Four Malawi Stock Exchange (MSE)-listed commercial banks have posted a combined profit of K335 billion in 2024, a 77 percent rise from profits chalked in 2023 as the banking sector continues dominating the capital market.
Published financial results show that National Bank of Malawi (NBM) plc posted K102 billion profit from the previous year’s K72 billion, Standard Bank plc’s profit jumped to K86.3 billion from K52.5 billion, FDH Bank plc profit increased to K74 billion from K35.6 billion while NBS Bank plc profit moved to K72.9 billion from K29.3 billion.
First Capital Bank, a subsidiary of MSE-listed FMB Capital Holdings Limited, has not yet released financial results for the year ended December 2024.
The 77 percent profit jump from K189 billion in 2023 means that banks’ 2024 profits are equivalent to 88 percent of the combined profits of all the 16 listed companies on MSE in 2023 at K375 billion.
The banks have continued to post high profits at a time the economic environment remains volatile as they benefited from growing interest income, customer deposits and fees and commissions, among others.
Reads part of NBM plc financial statements: “The results were largely driven by growth in customer deposits, which fuelled growth of the loan book and fixed income securities. Consequently, net interest and similar income grew by 52 percent.”
Financial expert and former bank executive Misheck Esau, in an interview on Wednesday, described the listed banks’ strong performance as critical to the market, but expressed concern that the sector is making the profits mainly from lending to government instead of the real sector.
He said: “These top performers you have, have contributed greatly to wealth creation to their shareholders and I am sure many Malawians have benefited from this.”
Esau said there is need to reverse the trend where most banks’ profits should come from private sector lending and in turn the private sector should invest in productive sectors to enhance economic development and wealth creation.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa attributed the sector’s sprofits to the current high interest rate environment, which enables banks to perform well, but warned that overreliance on one sector is risky.
He said: “This provides investors with opportunities to invest and generate returns.
“Additionally, these profitable sectors contribute significantly to government revenue through higher tax payments.”
The bank rate is currently at 26 percent, but banks charge interest rates as high as 34 percent.
Financial expert and a stock market investor Brian Kampanje said that banks’ resilience to economic shocks is strengthened by benefits they get from high interest income.
He said: “This is a result of substantial fees and commissions earned in the financial services, including forex transactions as well as rising interest, especially from the public securities in form of Treasury bills and Treasury notes.
“The downside risk might be propelling domestic debt as the government has access to more resources.”
On the other hand, Consumers Association of Malawi executive director John Kapito said banks are benefiting from the unfriendly structure of the country’s lending system, which favours financial institutions.
In its Financial Stability Report for February 2025, the Reserve Bank of Malawi attributed the bank’s growth to stability of the sector, which it said has remained sound and well capitalised over the past years.
