Standard Bank Malawi Limited Records 57% Revenue Growth Despite 31% Rise in Operating Costs

Published On: April 29, 2024Company: Standard Bank Malawi Plc (STNBIC.mw)
What are the key factors that contributed to the modest economic growth of Malawi in 2023?
The main contributors to the modest economic growth of 1.5% experienced in Malawi in 2023 included electricity shortages, inclement weather, shortages in foreign exchange, and high farm input costs. However, a bit of relief came in form of the reinstatement of the IMF's Extended Credit Facility programme.

Economic Highlights

  • The local economy of Malawi grew by 1.5% in 2023, up from 0.9% growth in the previous year
  • Factors contributing to modest growth include electricity shortages, inclement weather, foreign exchange shortcomings, and heightened farm input costs
  • Inflation increased to an average of 28.8%, driven by food prices, utility tariff increases, and depreciation of the local currency Kwacha
  • The Policy rate was revised twice, ending at 24% to moderate inflation
  • The International Monetary Fund (IMF) reinstated a 4-year Extended Credit Facility (ECF) programme worth US$174 million which was a significant positive development amidst public debt pressures

Performance

  • Despite the challenging environment, the Group achieved growth of its financial sheet and profitability, with a 34% increase in profit after tax
  • Revenue grew by 57%, driven by both net interest income and non-interest revenue
  • Net interest income increase was due to an increase in loans and advances to customers, which grew by 25% year on year and a 6.3% upward adjustment of the base lending rate
  • Operating costs rose by 31% due to increased costs of goods and services coupled with 44% devaluation of Kwacha
  • The cost to income ratio diminished from 48% to 40%, indicative of increased operational efficiency

Outlook

  • Future economic uncertainties include possible unfavorable exchange rate movements and the potential of adverse weather conditions negatively impacting crop yield
  • Malawi will likely witness increased levels of foreign currency inflows from the IMF’s ECF programme which will provide direct budgetary support and may stabilize the exchange rate

Dividend

  • An initial interim dividend of MK5 billion was paid in March 2024 while a second interim dividend of MK7.5 billion is expected to be paid in April
  • The Directors recommend a final dividend of MK12.9 billion to be deliberated in the upcoming Annual General Meeting

Useful links

About Standard Bank Malawi Limited (STNBIC.mw)

The Standard Bank of Malawi is a financial services institution in Malawi providing products and services for personal and business banking, corporate and investment banking, and Treasury and Capital Management. The company provides a wide range of products; from transactional accounts, electronic banking and short- and long-term savings accounts to vehicle and equipment finance, bancassurance, structured finance, corporate lending and foreign exchange. The Standard Bank of Malawi also provides financial services to the government of Malawi, parastatals, financial institutions and international counterparts. It is a subsidiary of Standard Group in South Africa. The organisation was previously known as the Commercial Bank of Malawi and opened its first branch in Limbe in the Blantyre District in 1970. Today, the financial institution has a national footprint with 19 branches in the major towns and cities of Malawi. Standard Bank of Malawi is listed on the Malawi Stock Exchange

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