Despite posting losses for years now, Malawi Stock Exchange (MSE) listed NBS Bank Limited is optimistic that once the bank realises at least K10 billion from rights issue, its banking services will improve within 12 months.
According to the Bank’s Board Chaiperson, Vizenge Kumwenda, the company needs to recapitalise to continue to be complying with capital adequacy regulation for banks and to have the capacity to work on the market.
Kumwenda made the assurance on Thursday at the bank’s Extraordinary General Meeting held in Blantyre.
He attributed the capital inadequacy of the bank to non performing assets and bad forex transaction in 2012 that has resulted in litigation against the bank.
“You shareholders have all adopted a more rigorous approach to providing for non performing assets in order to ensure compliance with the capital adequacy regulation for banks. For example, in 2015, your company made a profit, but after the provision of K6.2 billion for impairment it resulted in a loss of K236 million which was reduced further to K195 million loss after tax,” said Kumwenda.
He said that the board continued with the same rigorous approach and provisions in 2016 resulting into the bank reporting a further loss in the year just ended.
On the bad forex transaction in 2012, Kumwenda said that since 2015 significant sums of money have been paid out to the claimants and damages.
“We have made adequate provisions for such cases and as I speak it is the view of the board that the books of your company have sufficiently been cleaned up and we are in a strong position to receive additional capital and put it to profitable use. The additional capital required is a minimum of K10 billion,” said Kumwenda.
He said this money will be raised through rights issue afterwhich the bank will return to profitability within 12 months.
He boasted the state-of-the-art core banking system, Temenos T24 R14, that started operating in May 2016, as some of the major installed services that will help in the bank’s drive to growth.
“In terms of the new business plan, your company will be amongst the top three banks by profitability within five years. The account of active customer accounts will grow to above K1 million and the customer satisfaction index will have improved by 85 percent with staff turnover reduced to around five percent,” he said.
One of the shareholders, Jeff Gondwe is hopeful the rights issue is going to revive the bank’s operations.
“The articles of the company say the AGM must approve the price and the discount of the shares, but in this meeting they [the NBS board] are telling us that they should be given mandate to go and do the pricing and discount behind the scenes. Our major concern is that by the time we get the prospectuses, there is no time to raise the money to buy,” complained Harawa.