Commercial banks in Malawi paid out K265.3 billion in dividends in 2025, a jump of 70 percent from K123.3 billion the year before, as the sector’s profits surged on the back of high interest rates and heavy government borrowing.
This is contained in the 2025 Annual Report of the Registrar of Financial Institutions, a department of the Reserve Bank of Malawi that supervises banks, pension funds and insurance firms.
The report shows that profit-after-tax for the banking sector rose by 79.2 percent to K813.9 billion, up from K454.2 billion in 2024.
Total revenue climbed 63 percent to K2.5 trillion, mostly on the back of interest income, which grew 58.3 percent to K1.9 trillion.
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“Return on equity, a measure of how much profit banks make from shareholders’ money, rose to 60.6 percent from 49.9 percent, while return on assets increased to 7.8 percent from 5.7 percent. All banks were profitable in the year 2025,” the report states.
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It further indicates that non-performing loans also fell during the year, dropping 28.9 percent to K112.7 billion, even as gross loans grew 48.7 percent to K2.5 trillion, meaning banks lent out more money while reducing bad debts.
Banks remained well capitalised, with core capital and total capital growing by 45.3 percent and 33.2 percent to K1.2 trillion and K1.3 trillion, respectively, well above the regulatory minimum.
Liquidity in the sector stood at 50.9 percent, more than double the required prudential limit of 25 percent, although this was down from 57 percent in 2024 as deposits grew faster than liquid assets.
Total deposits held by banks rose by 30.7 percent to K7.2 trillion by December 2025.
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The figures come as ordinary Malawians continue to grapple with high interest rates, a weak Kwacha and rising cost of living, with critics saying banks are profiting heavily while lending remains out of reach for many small businesses.
In an interview, Business Partners International Country Manager Bond Mtembezeka said the sector’s strong performance was not surprising, as most banks increased their exposure to government securities, drawn by high yields that offered relatively low risk.
However, he said sustaining such elevated profitability may prove difficult going forward, as the government moves to cut public debt and interest rates begin to decline, both of which are likely to reduce the attractiveness of government securities to banks.
“This provided a significant boost to interest income and overall profitability. Going forward, banks will need to optimise their balance sheets and focus on generating sustainable, risk adjusted returns by increasing lending to productive sectors of the economy while maintaining prudent credit risk management,” he Mtembezeka said.
Financial market analyst Brian Kampanje described the sector’s earnings as a windfall, driven largely by government’s appetite for domestic borrowing.
“It was a great performance supported by high government borrowing, which allowed the banks to make profits. The forex market also assisted in non-interest income. It was a big windfall for banks, leading to supranormal profits,” Kampanje said.
At the beginning of the season, cotton growers pushed for a minimum buying price of K2,000 per kilogramme (kg).
However, the government set the minimum price at K1,500 per kg, a decision that was initially opposed by farmers.
Cotton Farmers Association (Cofa) President Lapson Zidana said the disagreements did not affect the overall performance of the market.
Zidana said farmers were also encouraged by the return of cash payments, which allowed them to receive money immediately after selling their produce.
