NBS Bank upbeat despite rate cut

post was last updated: June 7, 2019

By Taonga Sabola:

KUMWENDA—Good results are trickling in

Malawi Stock Exchange-listed commercial bank, NBS Bank, has said it remains confident of improved business in 2019 despite anticipated interest income drop due to recent slash in policy rate by the Reserve Bank of Malawi (RBM).

RBM has this year alone slashed the policy twice by a total of 250 basis points from 16 percent to 13.5 percent.

Analysts have predicted that the development is likely to hit the bottom line of commercial banks which have thrived over the years in an environment of high costs of borrowing.

But speaking to reporters on the sidelines of the bank’s 15th annual general meeting (AGM) in Blantyre on Wednesday, NBS Bank Board Chairperson, Vizenge Kumwenda, said the bank was confident of increased lending in a low interest rate regime.

He said the low interest rates would help bolster the bank’s loan book which has been relatively lower in the past three years as the bank was working on solidifying its foundation.

“We are confident that, with the low interest rate regime, the demand for loans will go up and we will be able to lend to more customers than before.

“In addition, we are working on measures to increase non-interest revenue,” Kumwenda said.

He told shareholders during the AGM that, in 2018, the bank rolled back to profitability, posting an after-tax profit of K1.699 billion from a loss of K1.092 billion in 2017.

“The profit is a result of the turnaround strategy the bank has been implementing since 2017. Net interest income grew by 35 percent as a result of the increased investments in short-term placements with financial institutions. “Non-interest income, which is made up of transactional fees and forex trading income increased by 52 percent year-on-year. The bank’s uptake on digital platforms continued to improve as investments were made to increase network availability and reliability. The forex business recorded growth of 75 percent largely as a result of increased volume of trade compared to the prior period,” Kumwenda said.

He said recoveries of nonperforming debt was flat, adding that operating expenditure was up 14 percent compared to the prior year largely due to investments changing the bank projects.

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