NBS bank posts k4 billion loss
In a market where other players are reporting astronomical profits, Malawi Stock Exchange-listed NBS Bank, and its subsidiary, NBS Forex Bureau Limited have posted a net loss after tax of K4.3 billion.
The loss for the year ended December 2016 is up from the previous year’s K 195 million.
In its published financial statement for the year period under review,, the bank says the loss was on account of a drop in interest income and sharp increase in other operating expenses., the bank says the loss was on account of a drop in Interest Income and sharp increase in other operating expenses.
According to the statement, total gross income at K18.5 billion was 10.3 percent lower than the K20.6 billion realised in 2015 due to a 24.5 percent decline in net interest Income which recorded at K10.8 billion in 2016 against K14.3 billion in 2015.
Reads the statement in part: “Interest income declined due to reduced lending activities as the bank tightened its risk appetite in the high
interest rate environment and continued to focus on cleaning up its non-performing loan book and reducing credit losses. This strategy paid off and, consequently, impairment charges for non-performing loans declined by 70.1 percent from K6.2 billion in 2015 to K1.9 billion in 2016.
“Looking ahead, the bank forecasts a return to profitability in the third quarter of 2017, after the recapitalisation process.
“The bank has embarked on recapitalisation project which was approved by the shareholders on 29th December 2016 at an extra-ordinary general meeting to augment its capital position. After recapitalisation, the bank shall be able to take on more business which shall result in increased income,” reads the statement in part.
NBS Bank Limited is implementing a new five year business plan that will enable the bank to successfully differentiate itself in the market, offer customised services and solutions for clearly segmented existing and new customers and deliver value for its various stakeholders.
In recent years, NBS Bank has been struggling to meet the minimum capital requirement in line with Basel II, a directive that requires that banks’ Tier 1 capital and total capital ratio to be at 10 percent and 15 percent respectively.
In December last year, shareholders of NBS Bank endorsed a resolution of the bank’s board of directors to raise K10 billion through a rights issue where proceeds from the transaction are expected to help the bank meet capital and regulatory requirements.
Ironically, during the same period, other listed commercial banks notably, National Bank of Malawi (NBM), Standard Bank and FMB are all poised to end the year on a good note having declared to have posted higher profits compared to the previous year (2015).
For instance, Standard Bank had projected to post a profit 40 percent higher in 2016 than the corresponding period while NBM has forecasted to post a profit at least 25 percent higher in 2016 than last year.
FMB has since posted profit after tax of K7.66 billion, representing an 80 percent increase from 2015, according to its published financial statement for the period ending 31 December 2016.
