National Bank of Malawi (NBM) has reported an after-tax profit of K14.5 billion in the year ended December 2014, a 14.3 percent increase from the previous year’s K12.7 billion despite operating in an “uncertain and subdued” first half.
The Malawi Stock Exchange (MSE)-listed bank said in a published statement accompanying the results yesterday that in the run-up to the May 20 2014 Tripartite Elections Elections, major investment decisions by most bank’s customers were put on hold.
“In addition, the high cost of borrowing had the adverse effect of dampening demand for most of the bank’s products,” reads the statement jointly signed by the bank’s chief executive officer George Partridge and board chairperson Matthews Chikaonda.
The statement said the bank’s management took deliberate steps to control the growth of its lending book as the risk of bad debts increased.
It said post-election, business started to improve such that towards the end of the second half of the year, demand for lending started to increase and, as a result, the loan book grew by 26 percent while non-performing loans at 5.65 percent were higher compared with 3.8 percent recorded in 2013 but much lower that industry level.
In the year, the bank relied on revenue from treasury operations, which continued to be sources of income while foreign exchange earnings met expectations despite relatively low foreign exchange availability and partly due to the withholding of aid by bilateral donors.
Despite the operating environment, the board has resolved to pay a final dividend of K4.6 billion, representing K10 per share.
This makes the total dividend of K7.17 billion in respect of 2014 profits, representing K15.35 per share payable at the end of May 2015.
Due to the uncertainty on the resumption of donor support despite the International Monetary Fund (IMF) approving $18.1 billion (about K8 billion) after completion of fifth and sixth reviews under the Extended Credit Facility (ECF) arrangement, the bank expects 2015 to be another year of challenges as resumption of meaningful donor budgetary support is uncertain in addition to challenges posed by severe flooding in some parts of the country. n