Business

Banks assets up 49%to K7.2tn in 2024

Reserve Bank of Malawi (RBM)  data shows that commercial banks assets grew by 49 percent in 2024, adding an extra K2.4 trillion to close the year at K7.2 trillion from K4.8 trillion in 2023.

According to RBM’s Commercial Banks  Assets and Liabilities January 2000 to December 2024 report, the assets grew by 33 percent in 2023 after gaining by 23 percent in 2022 from K2.9 trillion to K3.6 trillion.

This comes in a year the country’s five Malawi Stock Exchange listed banks , namely National Bank of Malawi (NBM), Standard Bank, FDH Bank, FMB Capital Holdings plc and NBS have each surpassed K1 trillion market capitalisation led by NBM at K2.6 trillion.

Commercial banks assets continue to grow | Nation

In an interview, banking and financial consultant Misheck Esau said the growth of the banking sector is good for the economy because in theory, it also means higher levels of intermediation, which is the banks’ main role.

He, however, observed that under normal circumstances the growth in assets would translate into production increase as well as lending, which is not the case due to higher interest rates.

Said Esau: “This is because when financial intermediaries are growing, there is hope for the real sector. The only draw-back is that the financial sector is doing business mostly with the government to the exclusion and detriment of the growth of the private sector.

“I hope we can work on a new solution with the new leadership at the central bank. Seriously, I strongly believe we must break from the past and put the real sector, in the lead and at the centre of our economy. Anything else is momentary.”

He has since encouraged banks to keep supporting the private sector even amongst high credit risks due to high interest rates, forex shortages and other economic challenges stressing that such could trigger the economic rebound.

In a separate interview, Consumers Association of Malawi executive director John Kapito attributed the rapid growth of commercial banks’ wealth to high interest rates and government’s borrowing appetite which gives banks business.

He said: “Banks are indeed making huge gains unlike in other businesses for a number of reasons which include high interest rates, high bank charges and the dominance of government as the largest borrower.”

Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said while the growth in commercial banks’ assets is positive for the sector; it may also highlight a lack of diversification in the broader economy.

 “As the banking sector expands, there is a risk of greater reliance on it, with both the economy and investors potentially concentrating more on the financial sector. This could limit economic diversification, leaving the economy more vulnerable to future economic shifts,” he said.

Bankers Association of Malawi earlier indicated that in 2023, banks contributed 60 percent or K210.7 billion in corporate tax, K38.7 billion in pay as you earn, K5 billion in fringe benefit tax, K10.5 billion in non-resident tax, K710 million in import duty and K13 billion in dividend tax, among others.

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