The dark clouds hanging over the financial sector for greater part of 2016 seem to have lifted as the year closed business on December 31.
This week, especially for those companies listed on the Malawi Stock Exchange (MSE) and some financial houses who may be required by regulation to publish their financial results have announced improved performance in 2016.
The development will come as a huge relief to the investing public as most of the banks and financial instutions either posted drastically reduced profits or recorded outright losses in the first half of 2016.
For example, FMB profits dipped to around K2.48 billion during the January to June 2016 period, lower than the nearly K3.6 billion registered over the same period last year.
Dual-listed multi-sectoral conglomerate Press Corporation Limited (PCL)—which boasts interests in industries such as banking, food and beverages, telecommunications and the energy sector among others—saw its profit-after-tax for the half-year ended June 2016 slumping 17 percent compared to the same period last year.
First Discount House Limited’s profit-after-tax during the half-year fell from roughly K532 million to around K441 million.
Its sister company, FDH Bank Limited—which during the year merged with hitherto State-owned bank Malawi Savings Bank after parent company FDH Group bought controlling stakes in the institution—had an even worse half-year, chalking just K116.9 million in consolidated profit-after-tax for the six months ended June 2016. That is a far cry from the K2.13 billion hauled over the same period last year.
CDH Investment Bank had to give up more than half of its profits, settling for consolidated profits before tax of just K192 million in the January to June 2016 period from K493 million raked in the same period last year.
Leasing and Finance Company recorded K270 million as profit, lower than the K412 million achieved over the first half of 2015.
Other than reduced profits, some banks made outright losses during the half-year of 2016. Nedbank posted a loss of K603 million against a profit of K203 million realised during the same period last year.
Opportunity Bank—which has been going through what it calls a business rationalisation process—made an after-income tax loss of K1.1 billion compared to K1.9 billion over a similar period last year.
While some experts feared the bubble in the banking sector had burst, the banks have shown resilience by bouncing back with profits.
Standard Bank Malawi Limited, FMB and NBM are all poised to end the year on a good note having declared to have posted profits up from the previous year (2015).
For instance, Standard Bank has projected a profit of at least 30 percent higher in 2016 up from the previous year’s K13.4 billion profit. This means that the bank is likely to record a profit of about K17.42 billion.
FMB on the other hand has projected to post a profit of at least 40 percent higher in 2016 than the corresponding period.
In 2015, the bank made a profit of K3.8 billion, and this means that in 2016, based on the forecast, the bank will likely record a profit of about K5.4 billion.
NBM has forecasted to post a profit of at least 25 percent higher in 2016 than last year.
However, of the four declared bank’s trading statements, only NBS bank is expecting to post a loss of at least 20 percent higher in 2016 than the corresponding period.
Dheeraj Dikshit, FMB group managing director remains upbeat in 2017.
“While economic growth remains muted, we need to strive to increase market share and promote our transactional banking service offerings to achieve our desired financial targets,” he said.