By Kingsley Jassi:
The banking industry continues to expand with assets growing by 18.7 percent in the second half of 2024 to K7.2 trillion, according to the Reserve Bank’s Financial Stability report.
Net income surged by 109.5 percent to K415.1 billion in the second half of last year from K198.2 billion in the first half, totaling K613.3 billion for 2024.
The central bank reports this trend is improving liquidity in the banking sector but expressed concern that the real economy is not benefiting sufficiently through productivity-enhancing investments needed for sustainable economic growth.
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“This growth was primarily driven by increases in securities and investments which grew by 26 percent to K3.7 trillion, balances with RBM that grew by 82.9 percent to K595.7 billion, gross loans by 9.1 percent to K1.7 trillion, and cash balances growth by 143.2 percent to K219.0 billion,” the report states.
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NICO group business development executive Zizwani Khonje, speaking at the Malawi Tourism Expo in Lilongwe, emphasized that the growing financial sector should increase investments in the real economy. He noted that his company has already begun shifting away from securities toward financing industrial projects.
“We are very clear on that we should not just be in the era of putting money in treasury bills and wait for returns. It will still have its role but we want to invest in real sector and have something to point at,” Khonje said.
He added that the economy needs to grow with the private sector taking the lead in strategic sector investments rather than leaving everything to the government.
Reserve Bank Governor McDonald Mafuta Mwale recently stated that efforts are underway to incentivize the financial sector to invest in the real economy, noting that government securities are currently absorbing significant resources.
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Meanwhile, the report indicates the banking sector faces moderate but rising credit risk as loan defaults grow to K158.2 billion, increasing to 9.4 percent in the second half from 8.3 percent in the first half of the year.
