NBS Bank has warned Malawians to expect a high interest rate environment even though the economy of the country is projected to be on rebound mainly on account of improved food situation.
NBS has said this in a press statement highlighting its financial results for the just ended year.
According to the statement, the interest rates are expected to remain high as the authorities attempt to tame inflationary pressures.
On depreciation, the bank has also revealed that Malawi Kwacha shall continue to depreciate due to the low export base and high demand of imported goods.
“We expect increased electricity costs due to inadequate electricity generation capacity and we expect the authorities to continue coordinating a strong monetary and fiscal policy,” reads the statement.
On business performance, the statement has said that the bank and its subsidiary, NBS Forex Bureau Limited reported a loss before tax of MK4.8 billion for the year ended 31 December 2016 and net loss after tax of MK4.3 billion.
The statement has also revealed that interest income for the just ended year declined due to reduced lending activities as the bank tightened its risk appetite in the high interest rate environment and continued to focus on cleaning up its non-performing loan book and reducing credit losses.
“This strategy paid off and, consequently, impairment charges for non-performing loans declined by 70.1% from MK6, 243 million in 2015 to MK1, 868 million in 2016,” reads the statement.
Meanwhile, the bank is implementing a new five year business plan that will enable it to successfully differentiate itself in the banking market.
According to the statement, the plan will see the bank offering customised services and solutions for clearly segmented existing and new customers and deliver value for its various stakeholders.
“The bank has since identified a technical partner who will work closely with local leadership on the new business plan,” Reads the statement.
“The bank has embarked on recapitalisation project which was approved by shareholders on 29th December 2016 at an extraordinary meeting to augment its capital position. After recapitalisation, the bank shall be able to take on more business which shall result in increased income. The bank forecasts return to profitability in the third quarter of 2017, after recapitalisation process,” adds the statement.