NBM shareholders want 10% excess tax on profit removed

National Bank of Malawi (NBM) plc shareholders are pushing for the removal of extra 10 percent tax on profit in excess of K10 billion, saying it is affecting their dividends.

One of the shareholders, Brian Kampanje, expressed the concern at the bank’s annual general meeting in Blantyre on Thursday where directors recommended a final dividend of K23 billion, which puts total dividend at K48 billion or K102.80 per share.

However, he said the company paid K47 billion in taxes in 2023, a rise from K22 billion in 2022, which he feels is the impact of the new tax.

Said Kampanje: “I suppose this increase of tax is due to the additional tax that was imposed in 2023.

“I, therefore, urge the board to continue negotiating with the government to remove it because it is affecting our dividend as shareholders.”

In a separate interview, Minority Shareholders Association of Listed Companies member Bernadette Maere described the company’s performance in 2023 as impressive.

NBM board chairperson Jimmy Lipunga said through the Bankers Association of Malawi, they are still engaging authorities on the tax which he believes was introduced on a temporary basis.

He said going forward, the bank has a strategy that will enable it to maintain its strong performance, issue good dividends and invest in the growth of the business where necessary.

Said Lipunga: “The shareholders own the company so they need to have a good return.

“It’s not unusual though when you have commitments to motivate directors to return some profits for investments.”

During the year, NBM posted a net profit of K71.9 billion, which is a 56.6 percent increase from K45.9 billion in 2022, but two of its subsidiaries United General Insurance (UGI) and Akiba Commercial Bank of Tanzania posted losses.

However, Lipunga said there are turnaround strategies to ensure the two are transformed into profitable businesses in the coming financial years.

He said: “There are turnaround strategies at United General Insurance, including a new chief executive officer and new targets have been put in place and what we are seeing is growth in revenue and costs are coming down.

“In any turnaround, the profitability would not be achieved straight away, so our expectation is that in subsequent financial years, we will see UGI and Akiba in profitability,” he said.

In the 2023/24 fiscal year, the Ministry of Finance and Economic Affairs introduced a 10 percent tax on banks posting in excess of K10 billion profit, a tax which was extended to all firms in the 2024/25 National Budget. n