Tuesday, March 2, 2021
  • About Us
  • ImagiNATION
  • Adverts
  • Rate Card
  • Contact Us
The Nation Online
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
No Result
View All Result
Home Business Business News

Banks reaping from high lending rates

by Grace Phiri
16/01/2021
in Business News, Editors Pick
3 min read
0
Share on FacebookShare on TwitterShare on WhatsAppShare on LinkedinLinkedinShare via Email

Malawian banks are among the most profitable financial institutions in Africa, thanks to the high net interest margins (NIM), the United Nations Economic Commission for Africa (Uneca) has said.

In its recently published Economic Report on Africa, Uneca observed that Malawi recorded a NIM—a measure of the difference between interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders—of more than 10 percent, an indication that banks in the country are highly profitable.

RelatedHeadlines

ActionAid develops content on feminist macroeconomics

Mlusu positive on growth prospects

Arrears payment to ease job losses—Ecam

graph 4 | The Nation Online

Reads the report in part: “African countries that recorded high NIMs [above 10 percent on average] include Ghana, Malawi, Mozambique, Uganda and Zambia, indicating that banks are highly profitable in those countries.

“The high ratios can be explained by the structure of their balance sheets, the high interest rates environment in which they operate or the high concentration of few banks in their respective countries.”

For instance, the Global Finance Development Database 2019 indicated that in Malawi, the three largest banks in Malawi held 86.8 percent of total commercial banking assets in 2017.

Since June 2019, Reserve Bank of Malawi (RBM) had maintained the policy rate at 13.5 percent from 14.5 percent in April, until in October last year when the policy rate was reduced to 12 percent.

Over the period, reference rate has averaged 13.3 percent while savings rate has averaged 4.2 percent.

However, commercial bank loans have been attracting interest rates in excess of 25 percent.

However, despite the development, interest rate spread has remained wide at around 15 percent, a situation that Consumers Association of Malawi (Cama) executive director John Kapito says has prevented consumers and businesses from borrowing funds and paying loans.

“The banks are not being honest with consumers. We need an intervention from the central bank,” he said.

However, market analyst Cosmas Chigwe observed that in the interest rate spread, the higher lending rates in the country are due to the high risk in the country.

He said since the country does not have a proper credit reference system, which should improve with the national identity cards system, it leads to higher lending risks for banks.

“However, a case can indeed be made on the lower savings rates,” he said.

Earlier, Bankers Association of Malawi (BAM) chief executive officer Lyness Nkungula said banks react to policy rate reduction differently according to their internal business policies.

Previous Post

Clubs blame FAM, Sulom for commercialisation failure

Next Post

Mera cautious as global oil prices rise

Related Posts

IMG 20210301 WA0000 | The Nation Online
Business News

ActionAid develops content on feminist macroeconomics

March 1, 2021
Sees economic growth by 3.5 percent: Mlusu
Business News

Mlusu positive on growth prospects

March 1, 2021
Employees in the thick of things
Business News

Arrears payment to ease job losses—Ecam

March 1, 2021
Next Post
Malawi relies on fuel imports to run the economy

Mera cautious as global oil prices rise

Discussion about this post

Opinions and Columns

My Turn

Tackling global slowdowns

March 1, 2021
People’s Tribunal

Burglary at the hill

February 28, 2021
Search Within

Perseverance landed, is alive and well

February 28, 2021
Emily Mkamanga

Tasting your own salt in politics

February 28, 2021

Trending Stories

  • Olela: We are excited

    K5bn Sunbird Waterfront hotel opens May

    0 shares
    Share 0 Tweet 0
  • Inside Chisale’s seized property

    0 shares
    Share 0 Tweet 0
  • We won’t give Up—Chakwera

    0 shares
    Share 0 Tweet 0
  • Exclusive: RBM’s Mzuzu branch payment mess exposed

    0 shares
    Share 0 Tweet 0
  • Court declares Escom private company

    0 shares
    Share 0 Tweet 0
  • Values
  • Our Philosophy
  • Editorial policy
  • Advertising Policy
  • Code of Conduct
  • Plagiarism disclaimer
  • Disclaimer
  • Privacy Policy
  • Terms of use

© 2021 Nation Publications Limited. All Rights Reserved.

No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation

© 2020 Nation Publications Limited. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.