Site icon The Times Group Malawi

Reserve Bank of Malawi rates 2020 good for financial sector

GONDWE— We should brace for tough times

A latest report by the Reserve Bank of Malawi (RBM) has described performance of the financial sector in 2020 as sound and stable, despite challenges posed by the Covid pandemic.

This is coming against underperformance of sectors such as the hospitality and tourism industry where companies were forced to lay off employees and, in other cases, shut down.

According to the report, the banking sector was steady, demonstrated by adequate capital, liquidity and profitability, registering an increase in aggregate profit tax of 49.3 percent to K88.4 billion in 2020.

The capital market was described as bullish reflected by a positive return on the Malawi All Share Index (MASI) at 7.21 percent in 2020 which was 2.8 percentage points higher than the 4.4 percent registered in 2019.

It adds that the pension sector recorded a reasonable growth in aggregate assets of 19.9 percent to K1.1 trillion, strengthened by an increase in pension contributions and investment earnings, at K122.1 billion from K112.8 billion in 2019.

The report is signed by RBM Governor Wilson Banda.

“The advent of Covid pandemic posed unique economic and financial stability challenges to the financial sector as well as implementation of the regulatory and supervisory activities by the Registrar’s office, notably, the pandemic negatively affected remittance of pension contributions by employers resulting in an increase in pension contribution arrears to K26.2 billion from K20.2 billion in 2019. Similarly, increased non-performing loans were observed in the microfinance sector resulting in the sector registering a loss,” Banda said.

In an interview, Institute of Chartered Accountants in Malawi Chief Executive Officer Francis Gondwe said the performance of businesses moving forward will be negatively affected especially if the pandemic is not properly handled.

“We should brace for tough times. Last year a number of companies reduced their workforce, some even reduced salaries and benefits, we should pray that Covid disappears as soon as possible. Otherwise it will have a negative impact on the performance of many companies,” Gondwe said.

He further said the new Covid measures are necessary, but the mandate requiring employees to work from home has not been properly defined and could lead to underperformance in companies which will in turn lead to lower profits.

Facebook Notice for EU! You need to login to view and post FB Comments!
Exit mobile version