Malawi economy on muted growth—Standard Bank safe with 56% profit growth this fa

Malawi’s economic growth will be muted this year due to effects of the Covid-19 pandemic and will be characterized by foreign currency supply shortages, Standard Bank has forecast.

While the bank itself seems to have survived the initial Covid-19 onslaught by posting a decent 56 percent profit in the first six months of the year, it warns of consequences for the general economy.

“Foreign exchange supply is expected to remain weak which will continue to exert pressure on the Kwacha. The impact Covid-19 on supply chains and the exchange rate dynamics will have strong influence on the direction of the inflation and interest rates. Therefore, economic growth is expected to be muted,” reads a statement accompanying Standard Bank Malawi’s Half-Year financial performance and co-signed by new board Chairperson Ngeyi Kanyongolo and Chief Executive William le Roux.

The statement says despite the virus and political instability, it registered good performance in the first half of the year ending June 31. Profit is up 56 percent to K12.75 billion while dividends have increased from K2.1 billion to K2.5 billion representing growth by 19 percent.

“The group registered good performance notwithstanding a challenging operating environment characterized by unstable political environment and Covid-19 pandemic,” reads the statement.

It says assets grew by 8 percent as compared to the same period in 2019. The asset growth was a result of a 5 percent annual growth of our customer base and the funding base, it adds.

“Growth of customer and funding base corresponded with increased loan and advances by 22%. Likewise, financial investments also grew by 22 % year on year,” reads the report.

According to the statement, the low interest rate environment prevailed in the first half and resulted in a modest 2 percent growth in net interest income despite sizeable growth of interest earning assets.

On the other hand non-interest revenue grew by 17 percent year on year arising from the bank’s focus on growing the transactional business as well as one off gain on disposal of securities.

Credit impairments were significantly below prior year due a significant recovery on a credit facility that was previously written off.

“Standard Bank will continue its efforts to recover previously written off loans as well as focus on prudent risk taking and management,” says the statement.

Standard Bank recently elected a University of Malawi legal scholar, Ngeyi Kanyongolo, as its first woman chairperson of board, replacing eminent financial guru Rex Harawa.