Malawi Records Impressive K356bn Profit, Boosting Business Confidence
Key Business Points
- The Reserve Bank of Malawi (RBM) has reported a net profit of K356 billion in 2024, a significant turnaround from a K539 billion loss in 2023, highlighting the bank’s ability to manage foreign exchange risks.
- The RBM’s asset base has increased by 17.7% from K4.2 trillion in 2023 to K5.1 trillion in 2024, demonstrating the bank’s growth and stability.
- The government’s bailout of K600 billion has provided the RBM with the necessary resources to continue operating and supporting the country’s economy, ensuring liquidity and stability in the financial market.
The Reserve Bank of Malawi has made a remarkable recovery in 2024, reporting a net profit of K356 billion, a stark contrast to the K539 billion loss incurred in 2023. The bank’s financial results, contained in the RBM Annual Report 2024, show that the profit before foreign exchange revaluations was recorded at K404.9 billion. The reduction in foreign exchange losses, from K708 billion in 2023 to K48 billion in 2024, is a significant achievement and a testament to the bank’s ability to manage risks.
The RBM’s solvency is guaranteed by the Reserve Bank of Malawi Act, which ensures that the government will keep the bank solvent at all times. The bank’s asset base has increased by 17.7% from K4.2 trillion in 2023 to K5.1 trillion in 2024, demonstrating the bank’s growth and stability. This increase in assets is expected to have a positive impact on the country’s economy, providing a solid foundation for investment and development.
According to money market analyst Bond Mtembezeka, the RBM’s exposure to foreign exchange rate shocks is a result of its role in building reserves, which exposes it to foreign liabilities. However, the bank has access to derivative instruments such as forwards and options to hedge against such exposures. The use of these instruments is expected to reduce the bank’s risk and ensure its stability in the future.
The RBM’s recovery in 2024 is attributed to the reduction in foreign exchange losses, which was largely buoyed by a drop in foreign exchange losses. The bank’s ability to manage risks and ensure liquidity in the financial market has been praised by economists and analysts. The RBM’s performance is expected to have a positive impact on the country’s economy, providing a stable and secure financial environment for businesses and investors.
In an earlier interview, economist Leslie Mkandawire stated that the RBM’s ownership by the Malawi Government means that some losses require reverse transfers from the Treasury to RBM for recapitalisation. The government’s bailout of K600 billion has provided the RBM with the necessary resources to continue operating and supporting the country’s economy. This support is expected to ensure the RBM’s continued stability and ability to provide critical financial services to the country.
The RBM has assessed its ability to continue as a going concern and has a reasonable expectation that it has adequate resources and the support of the government to continue in operational existence for the foreseeable future. This assurance is expected to provide confidence to investors and businesses, encouraging investment and growth in the country.
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