Banks’ profits under scrutiny
Renowned consumer rights activist John Kapito has taken a swipe at commercial banks for ‘ripping off’ Malawians by posting ‘out of the world’ profits.
Kapito, who is also executive director for Consumers Association of Malawi (Cama), also wondered why banks continue to register robust profits at a time the economy is in bad shape, characterised by high inflation and a weakening local currency, among other key indicators.
He was commenting on the latest interim results for commercial banks plying their trade in the country’s banking sector, which shows that nine of the 11 banks have recorded huge profits as at June 30 2015.
Said Kapito: “These profits are out of this world. They are what we call super-normal profits. This is probably an insult to poor Malawians.”
According to banks’ statements of profit or loss consolidated by the Malawi Stock Exchange (MSE) seen by Business Review only two banks, namely Opportunity Bank of Malawi (OBM), and Indebank Limited have incurred losses of K1.9 billion and K600 million respectively.
Both OBM and Indebank are not listed on MSE.
Our analysis on the results also shows out of the nine banks that have registered profits, six have made their profits in billions of kwacha.
The banks are National Bank of Malawi (K8.1 billion), Standard Bank of Malawi (K6.7 billion), FMB (K3.6 billion), FDH Bank (K1.2 billion), Malawi Savings Bank (K1 billion) and Ecobank (K1.4 billion).
Only three banks NBS Bank (K666.4 million), CDH Investment Bank (K352.7 million) and Nedbank Malawi (K202 million) have posted their profits below the K1 billion mark during the period.
But Kapito queried as to why banks are making huge returns at a time “there is no money in circulation”.
He said it is evident from the latest results of banks that they are merely concentrating on ‘punishing’ and taking money from the poor.
“The poor are still remaining poor and we see companies struggling and others closing down because of lack of support from the same banks. It [huge profits] is an insult to Malawians,” he said.
In June this year, government branded the Malawi banking sector amost profitable in the region, making it a potential sector for investment.
“The banking sector in Malawi is the most profitable not only in Malawi but also in the region. This suggests that the industry is still monopolistic where the magnitude of the profits can only come down with more competition in a sector that is liberalised,” said Cliff Chiunda, Principal Secretary in the Ministry of Industry and Trade.
He said there are opportunities for expansion of existing banking sector as well as more banks to open up in Malawi.
