NBS Bank Limited (NBS.mw) HY2019 Interim Report

We have extracted below the Chairman’s Statement from the 2019 half year interim report of NBS Bank Limited (NBS.mw), listed on the Malawi Stock Exchange:

The Group (NBS Bank Plc and NBS Forex Bureau), registered a progressively upward trend in performance in the first half of 2019 when compared to the same period of the previous year, despite a low interest rate environment. This trend and performance is confirmation that the Bank’s transformation journey is on track and on a sustainable path.

The Bank recorded a profit before tax of MK2.08 billion for the six months ended 30 June 2019 (June 2018: profit of MK683 million) and net profit after tax of MK 1.40 billion (June 2018: Net profit after tax of MK479 million). The 2019 half-year net profit after tax, with a year-on-year growth of 194%, is a significant improvement on the comparable period last year and builds on the K1.69 billion net profit reported for the full 2018 year. Net interest income grew by 95% in 2019 compared to a similar period in 2018, largely as result of growth of loan book and effective management of investments in money market instruments. The Bank continues to build capability of digital offerings particularly using such channels as mobile, internet, and agency banking. Growth is therefore expected to come from the transactional business. Operating expenses went up by 24% because of branch rationalisation programmes done early this year. The increase was in line with projections. The Bank continues to implement cost optimization measures to further improve its efficiency ratios as well as to deliver maximum value to the customers.

The Bank registered a 14% growth of customer deposits during the six months under review. Loans and advances grew by 59%. The improvement of our performance in the first half of 2019 is mainly due to targeted and specific management actions focusing on improving the quality of our loan book, growth of money market investments and loans.

Outlook

The economic outlook remains positive. Gross Domestic Product (GDP) growth for 2019 is forecast to be at 5 percent, an improvement on the growth rate of 4 percent recorded in 2018. The rebound in growth is expected to be supported by the agriculture sector, improved power supply, continued macroeconomic stability as well as the easing of monetary policy. Notable growth is expected in the manufacturing, electricity, gas and water supply, construction and transportation sectors. Inflation is expected to drop further from the current 9%, with a major pull down effect coming from food inflation. Notwithstanding, downside risks to inflation include rising global oil prices and weakening of demand in advanced economies. The Bank will continue to monitor the recent significant developments and changes in the monetary policy to make sure it mitigates risk on performance against any further reduction of interest rates. The Bank continues to strive forward in its turn round journey and see positive prospects for 2019 and beyond.

Dividend

While noting that the Bank has made a profit in the six months period ended 30 June 2019, the Board of Directors has not recommended the payment of any dividend to enable full turnaround of the business in 2019.

V. Kumwenda
Chairman

M. Mtumbuka
Director

K. Ngwenya
Chief Executive Officer

Vera Zulu
Chief Finance Officer