Economic slowdown affects Malawi unit
AFTER tax profits in Standard Bank’s Malawi unit came down 15 percent to $11.2 million (R148.3m) for the first half of 2017 with the bank blaming subdued demand for lending as a result of high interest rates.
The bank said the slowdown had affected its profitability prospects, with credit impairments rising significantly compared to the same period last year.
“The group continues to focus on robust credit risk management to avert future non-performing loans and Banking executives said that they were optimistic that the operating environment would improve this year.
places emphasis on recoveries of written off loans,” the lender said yesterday.
The bank said it hoped to benefit from an improvement in the country’s inflation rate for the second half of the year, although “interest rates (are expected) to remain low” while the Kwacha is projected to remain “reasonably” stable.
It said the Malawi economy remained vulnerable to extreme shocks, despite good rains and subsequent better performance from the agricultural sector.
The National Bank of Malawi said on Wednesday that inflation in the country was expected to “continue on a downward trajectory” and added that this would provide “room for a further reduction in interest rates”.
Other banking executives said that they were optimistic that the operating environment would improve this year and buoy profitability prospects.
In the half year period to the end of June, Standard Bank Malawi raised deposits from account holders by as much as 18 percent while its asset base grew by 25 percent.
Total income for the interim period was also 12 percent higher at $39m, but costs also spiked by 22 percent to $19.2m.
Standard Bank paid about $5.5m in taxes to the Malawian government during the period under review.
The bank paid total dividends of about $2m for the interim period, up from $1.3m from the previous contrasting period.