Indebank Limitedâ€™s profits slumped 38 percent in the year ended December 31 2011 to K189.4 million (about $1.13m) from the previous yearâ€™s K305.1 million (about $1.8m).
The bank has partly attributed the dip in profits to a K128 million (about $1.7m) along with interest payment the financial institution made last year to a liquidated company following instructions from the High Court of Malawi.
But the drop in profit is despite the companyâ€™s net interest income growing by 29 percent to K1.1 billion (about $6.5m) from K918 million (about $5.4m) largely driven by 44 percent and 67 percent increases in loans and advances and customer deposits, respectively.
In a statement, issued jointly by the companyâ€™s chairman Isaac Nsamala and the managing director William Chatsala, the bank bemoans the shortage of foreign currency which, they said, impacted negatively on foreign currency trading income.
But the bank said in 2011, it focused on its strategy of increasing access to its products and services and improving operational efficiency and service delivery.
“Four new service centres were established, we introduced internet banking and commercial work on installation of an own ATM [auto teller machine] switch. The bankâ€™s business was also appropriately segmented into corporate and personal and SME [small and medium enterprises] banking to give customers in the two segments the required focus and service,” said the statement.
Although the initiatives above steered the operating costs up, the bank is optimistic that long term benefits will be derived from the investments.
Indebank expects that some economic challenges encountered in 2011 to continue this year and will largely exert more pressure on the groupâ€™s earnings.
But the bank said it will continue to build on the solid base it has established over the years and also continue in its branch expansion programme, and introduce new products and services.