The ugly face of the economic challenges that Malawi is facing have finally caught up with the economy’ most resilient sector, banks.
In their recently published, three banks namely FDH Bank, CDH Investment Bank and Nedbank (Malawi) Limited all posted reduced pre-tax profits.
For a number of years, banks have been posting super profits and as a key component of the financial system, banks play a bigger role in an economy, hence, their importance cannot be over emphasised.
In the period under review, FDH Bank profit after tax declined to K116.9 million compared to K2.13 billion achieved during a similar period last year.
On the other hand, Nedbank reported a loss of K603 million compared to a profit of K203 million realised during the same period last year.
CDH Investment Bank realised a consolidated profit before tax of K192.1 million against K493.0 million realised the same period last year.
The three banks have since projected a challenging economic environment in the next six months due to harsh macro-economic factors.
According to the banks, the soaring inflation rate, which stands at 23.5 percent for the month of July, is likely to put pressure on economic activities.
In its published summary of consolidated financial statements, FDH says the economic environment is expected to remain challenging in the foreseeable future.
“The economic environment is expected to remain challenging in the foreseeable future mainly due to volatility in the local currency and high interest rates. Inflation is also likely to remain high for much of the year ahead,” reads the statement in part.
In a statement announcing the results, Nedbank (Malawi) Limited says inflation is likely to continue to rise driven by the reported food shortage.
The bank further says that the projected government budget deficit will likely to continue exerting pressure on interest rates and economic growth is likely to remain subdued.
Reads a statement:“Malawi’s economic environment continues to be challenging. Interest rates have remained high and this may continue for most of 2016. On the back of reduced agricultural output due to the drought experienced in the past growing season, headline inflation has been has been on the rise closing at 22.6 percent in June, up from 21.5 percent in May against the projected 15 percent by June 2016.”