National Bank of Malawi (NBM), which has reported a 110 percent pre-tax profit growth in the year ended 31 December 2012, to K11 billion (about $27.5m), has defended its astronomical profits.
The Malawi Stock Exchange (MSE)—listed financial institution’s profit has jumped from K5.2 billion (about $13m) in 2011, according to published financial results.
NBM chief executive officer George Partridge said, apart from the strategies that they put in place, the profit they made is in line with the bank’s asset base.
“I don’t think the profit that we made is that astronomical because it is being made with the background of an asset base of K140 billion [about $350m] and if someone had K140 billion, how much profit would you expect them to make?” asked Partridge in an interview on the sidelines of a long service awards ceremony for its employees.
Apart from that, he argued that the monetary reforms the Malawi Government introduced in May last year have helped to improve the economic situation and, that too, has contributed to their success.
“After the monetary reforms that came about in May/June 2012, the situation changed for the better in terms of the availability of foreign exchange and, therefore, availability of raw materials, and also capacity of our clients.
“Our clients were then able to import raw materials for their factories and they were also able to improve on trading activities as well as to distribute because of the availability of fuel. So this contributed to some of our success,” said Partridge.
In the financial statement, the bank indicated that with the new government embracing a more liberal and market-oriented approach to economic management, businesses started to recover in the second half of 2012.
“Consequently, there were signs of a return to a favourable business climate in the second half of the year which resulted in the bank recording significant growth of business.
“Deposits and the loan book grew by 31 percent and 35 percent respectively. International trade and treasury business recorded significant growth as a result of improved foreign exchange availability,” reads the financial statement in part.
The bank, a subsidiary of the listed conglomerate Press Corporation Limited (PCL), expects 2013 to pose different challenges from those of 2012, but has expressed optimism that the bank will maintain its growth path.