NBS Bank banks on five-year plan

NBS Bank Plc chief executive officer Kwanele Ngwenya is banking hopes on the listed bank’s five-year strategic plan, saying it is the genesis of turning the corner to start making profits.

This is despite the Malawi Stock Exchange (MSE)-listed bank projecting a loss of at least 70 percent lower than the previous period in the year ended December 31 2017.

In 2016, the bank made a loss after tax of K4.3 billion from the previous year’s K195 million largely due to two factors, a drop in interest income because of reduced lending activities as the bank tightened its risk appetite and sharp increase in other operating expenses which more than doubled to K8 billion in 2016 on account of non-recurring legal expenses.

But Ngwenya said the strategic plan—which is transformational in every aspect and spans to 2021—was operationalised in January and is already bearing fruits.

“I can boldly state that, among other benefits, we are now becoming more agile and customer-centric and more robust in risk management and innovation.

“This is likely to result into delighted customers and better returns to our shareholders,” he said in a statement.

In 2017, the bank roped in technical partner Rabobank of the Netherlands and also raised K11.8 billion through rights issue—an issue of shares offered at a special price by a company to its existing shareholders in proportion to their holding of old shares—to boost the bank’s working capital.

Ngwenya said inadequate capital incapacitated the bank from taking up opportunities that the environment offered and also from responding to the intense competition in the banking industry.

He said: “We were also unable to make necessary investments to catch up with the rapid changes in the Malawian banking environment. We were, therefore, losing relevance to the customer, which in turn had a negative effect on some of our major income lines, like the lending business.

“Loss of revenue in such income streams obviously impacted on our bottom line and led us to the loss that was declared in the recent past. This is why we decided to raise extra capital through rights issue.”

With the added capital, he said the bank will now be able to serve its  customers better through “unparalleled customer service and world class banking solutions”.

In an earlier interview, NBS Bank board chairperson Vizenge Kumwenda was upbeat that the partnership with Rabobank would help the bank deliver on this new business plan, adding that prospects of achieving the goals are even brighter.

In a cautionary statement, the bank’s company secretary Marsha Ovi Machika said the bank expects to post a loss for the year ending December 31 2017.

“The expected loss attributable to shareholders for the financial year ending December 31 2017 is at least 70 percent lower than the previous corresponding period,” she said.

Over the past few months, the bank, which is a subsidiary of financial services group Nico Holdings Limited, has made changes to the leadership of the organisation, an issue Ngwenya said was necessary to align to the new five-year strategic plan which demanded a new organisational structure and new skills set.

“We can happily state that we have finished aligning all staff members and we are now concentrating on pursuing our goals as prescribed in our strategic plan.

“The team is stronger than ever and I am personally motivated by the energy and dedication that I witness everyday from the staff who are going above and beyond expectations to improve the customer experience,” he said.

On the 13-counter MSE, NBS Bank closed last week at K8.50 per share.