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Banks see 2021 mixed and murky

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William Mpinganjira

Bankers Association of Malawi (Bam) has said the resurgence of Covid-19 cases is threatening the sector’s business in the new year.

In an interview, Bam Chief Executive Officer Lyness Nkungula said the year ahead is a mixed bag as the virus is still in existence.

“Banks are institutions that will help the economy to recover and I am sure they will continue working tooth and nail to achieve this humble goal. The banks have a better business risk management profile that has helped them to sail through the turbulent times in 2020. The diversification of products and technology has helped to intensify the resilience to the pandemic,” Nkungula said.

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FDH Bank Chairman William Mpinganjira said the industry was looking and hoping for a better 2021.

“As we begin 2021, it will not be much better than 2020. However, with the vaccine that is being rolled out, hopefully we should see an improvement. Probably, we might see, in the second half of 2021, things starting to improve once the vaccine goes into effect,” Mpinganjira said.

He further said last year Covid-19 affected customer’s ability to pay back loans, which also impacted on the bank business.

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Mpinganjira said, performance, wise, the whole financial services sector was affected and, probably, when the Reserve Bank of Malawi (RBM) produces its report, more customers will be found to have defaulted than normal due to the shutdown.

At the pick of the pandemic last year, government and development partners agreed that economic growth would be subdued to around 2 percent from the 6 percent initial projection.

RBM indicated that there was an increase in credit risk in the market, reflected through loan moratorium extension to borrowers.

According to the central bank, a total of 1,900 customers benefitted from the moratoriums, with a consolidated balance of K103 billion constituting 15 percent of total gross credit of the industry.

Fees and charges on digital banking were also to reduce by 40 percent, in a bid to increase customer utilisation amid calls for social distancing.

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