National Bank of Malawi (NBM) has praised its own strategic plan, noting that it is evidently bearing fruit now.
NBM board chairperson Mathews Chikaonda speaking after the bank’s annual general meeting (AGM) held on Thursday at its Learning and Growth Centre in Blantyre said the bank has a good strategic plan as evinced by well trained and skilled staff, and latest technology.
“We are able to look ahead into the future very carefully and be prepared. We have been able to pay a higher dividend because we prepared for the implementation of Basel II. NBM repositioned itself three years ago and our ratios are not out of line,” said Chikaonda.
According to the 2013 chairman’s report NBM pretax profit climbed 68 percent to K18.4 billion from K11 billion 2012.
According to its financial statements, the bank paid two interim dividends totaling K3.4 billion in September 2013 and January 2014, respectively.
NBM also paid a final dividend of K1.5 billion in June 2013 in respect of the previous year’s profits.
And during the AGM the company resolved to a final dividend amounting to K2.9 billion representing K6.20 per share.
In total according to NBM the dividend declared in 2013 amounted to K4.9 billion.
Malawi rolled out Basel II capital requirements in January 2014 under which commercial are expected to boost their capital base so that their Tier One Capital Ratio—the ratio of a bank’s core equity capital to its total risks weighted assets (RWA)—is at 15 percent.
This has seen some commercial banks recapitalise profits to meet the requirements.
Commenting on the economic general environment, Chikaonda said the bank has strategies to deal with problems Malawi will face.
He said that NBM has been able to make good profits during the country’s economic hard times.
He, however, pointed out that in 2013 the company experienced some challenges including the Cashgate and the consequent suspension of aid, and high interest rates.
“When the issues of Cashgate came up the country risk worsened especially when our donors suspended their support. As a result worsening of the credit risk rating resulted in some correspondent banks cutting credit lines. The interest rate environment was also bad with high inflation which resulted in lending going down because businesses could not be able to borrow,” said Chikaonda.
NBM chief executive officer George Patridge in the 2013 annual report noted that the year was characterised by liquidity challenges especially in the first-half.
“This was a direct result of the Reserve Bank of Malawi continued tight monetary policy stance exercised through mopping up operations and the maintenance of high interest rate regime,” said Patridge.