By Chimwemwe Mangazi:
Professor of Economics at Chancellor College, Ben Kalua, has said the decision by some local commercial banks to retrench staff on voluntary basis is an act of soul-searching to cut on operational costs.
In a space of two days, two Malawi Stock Exchange-listed banks, National Bank of Malawi Plc and NBS Bank Plc, wrote their employees to file for a voluntary exit, with the latter further announcing plans to close down five of its branches.
The banks said the move is in a quest to realign their business with the operating environment.
In an interview Wednesday, Kalua said the development is not alarming as banks across Africa, including in Malawi, are operating on high costs owing to extensive outreach.
“It is a trend coming from the experience of Kenya; in Kenya, they have the interest [rate] capping issue still raging and it triggered soul-searching among banks. I don’t want to say the interest rates are the cause here in Malawi but we are saying that it could be the catalyst”, he said.
Economics Association of Malawi Executive Director, Maleka Thula, said, while it could be early to associate the development to the recent interest rate cut, it makes more sense for the banks to do so to reduce operational costs.
“This development could be due to banks’ repositioning in response to the recent interest rate cut. However, it could be too early to associate the laying off of the banks’ operations to the downward revision in the interest rate,” Thula said.
Bankers Association of Malawi president, Paul Guta, said the trends can be best explained by the individual banks that have taken such initiatives as it is not yet regarded as an industry issue.
“At this stage, we do not regard the developments as an industry issue but [that] of individual banks. Mind you, each player in the industry does what they deem best for business,” Guta said.
Today’s top business story: Top Commercial Banks In Malawi
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