The Consumers Association of Malawi (Cama) says banks are reaping off consumers through prohibitive charges and, thereby, making huge profits.
Three of the Malawi Stock Exchange (MSE)—listed banks, FMB, Standard Bank and National Bank of Malawi (NBM) have issued trading statements indicating that their profits in the year ended December 31 2012 will be above those of the previous year.
Reacting to this, Cama executive director John Kapito says banks are certainly ripping off consumers by being speculative and taking advantage of the system.
“Which economy are these commercial banks operating in that they should be posting these profits? These banks are certainly taking advantage of the floated currency and are being speculative and making more money. These banks are also charging high interest charges with low deposits interest rates,” says Kapito.
A market analyst James Chikavu Nyirenda also thinks banks have benefited from the devaluation of the local currency and the widespread between borrowing and lending rates.
“Banks might have benefited from the devalued local currency which happened during the year because they sold the currency at a higher rate than the price they bought it at,” he said.
Reserve Bank of Malawi (RBM) spokesperson Ralph Tseka defends the bank’s anticipated profits, arguing this indicates that they are solid to withstand tough economic conditions.
“Banks are in business and RBM as a regulator cannot stop them from making profits. This situation is a good sign and indicates that the financial system is working well.
“This signifies that our banks are solid and cannot collapse in the face of economic problems,” he says.
According to trading statements for the year ended December 2012 released recently, the profit after-tax for Standard Bank is expected to increase by 70 percent from the previous year’s, FMB by 75 percent and NBM by 80 percent indicative vibrant performance.