Commercial banks have posted a cumulative profit of K198.2 billion in the first six months of this year, maintaining their resilience to economic shocks that continued to affect other sectors, it has emerged.
This means the profit has increased by 19 percent from K160.4 billion achieved during the corresponding period in 2023, according to the Reserve Bank of Malawi (RBM) latest Financial Stability Report.
Reads part of the report: “Most banks reported robust earnings in the first half of 2024 with net profit after-tax increasing to K198.2 billion from K160.4 billion in the corresponding period of 2023.
“Profitability continues to be driven by interest income from securities, followed by non-interest income and interest income from loans.”
As at June 2024, interest income from securities was recorded at K311.3 billion while non-interest income was at K183.6 billion.
On the other hand, interest income from loans was K171.7 billion against interest expenses of K133.7 billion and non-interest expenses of K204.9 billion, according to the report.
Last year, the banks posted an annual profit of K265 billion, a feat likely to be beaten this year given that the sector has already made 75 percent of that profit in six months.
Meanwhile, on the liquidity situation, the report said that during the first half, the banking sector continued to hold liquid assets well in excess of the statutory minimum liquid asset requirement.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said in an interview yesterday that the robust performance and resilience of banks can be attributed to a rise in interest income.
“There has been a significant increase in customer deposits as individuals and businesses seek the liquidity of bank accounts during uncertain times,” he said.
Makwakwa said the growing demand for cash has allowed banks to enhance their lending activities with an increase in issued loans generating additional interest income that further boosts revenue.
In a separate interview, Financial Market Dealers Association secretary general James Mbingwa described the banking sector’s strong performance as critical to the country’s economy.
But onsumers Association of Malawi executive director John Kapito said yesterday that banks are benefiting from the unfriendly structure of the country’s lending system which favours financial institutions.
Financial market analyst Armstrong Kamphoni earlier said banks benefit from a high interest environment.
