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Businesses cry, smile in 2020

National Bank of Malawi

TO MAKE A LOSS— Sunbird Hotels

Malawi Stock Exchange (MSE)-listed companies registered mixed fortunes in 2020, with some making huge losses and others chalking profits on their books.

Out of 16 counters, eight companies have published their trading statements, which indicate that two are expecting losses, two have subdued profits in their sights while four others are eyeing significant profits.

NBS Bank has forecast a 25 percent profit, Standard Bank 45 percent profit, Airtel Malawi 40 percent profit and FCB Capital Holdings 200 percent profit while Telecom Networks Malawi plc is anticipating a profit that would be, when compared to that registered in 2019, 25 percent lower.

This also applies to NITL, which will see itself registering a profit that is lower by 40 percent when compared to cash that remained in its books after profit in 2019.

Meanwhile, the hospitality industry is expected to make losses, with Sunbird Hotels anticipating a 150 percent loss while Blantyre Hotels Limited is expecting a 200 percent loss.

Reacting to the news, capital markets expert Bond Mtembekeza said the poor performance of hospitality industry players was expected, citing their overreliance on occupancy rates, which hit a record low in 2020 due to coronavirus infestation.

He added that banks have performed better because, historically, commercial banks stand on dry ground during economic calamities.

“Malawian banks are generally resilient firstly because of stringent standards set by Reserve Bank of Malawi; that is, adequate capital requirements and constant off-site and on-site monitoring.

“Secondly, there is a general feeling that banks in Malawi overprice their products and services and that there is a generally much wider spread between deposit rates and lending rates,” he said.

He added that most banks in 2020 relied largely on digital and remote banking channels, which culminated in enhanced efficiency on one hand and reduced costs on the other hand.

Despite the reliance on technology, especially the internet, last year due to Covid restrictions, TNM is expecting a 25 percent subdued profit.

Speaking in an earlier interview, MSE Chief Executive Officer John Kamanga attributed the mixed performance to the Covid pandemic, political instability and listing of new companies on the market.

”Some of the counters were heavily affected, especially those for hospitality industry [players], and, [in] some counters, we saw the price going down. As a result of that, investors increased their sales but at a lower price but we also saw some counters, such as the banking industry and the telecommunications industry, registering an increase in activity,” Kamanga said

The year 2021 is already posing a threat to businesses in the country due to the second wave of Covid, which has hit the economy hard.

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