By Emmanuel Chilemba:
Four commercial banks listed on the Malawi Stock Exchange (MSE)—NBS Bank, FDH Bank, National Bank of Malawi (NBM) and Standard Bank— have collectively posted a K145.05 billion profit after tax in the first half of the year, consolidated figures show.
This represents a 61.5 percent increase from K89.66 billion recorded in the corresponding period last year.
In their separate trading statements, the banks attribute the positive outturn to increased net interest income and customer deposits, which expanded loan books and fixed-income securities.
For instance, NBS Bank profit rocketed by 169 percent to K32.16 billion, from K12.16 billion in the same period last year. National Bank recorded a 19 percent increase in its profit to K42.1 billion from K35.5 billion. FDH Bank’s profit surged by 89.8 percent to K27.9 billion, compared to K15 billion last year while Standard Bank recorded an 89.9 percent profit jump to K42.4 billion .
Commenting on the performance, Bankers Association of Malawi Chief Executive Officer Llyness Nkungula said banks were prioritising effective risk management, adopting a customer-centric approach and leveraging technology to drive sustained growth.
“Despite the progress, Malawi’s banking sector faces challenges: Non-performing loans have increased due to macroeconomic difficulties, foreign exchange shortages, and high borrowing costs. Interest rate spreads remain elevated.
“Additionally, credit risk management efficiency and maintaining adequate capital reserves are critical to mitigating risks. Monitoring external shocks and ensuring prudent lending practices are essential for sustained performance,” said Nkungula.
But in a written response, MSE Chief Operations Officer Kelline Kondowe described the collective performance as a “remarkable milestone” towards the growth of the local bourse.
“This is good news to investors as their investments are performing well in terms of profitability which normally trickles down to good performance of the counters,” said Kondowe.
Economics Association of Malawi President Bertha Chikadza attributed the performance to banks’ significant lending to the government to cover budget deficits.
“Interest payments alone take over a third of the government’s budget, and the country’s domestic debt has been rising significantly because the government borrows from the commercial banks.
“The high interest payments mentioned in the budget, some are paid to these banks. So, it is obvious that since the government doesn’t default on payment, banks are making huge profits by lending to the government and the government is paying back the loans with interest,” said Chikadza.
She then warned that increased lending to the government may fuel demand in the economy, further exacerbating inflationary pressures and frustrating the central bank’s efforts to manage monetary policy.
Standard Bank, NBM, and FDH Bank are among the most capitalised counters on the local bourse, each with a market capitalisation exceeding K1 trillion.
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