NBS Bank share price dips 15%

NBS Bank’s share price last week slumped by 14.9 percent to K12.50 from K14.70 as investors reacted to the financial institution’s dip in profit in the half year ended June 30 2012.

The bank’s K2.20 share price loss pulled down the overall measure of the market, Malawi All Share Index (Masi), by 37.92 points to 5 939.41 points, according to the Malawi Stock Exchange (MSE) weekly report .The fall in Masi was on account of a drop in Domestic Share Index (DSI), the gauge for domestic counters’ performance anchoring 13 counters, by 30.27 points to 4 679.99 points

NBS Bank’s share price drop is not surprising coming on the back of a 74 percent drop in the bank’s halfyear profit to K326 million from K1.2 billion same period last year.

In the halfyear, the bank bemoaned the scarcity of foreign exchange and foreign currency devaluation and its subsequent floatation on May 7 as having affected its income.

“The adverse impact of foreign exchange currency devaluation was due to the unmatched foreign currency denominated liabilities,” said the bank in a statement accompanying the financial results.

The devaluation of the local unit also raised the bank’s impairment provisions and high interest cost on inter-bank takings on account of the liquidity squeeze—a time when cash resources are in short supply than demanded —that has affected the operations of the financial system. This has forced them to heavily borrow from the Reserve Bank of Malawi (RBM).

In the week, the equity market recorded trading in three counters; Illovo Sugar (Malawi) Limited, NBS Bank and TNM plc.

Despite not registering a price gain, TNM plc, trading at a special bargain price of K1.85, recorded much activity with 238 million shares changing hands.

NBS Bank had slightly over one million shares transacted, with Illovo having only 91 531 shares traded.

The Foreign Share Index (FSI), anchored by one foreign counter, Old Mutual plc (OML), with 4.8 billion shares on issue, has seen its share price stuck at K545 for some time now despite releasing its halfyear financial results.

MSE has over the past months experienced subdued performance as investors have shifted their focus to the now lucrative money market where yields are at as high at 23 percent.

The local shares market has 14 counters with 22 billion shares on issue.