National Bank of Malawi (NBM) plc has posted an impressive K71.96 billion profit after tax for the financial year ending 31 December 2023, representing a 56.62% profit jump.
In a statement dated 28 February and signed by the Bank’s Board Chairperson Jimmy Lipunga, Director Dorothy Ngwira, Chief Executive Officer Macfussy Kawawa and Chief Finance Officer Masauko Katsala, the Bank attributed the remarkable results to growth in customer deposits.
“The Group registered a profit after tax of K71.96b representing a 56.62% increase from K45.9b reported in 2022. These results were largely driven by growth in customer deposits which resulted in increases in the loan book and fixed income securities.”
“Consequently, Net interest and investment income grew by 33%. In addition, there was a 86% increase in Other Income mainly arising from growth in foreign exchange commissions by (99%) from K12.8b to K25.5b. Overall net revenue grew by 50%. Operating expenses increased by 25%, within the average inflation for the year. On the other hand, net impairment losses continue to increase, reflecting the realities of the tough operating environment,” reads the statement in part.
Customer deposits increased by 20% (2022: 45%) year on year while the Bank’s loan book grew by 31% (2022: 29%). Investment in Fixed Income securities grew by 10% (2022:16%), according to the statement.
The statement also shows that the group made a profit before tax of K120.13 billion and paid a total of K48.17 billion in taxes.
“All the subsidiaries of the Bank posted profits that contributed positively to the Group performance except for Akiba Commercial Bank (ACB) in Tanzania and an associate company, United General Insurance which posted losses.”
“Positive trends continue to be registered in the two entities where the results improved significantly from the previous period. Consequently, the losses registered for Akiba Commercial Bank and UGI were much lower than those of the prior period,” reads the statement in part.
Commenting on the operating environment, the Malawi Stock Exchange (MSE) listed Bank said the Malawi economy grew by 1.5% in 2023 up from 1.1% the previous year and was adversely affected by the prevailing high inflation as well as continued foreign exchange supply challenges.
“The average headline inflation accelerated from 26.1% in the first quarter to 31.5% in the last quarter. Similarly, interest rates were on the rise, with the Policy rate being raised from 18% in the first quarter to 24% in the second quarter of the year.”
“The Malawi kwacha devalued by 63% between January 2023 and December 2023. Despite the devaluation, foreign exchange supply challenges persisted. Generally, the operating environment was very challenging. Weather shocks and geo-political landscape also affected the operating environment,” reads the statement in part.
NBM plc forecasts that the economy is expected to grow by 3.2% in 2024 from 1.5% in 2023 supported by an increase in public investment and recovery in mining and quarrying, manufacturing, information and communication, financial and insurance activities, and education sectors.
“The resumption of the IMF-supported ECF program is expected to unlock foreign exchange inflows going into 2024, which will in turn support importation of raw materials and promote economic activity. The positive outlook is, however, clouded by El Niño-induced weather conditions, and a highly uncertain global economic and geopolitical environment. Inflation is likely to remain elevated in 2024,” reads the statement in part.
“The Board envisages a continuing challenging operating environment due to the factors enumerated above. This notwithstanding, the Bank is expected to sustain its enviable performance through its ability to leverage on its core strengths, address challenges and exploit opportunities in the market,” adds the statement.
The Bank Directors recommend a final dividend of K23b (2023: K15b) making a total dividend of K48.0b in respect of 2023 profits representing K104.94 per ordinary share (2022: K70.67 per share). The final dividend will be payable after approval by the Annual General Meeting scheduled for June 2024.
The Bank also said a second interim dividend of K14 billion will be paid in April 2024 having paid the first interim dividend of K11 billion in September 2023.
