Cashgate worsens Malawi credit rating

Malawian financial institutions continue to face problems in accessing international credit lines due to the cashgate scandal which raised Malawi’s country risk, National Bank of Malawi (NBM) has revealed.
NBM board chairman Matthews Chkaonda spoke in Blantyre recently on the sidelines of the bank’s Annual General Meeting (AGM).
He said due to the cashgate scandal, Malawi was assessed by international banks and correspondent banks to be a much more riskier country, especially when donors suspended balance of payment support.
“The challenge we faced is that some of the credit lines we use as National Bank and even our colleagues in the banking system were cut off,” said Chikaonda.
“These are foreign exchange based credit lines which we use to support the private sector in Malawi during the lean period,” said Chikaonda.
He said another challenge being faced by the financial sector is the high rate of interest which have resulted in the shrinking of lending as businesses struggle to borrow at high rates.
Despite the challenges NBM registered a 67.4 percent after tax profit jump from K7.5 billion in 2012 to K12.7 billion in 2013 buoyed by some good strategies implemented by management and the board.
Chikaonda said the ban has built in flexibility, resources and the agility necessary to continue on the growth path.
He said he expects the bank to perform similarly well in 2014. In his statement, NBM Chief Executive Officer George Partridge said the medium to long term health of the economy will depend on policies to be adopted by the new government and the speed at which suspended budgetary support will be restored by donors.
He said guided by its five-year strategic plan — which is in the second year of implementation, NBM has the necessary capital, human resources and ability to respond rapidly and adapt to changes in the macroeconomic environment.
“It is, therefore, expected that the bank will continue of the growth path in 2014,” said Partridge.
The bank has since paid two interim dividends totaling K3.4 billion – the first one in September, 2013 and the second in January 2014, in addition to a final dividend of K1.5 billion in respect of 2012 profits paid in June 2013.
In total the dividend declared by NBM for the year 2013 amounted to K4.9 billion. During the AGM shareholders nodded to a final dividend amounting to K2.9 billion representing K6.20 per share.
(BNL Times)