Private sector credit contracts in January

Post was last updated: March 28, 2019

By Chimwemwe Mangazi:

Credit extended to the private sector shrunk by 2.1 percent in January to settle at K447.1 billion as firms started the year on a slow note, figures from the Reserve Bank of Malawi (RBM) have shown.

This was the second consecutive month for private sector credit to contract after shrinking again in December 2018.

RBM says in its January 2019 monthly economic report that, in terms of economic sectors, the manufacturing, agriculture, financial services and community, social and personal services sectors registered credit contractions amounting to K5.9 billion, K3.6 billion, K2.3 billion and K1.7 billion, respectively.

This resulted in January 2019 closing stocks of K79.9 billion, K91.4 billion, K9.6 billion and K46.3 billion to these sectors, respectively.

Credit expansions to the tune of K2.3 billion, K2.3 billion, K2.2 billion were reported in wholesale and retail trade; transport, storage and communications and electricity, gas, water, and energy sectors, thereby closing January 2019 position at K118.2 billion, K27.1 billion, K11.8 billion, respectively.

“The above notwithstanding, the distribution of private credit across the sectors was similar to December 2018. Wholesale and retail trade sector continued to represent the largest share of the total private sector credit, at 26.4 percent,” reads the report in part.

Agriculture, manufacturing and community, social and personal services sectors claimed 20.4 percent, 17.9 percent and 10.4 percent of the total outstanding credit stock, respectively.

The report says the household sector and commercial and industrial sector saw a net repayment of K10.2 billion and K4.6 billion in the month, reducing their indebtedness to the commercial banks to K117.8 billion and K173.4 billion, respectively.

Meanwhile, commercial banks increased their provisions for loan losses by K2 billion to K23.8 billion.

Foreign currency denominated loans and mortgages also by K5.4 billion and K1.8 billion to K136.9 billion and K42.8 billion, respectively.

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