National Bank of Malawi – FY2021 PAT up 52% to K34.21b

National Bank of Malawi (NBM.mw) 2021 Abridged Report

The Board is pleased to announce the audited financial results of the Group for the year ended 31 December 2021.

Performance

The Group registered a strong performance. It posted a profit after tax of K34.21b representing a 52% increase from K22.45b reported in 2020. Net interest and investment income grew by 44%. These results were driven by volume increases in fixed income securities, made possible by growth in customer deposits. In addition, there was an increase in transaction volumes that resulted in a significant growth in non-interest income of 49%. Overall net revenue grew by 45%.

Operating expenses and impairment losses increased by 41% and 2% respectively.

Customer deposits increased by 38% year on year while the loan book grew by 20% (2020: 6%). Investment in Fixed Income securities grew by 66% (2020:35%).

The results have incorporated a full year performance for the recently acquired subsidiary, Akiba Commercial Bank plc in Tanzania.

The Operating Environment

The Malawi economy continued to recover from the slowdown in real GDP growth experienced in 2020. In 2021, the economy grew by 3.9% up from 0.8% recorded in the previous year. The rebound was driven by enhanced economic activities following the rise in the uptake of COVID-19 vaccinations worldwide that improved business confidence.

The annual average headline inflation was 9.3% in 2021 up from 8.6% recorded the previous year. Food inflation was the main driver of inflation in the country. There was also an increase in non-food inflation mainly on account of the increase in global oil prices and persistent disruptions to global supply chains.

The Malawi Kwacha depreciated against all major currencies during the year. This was exacerbated by low foreign exchange reserves at a time when there was a general increase in global commodity prices driven by a sharp recovery in demand as economies bounced back from the impact of the COVID-19 pandemic.

The Reserve Bank of Malawi maintained Liquidity Reserve Requirement at 3.75%.

Dividend

The Bank paid a first interim dividend of K5b in September 2021 (2020: K2.5b) and a second interim dividend amounting to K7b on 31 March 2022 (2021: K5.5b).

The directors recommend a final dividend of K11.0b (2021: K8b) making a total dividend of K23.0b in respect of 2021 profits representing K49.26 per ordinary share (2021: K27.84 per share). The final dividend will be payable after approval by the Annual General Meeting scheduled for June 2022.

Outlook

As reported in the National Budget Statement, the economy is expected to grow by 4.1% in 2022. The growth will be supported by an increase in economic activities in mining and quarrying, manufacturing, and construction. However, some downside risks, such as the uncertainty regarding the evolution of the COVID-19 pandemic, the effects of climate change and the war in Ukraine could jeopardize growth prospects and exert pressure on inflation.

As at end of the year, the Bank had a 60.48% controlling stake in Akiba Commercial Bank plc in Tanzania. Negotiations are still ongoing to acquire a further stake to reach 75%.

Looking ahead the Board envisages a challenging operating environment emanating from pressures on inflation, foreign exchange supply, and developments in the other parts of the world. In spite of this, the Group has built-in flexibility, resources, and agility necessary to continue on a growth path.

BY ORDER OF THE BOARD

M.M. Kawawa                                       M.N. Katsala
Chief Executive Officer                       Chief Financial Officer

J. Nsomba                                              D. Ngwira
Director                                                  Director

31 March 2022
Registered Office:
7 Henderson Street,
BLANTYRE

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