii CHAPTER FOUR .......................................................................................................................... 26 REGIONAL AND INTERNATIONAL COOPERATION ................................................................ 26 4.1 Overview ................................................................................................................................ 26 4.2 The East African Community (EAC), Monetary Affairs Committee ...................................... 26 4.3 SADC and CCBG Meetings ................................................................................................. 26 4.4 AACB Meetings ..................................................................................................................... 27 4.5 Attending supervisory collage ............................................................................................... 27 APPENDICES ............................................................................................................................... 29 APPENDIX I: DIRECTORATE OF BANKING SUPERVISION ORGANIZATION STRUCTURE 29 Appendix II: Consolidated Balance Sheet of the Banking Sector ............................................... 30 Appendix III: Composition of Off-Balance sheet items................................................................. 31 Appendix IV: Consolidated income statement of the banking Sector .......................................... 33 Appendix V: Comparative Total Assets and Total Deposits of Banks and Financial Institutions34 Appendix VI: Branches, ATMs and Employees of Banks and Financial Institutions .................. 36 Appendix VII: Agents contracted by banks and financial institutions........................................... 39 Appendix IX: Geographical distribution of bank agents .............................................................. 40 Appendix XI: Directory of representative offices operating in Tanzania ...................................... 59 Appendix XII: List of audit firms registered by Bank of Tanzania to audit banks and financial institutions .............................................................................................................................. 61 Appendix XIII: List of Bureaux de Change operating in Tanzania as at 31st December 2017 . 64 LIST OF TABLES TABLE 1. 1: CLASSIFICATION OF BANKS AND FINANCIAL INSTITUTIONS .................................................................... 1 TABLE 1. 2: DISTRIBUTION OF BANKING INSTITUTIONS’ BRANCH NETWORK ............................................................ 2 TABLE 1. 3: MARKET SHARE (AS PERCENTAGE OF TOTAL BALANCE SHEET COMPONENTS) .................................... 2 TABLE 1. 4: MARKET SHARE OF TOTAL ASSETS OF LOCAL AND FOREIGN BANKING INSTITUTIONS ........................... 2 TABLE 1. 5: VALUE AND VOLUME OF MOBILE (SMS) BANKING, INTERNET BANKING, MOBILE PAYMENT, ATMS AND POS FROM 2013 TO 2017 .......................................................................................................................... 3 TABLE 2.1: ASSET COMPOSITION AND TREND ............................................................................................................... 7 TABLE 2.2: EARNING ASSETS TREND AND STRUCTURE ................................................................................................. 9 TABLE 2. 3: LIABILITIES COMPOSITION AND TREND ...................................................................................................... 11 TABLE 2.4: OFF BALANCE SHEET ITEMS RELATIVE TO TOTAL ASSETS ....................................................................... 13 TABLE 2.5: BALANCE SHEET POSITIONS ....................................................................................................................... 15 TABLE 2. 6: EARNINGS TREND ....................................................................................................................................... 17 TABLE 2.7: EARNINGS RATIOS PERCENT ........................................................................................................ 17 TABLE 2. 8: SUMMARY OF FINANCIAL SOUNDNESS INDICATORS .................................................................................. 20 Directorate of Banking Supervision Annual Report, 2017 iii LIST OF CHARTS CHART 2. 1 ASSET COMPOSITION AS AT 31ST DECEMBER 2017 .................................................................................... 7 CHART 2. 2 GROWTH OF MAJOR COMPONENTS OF TOTAL ASSETS