ISSN 0856 – 8537 DIRECTORATE OF BANKING SUPERVISION ANNUAL REPORT 2011 15TH EDITION For any enquiries contact: Directorate of Banking Supervision Bank of Tanzania P. O. Box 2939 Dar es Salaam Tanzania Tel: +255 22 223 5482/3 Fax: +255 22 2234 194 Website: www.bot-tz.org TABLE OF CONTENTS Page LIST OF TABLES..................................................................................................................... iv LIST OF CHARTS ................................................................................................................... iv ABBREVIATIONS AND ACRONYMS ....................................................................................... v MESSAGE FROM THE GOVERNOR ...................................................................................... vii FOREWORD BY THE DIRECTOR OF BANKING SUPERVISION .............................................. viii 1: CHAPTER ONE ................................................................................................................... 1 OVERVIEW OF THE BANKING SECTOR ..................................................................................... 1 1.1 Banking Institutions ........................................................................................................... 1 1.2 Bureaux de Change............................................................................................................ 1 1.3 Microfinance Institutions.................................................................................................... 1 1.4 Network of Banking Institutions ........................................................................................ 1 1.5 Ownership Structure .......................................................................................................... 2 1.6 Market Share ..................................................................................................................... 2 1.7 Employment in the Banking Sector .................................................................................... 2 1.8 Access to Financial Services ................................................................................................ 2 1.9 Electronic Payment Services ............................................................................................... 3 2: CHAPTER TWO ................................................................................................................. 4 PERFORMANCE OF THE BANKING SECTOR .......................................................................... 4 2.1 Overview of the Economy................................................................................................. 4 2.2 Balance Sheet Structure of the Banking Sector .................................................................... 4 2.2.1 Asset Structure ................................................................................................................. 5 2.2.2 Liability Structure ............................................................................................................ 7 2.2.3 Capital Structure .............................................................................................................. 9 2.2.4 Composition of Off Balance Sheet Items ......................................................................... 10 2.2.5 Banking Sector Performance ........................................................................................... 12 2.2.6 Capital Adequacy ........................................................................................................... 12 2.2.7 Asset Quality .................................................................................................................. 12 2.2.8 Management .................................................................................................................. 12 2.2.9 Earnings ......................................................................................................................... 12 2.2.10 Liquidity ......................................................................................................................... 14 2.2.11 Sensitivity to Market Risk ............................................................................................... 15 2.3 Risk Assessment ............................................................................................................... 15 2.3.1 Overall Risk Assessment ................................................................................................. 15 2.3.2 Credit Risk ..................................................................................................................... 15 2.3.3 Liquidity Risk ................................................................................................................. 16 2.3.4 Market Risk .................................................................................................................... 16 2.3.5 Operational Risk ............................................................................................................ 16 Directorate of Banking Supervision Annual Report, 2011 ii 2.4 Performance of Bureaux de Change ................................................................................. 16 2.5 Stress Testing ................................................................................................................... 16 2.6 Financial Soundness Indicators ......................................................................................... 17 3: CHAPTER THREE .............................................................................................................. 17 MAJOR ACTIVITIES OF THE DIRECTORATE ............................................................................ 19 3.1 Overview ........................................................................................................................ 19 3.2 Licensing .......................................................................................................................... 19 3.3 Off site Surveillance ......................................................................................................... 19 3.4 On site Examinations ....................................................................................................... 19 3.5 Targeted Examinations .................................................................................................... 19 3.6 Capacity Building .............................................................................................................20 4: CHAPTER FOUR ............................................................................................................... 21 DEVELOPMENTS IN BANKING SUPERVISION........................................................................ 21 4.1 Overview ........................................................................................................................ 21 4.2 Credit Reference System .................................................................................................. 21 4.3 Issuance of Circulars ......................................................................................................... 21 4.4 Licensing of Tanzania Mortgage Refinance Company ....................................................... 21 4.5 Issuance of Banking and Financial Institutions Regulations ............................................... 21 5: CHAPTER FIVE ................................................................................................................ 22 INTERNATIONAL COOPERATION ....................................................................................... 22 5.1 Regional Cooperation ..................................................................................................... 22 5.2 International Cooperation ............................................................................................... 22 APPENDICES ........................................................................................................................ 23 APPENDIX I: DIRECTORATE OF BANKING SUPERVISION ORGANIZATION STRUCTURE ..... 23 APPENDIX II: CONSOLIDATED BALANCE SHEET OF THE BANKING SECTOR ....................... 24 APPENDIX III: OFF BALANCE SHEET ITEMS .......................................................................... 25 APPENDIX IV: CONSOLIDATED INCOME STATEMENT OF THE BANKING SECTOR ............. 25 APPENDIX V: DIRECTORY OF BANKS OPERATING IN TANZANIA ....................................... 26 APPENDIX VI: DIRECTORY OF FINANCIAL INSTITUTIONS OPERATING IN TANZANIA ....... 32 APPENDIX VII: OTHER STATISTICS FOR BANKS AND FINANCIAL INSTITUTIONS ............... 34 APPENDIX VIII: STATISTICS OF ATMs, BRANCHES AND EMPLOYEES .................................. 37 APPENDIX IX: GEOGRAPHICAL DISTRIBUTION OF BRANCHES AND ATMS ......................... 40 APPENDIX X: NUMBER OF POINT OF SALE (POS) DEVICES 2011 ......................................... 40 APPENDIX XI: LIST OF AUDIT FIRMS REGISTERED TO AUDIT BANKING INSTITUTIONS ....... 41 APPENDIX XII: LIST OF BUREAUX DE CHANGE AS AT 31 DEC. 2011 ..................................... 44 Directorate of Banking Supervision Annual Report, 2011 iii LIST OF TABLES Table 1.4.1: Number of ATMs .................................................................................................... 2 Table 1.6.1:Market Share of Banking Assets ................................................................................ 2 Table 1.9.1: Value of mobile banking,