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National Bank of Malawi downplays devaluation effect

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Malawi Stock Exchange – listed National Bank of Malawi (NBM) plc has said the recent 25 percent Kwacha devaluation will not have huge impact on businesses and individuals as it reflects actual market trends.

The bank’s newly confirmed board chairperson Jimmy Lipunga said this during the financial institution’s annual general meeting (AGM) in Blantyre on Friday.

Lipunga said, for the past months, the dollar was already trading at K1, 100 on the black market and the devaluation of the local unit has just actualised that.

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He added that the hope for businesses is that there will not be double counting to take advantage of the devaluation because the devaluation has already filtered that.

“We hope that the exchange reserves will improve with the devaluation because more people will be willing to sell foreign exchange and, hopefully, the IMF dialogue will help us with foreign exchange and the uncertainty will be eliminated,” he said.

Two weeks ago, the Reserve Bank of Malawi announced a 25 percent devaluation of the Kwacha which, it said, was aimed at giving the local currency its true value and aligning it with market trends.

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Lipunga further said the devaluation can be a blessing in disguise because it can discourage imports since importing has been made expensive thereby promoting the consumption of locally produced goods and services.

“Those who want to take risks and provide products for profits locally, can utilise this opportunity because importing will not be easy because even if foreign exchange is there, it is the exchange rate that will make importing hard,” he added.

During the AGM, it was revealed that the bank has made K34.21 billion profit after tax in the year ended December 2021, which represents a 52 percent increase from K22.45 billion profit after tax made during the year ended December 2020.

One of the shareholders, Frank Harawa, said minority shareholders were happy with how the bank is operating but the bank should work on lending to individuals more than to government.

“The accounts of the banks are not showing any growth in their core business of lending out; they made money from Treasury bills and others, which is not their core business, so that was our concern but we are happy with dividends declared,” he said.

NBM is one of the oldest financial institutions in the country with branches scattered across the country.

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