Malawi Stock Exchange listed commercial bank, Standard Bank Malawi, has posted an after-tax profit of K19.4 billion for the year ended December 31 2016.
The profit is 45 percent above the K13.4 billon the bank posted in 2015.
The enviable financial performance was achieved despite a five percent decrease in loans and advances to customers.
In a statement signed by board chairman Rex Harawa and directors Andrew Chioko, Andrew Mashanda and Temwani Simwaka, the bank said the high interest rate environment that persisted last year resulted in a slowdown in private sector growth and decrease in capital investment.
Standard Bank said though loans to customers shrunk, there was a 125 percent surge in loans and advances to banks due to investment of excess liquidity.
The bank said the macroeconomic conditions in the second half of 2016 turned out to be better than widely expected, with improved food supply and a relatively stable kwacha.
“As a result, inflation eased to 20.0 percent in December from 23.5 percent in July; which gave authorities room to cut the policy rate by three percentage points to 24.0 percent in late November.
“The policy signal forced Treasury bill yields and commercial bank base lending rates to abate by same margin. In the year, the kwacha had depreciated moderately by about 11 percent against the US dollar largely driven by weak demand due to subdued GDP growth (<3.0 percent) and high interest rates,” reads a statement.
During the 12 months of 2016, the bank saw its total assets swelling by 35 percent.
“Operating income grew by 43 percent over same period in the previous year due to 56 percent growth in net interest income driven by growth in loans and advances to banks. Non-interest income grew by 22 percent due to increased volumes in the transactional business.
“Credit impairments increased by 186 percent when compared to the previous year due to an increase in the non-performing loan book. Despite the higher credit impairments for the year, the Group continues to focus on credit risk management and recoveries on written off loans,” said Standard Bank.
Looking ahead, the bank said it expects the economy to benefit from a bullish agriculture sector as normal to above normal rains are expected.
It said inflation is expected to fall generally, giving scope for authorities to cut the policy rate further.
“The extent of interest rate cut(s) will depend on expected developments in the foreign exchange market, amidst fears that the kwacha would break loose.
“As a Group, we endeavor to deliver superior customer experience and we remain committed to ensuring customer satisfaction. We will continue to focus on cost containment, prudent management of risk and liquidity, continue to diversify balance sheet and maintain a healthy capital position,” the bank said.