Financial institutions listed on Malawi Stock Exchange (MSE) have projected huge profits this year with Nico Holdings plc forecasting up to K130 billion.
The projections indicate the sector’s continued resilience to worsening operating environment in 2024.
According to published trading statements, Nico Holdings plc’s projected profit increase is in excess of 100 percent of the previous year’s results while National Bank of Malawi plc also expects a surge of profits from K72 billion to K98 billion.
This is happening in a year where other sectors struggled due to devaluation effects and high inflation which has averaged above 30 percent for the good part of the year.
Reads the Nico Holdings trading statement: “Nico Holdings plc accordingly advises that its consolidated profit after tax for the year ending 31 December 2024 is expected to be in the range of K122 billion to K131 billion representing an increase of between 107 percent and 122 percent on the profit after tax of K59 billion reported in the previous corresponding period.”
Meanwhile, Standard Bank plc, NBS Bank plc and FDH Bank plc have also projected their profit after tax to reach K86 billion, K72 billion and K62 billion at maximum from K52 billion, K29 billion and K35 billion respectively in 2023.
In an interview yesterday, Nico Holdings plc managing director Vizenge Kumwenda described the group’s performance in 2024 as excellent, saying the business achieved tremendous performance despite the harsh operating environment.
He said: “Yes. NBS Bank’s profit after tax is expected to fall in the range of K68.6 billion and K72 billion representing an increase of between 133 percent and 146 percent compared to K29 billion last year.
“Nico Group is also expected to post good profits. So it’s an excellent performance, it’s talking to our customers appreciating our services, our customers being satisfied but also they are talking of the hard work that our members of staff are putting in.”
Nico Holdings plc also owns NBS Bank plc and Kumwenda chairs the bank’s board.
In an interview, investment analyst Kondwani Makwakwa said the prospects are not surprising as the year 2024 has been highly promising for the banking sector in Malawi, marked by anticipated strong performance.
“Rising interest rates, coupled with the government’s proactive engagement in local borrowing, have created favourable conditions for banks to enhance profitability,” he said.
However, consumer rights activist John Kapito described the profit projections of financial institutions as emanating from the huge spread between deposits and lending interest rates.
He said: “It is unfair for our banks to take advantage of the struggling private sector and individuals charged by the current interest rates with no intervention from the regulator.
“A combination of both high interest rates and charges has made banks grow significantly while other private sector players suffer. Unfortunately in Malawi the biggest borrower is the government and the dominance of such a big single borrower is what has made these banks not to care.”
The financial services sector contributes about 7.1 percent to the country’s gross domestic product, according to the Malawi Government Annual Economic Report 2024.
