National Bank of Malawi : NBM plc H1 2023 Financials

SUMMARY OF UNAUDITED INTERIM RESULTS

FOR THE SIX MONTH PERIOD ENDED 30th JUNE 2023

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Financial

Highlights

SUMMARY STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Interest income and similar income

Interest expense

Net interest income

Other income

Net income

Operating expenses

Profit before impairment losses on loans and advances Net impairment losses on loans and advances

Profit before taxation

Income tax expense

Profit after tax

Other comprehensive income

Gains on property valuations

Deferred tax on revalued assets

Other comprehensive income net of tax

Total comprehensive income for the year

Profit attributable to shareholders

Owners of the Parent

Non-Controlling Interest (Minorities)

Comprehensive income attributable to shareholders Owners of the Parent

Non-Controlling Interest (Minorities)

DIVIDENDS PAID

Interim

Final (for prior year)

Total

Earnings per share (Kwacha) Dividend per share (Kwacha)

Number of ordinary shares in issue (millions)

SUMMARY STATEMENTS OF FINANCIAL POSITION LIABILITIES & EQUITY

Customer deposits

Current income tax liabilities

Other liabilities

Lease liability

Deferred tax

Loans and borrowings

		GROUP					COMPANY
30-Jun-23	30-Jun-22	31-Dec-22	30-Jun-23	30-Jun-22	31-Dec-22
Unaudited	Unaudited	Audited	Unaudited	Unaudited	Audited
	K'm	K'm		K'm	K'm	K'm		K'm
71,449	53,731	111,984		64,054	47,889	99,662
(10,871)	(5,308)	(13,111)		(9,267)	(4,265)	(10,775)
	60,578	48,423	98,873		54,787	43,624	88,887
40,959	21,851	45,232		37,085	19,943	40,919
	101,537	70,274	144,105		91,872	63,567	129,806
(42,414)	(33,031)	(70,747)		(34,552)	(26,850)	(57,587)
	59,123	37,243	73,358		57,320	36,717	72,219
(1,787)	(4,586)	(3,995)		(2,507)	(4,050)	(1,002)
	57,336	32,657	69,363		54,813	32,667	71,217
(21,853)	(10,539)	(23,419)		(20,925)	(10,127)	(22,082)
	35,483	22,118	45,944		33,888	22,540	49,135
-	-	3,696		-	-	3,696
-	-	2,032		-	-	2,032
-	-	5,728		-	-	5,728
	35,483	22,118		51,672		33,888	22,540		54,863
35,424	22,280	47,474		33,888	22,540	49,135
59	(162)	(1,530)		-	-	-
	35,483	22,118	45,944		33,888	22,540	49,135
35,424	22,280	53,202		33,888	22,540	54,863
	59	(162)	(1,530)		-	-	-
	35,483	22,118	51,672		33,888	22,540	54,863
10,002	7,003	8,003		10,002	7,003	8,003
-	11,038	18,005		-	11,001	18,005
	10,002	18,041	26,008		10,002	18,004	26,008
75.85	47.71	101.66		72.57	48.27	105.21
21.42	38.63	55.69		21.42	38.55	55.69
467	467	467		467	467	467
819,217	638,953	809,562		631,323	502,931	568,644
14,979	5,777	7,712		14,034	5,628	7,189
47,679	52,824	64,292		35,930	43,748	53,276
6,057	7,377	6,849		1,335	2,226	1,838
2	-	2		-	-	-
13,387	10,651	11,108		5,644	10,651	8,105

IMPAIRMENT LOSSES/NON PERFORMING CREDIT FACILITIES AND PROVISIONS FOR LOSSES BY INDUSTRY SECTOR

	30th June 2023		30th June 2022
			Expected			Expected
	Outstanding	Impaired	Credit	Outstanding	Impaired	Credit
Sector	Amount	Amount	Losses	Amount	Amount	Losses
	K'm	K'm	K'm	K'm	K'm	K'm
Agriculture, Forestry, Livestock and Fishing	49,690	5,825	1,773	58,731	2,043	1,446
Manufacturing	21,470	623	165	37,416	4,430	804
Mining and Quarrying	3,252	2,885	859	107	2	2
Construction and Engineering	6,016	1,623	437	4,190	472	142
Energy/Electricity, Gas, Air conditioning,
Water supply & Waste management	19,027	863	156	19,665	12,758	245
Transport/Storage	11,818	3,413	466	9,129	881	353
Communication	12,815	133	720	9,961	121	512
Financial/Insurance/Professional/Scientific
& Technical services	21,340	1,369	1,166	8,516	301	337
Wholesale/Retail	60,913	7,296	2,136	50,038	10,128	3,170
Individual/Households	78,700	2,098	1,788	56,123	1,855	1,681
Real Estate	6,887	4,988	10	7,238	5,636	28
Tourism	29,038	14,984	184	28,096	1,460	716
Other	13,460	601	273	18,954	3,017	1,210
TOTAL	334,426	46,702	10,134	308,164	43,104	10,646

CREDIT CONCENTRATION

Total Credit Facilities including guarantees, acceptances and other similar commitments extended to any one customer or group of related customers where amounts exceed 25% of core capital.

SECTOR OF BORROWER

		30th June 2023			30th June 2022
	K'm	% OF CORE CAPITAL			K'm	% OF CORE CAPITAL
Wholesale/Retail	-	0%		-	0%
LOANS TO DIRECTORS, SENIOR MANAGEMENT AND OTHER RELATED PARTIES	DIRECTORS REMUNERATION, BONUSES AND
			MANAGEMENT FEES

Profit	Net
After Tax	Income

K35.48b K101.54b

60%44%

Customer	Loans &	Balance
Deposits	Advances	Sheet

K819.22b K324.29b K1,100.50b

28%

9%

27%

SUMMARY OF UNAUDITED INTERIM RESULTS FOR THE SIX-MONTH PERIOD ENDED 30TH JUNE 2023

The Board is pleased to announce unaudited interim results for the Group for the six-month period ended 30th June 2023.

PERFORMANCE

The Group registered a profit after tax of K35.48 bn representing a 60% increase from K22.12 bn reported in 2022. These results were driven by growth in both net interest income and other income which grew by 25% and 87% respectively. Overall net revenue grew by 44%. Operating expenses increased by 28%. Net Impairment losses decreased by 61% on account of more recoveries.

Customer deposits increased by 28% (2022:34%) while the Bank's loan book grew by 9%. (2022: 31%). Investment in Fixed Income securities grew by 13% (2022:48%).

All the subsidiaries and an associate of the Bank posted profits that contributed positively to the Group half year performance.

Equity attributable to equity holders of the parent company Minority interest

Total liabilities and equity

ASSETS

Cash and funds with Central Banks

Placements with other banks

Other money market investments

Other assets

Income Tax Receivable

Equity investments

Government of Malawi Promissory Notes

Government Securities

Loans and advances to customers

Investment in associates

Investment in subsidiaries

Property and equipment

Intangible assets

Right of use assets

Deferred tax

Goodwill

Total assets

Memorandum items

Contingent liabilities - Letters of credit and guarantees

SUMMARY STATEMENTS OF CHANGES IN EQUITY

As at beginning of period

Total comprehensive income for the year

Dividends paid

Translation differences

As at end of period

SUMMARY STATEMENTS OF CASH FLOWS

Cash flows from operating activities

Profit before tax

Adjustments for:

Depreciation of property and equipment Amortisation of intangible assets Amortisation of right of use of assets Interest on lease liability

Net gains on financial instruments classified as held for trading

Gains on disposal of financial instruments classified as held for trading (Profit) loss on disposal of property and equipment

Dividends received

Share of (profits)/loss of associate

Net fair value loss on revaluation of property Net losses on modified and restructured loans

Movement in allowance for impairment in loans and advances

Operating cashflows before working capital movements Increase in operating assets

Movement in investments

Movement in liabilities to other banks

Increase in operating liabilities

Net cash flow from operating activities Tax paid

Net cash from operating activities

Net cash outflow from investing activities Net cash outflow from financing activities

Net increase /(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period

197,470	149,509	172,180	193,117	144,912	169,231
1,704	3,012	1,644	-	-	-
1,100,495	868,103	1,073,349	881,383	710,096	808,283
56,497	51,216	64,650	45,127	38,484	53,604
101,507	45,555	83,515	100,692	45,555	83,302
139,422	65,869	169,277	19,123	-	-
21,436	9,633	16,580	15,709	6,057	11,408
-	947	16	-	-	-
15,498	4,905	6,892	15,498	4,905	6,892
307	-	-	307	-	-
363,249	321,251	345,939	326,933	283,058	309,930
324,292	297,516	310,440	273,087	257,293	262,768
1,050	1,450	918	992	992	992
-	-	-	18,169	15,641	15,641
46,675	40,121	44,936	45,642	39,569	44,338
10,582	8,965	9,496	10,355	8,717	9,268
4,228	5,577	4,946	401	1,177	792
11,793	11,139	11,785	9,348	8,648	9,348
3,959	3,959	3,959	-	-	-
1,100,495	868,103	1,073,349	881,383	710,096	808,283
22,536	18,283	29,376	22,536	18,283	29,376
173,824	146,169	146,169	169,231	140,376	140,376
35,483	22,118	51,672	33,888	22,540	54,863
(10,002)	(18,041)	(26,045)	(10,002)	(18,004)	(26,008)
(131)	2,275	2,028	-	-	-
199,174	152,521	173,824	193,117	144,912	169,231
57,336	32,657	69,363	54,813	32,667	71,217
1,885	1,556	3,146	1,697	1,414	2,913
654	638	1,356	654	638	1,288
705	663	1,347	395	393	787
454	500	1,035	143	230	417
(8,606)	387	(931)	(8,606)	387	(931)
-	23	163	-	23	163
(76)	3	3	(76)	3	3
(113)	(48)	(202)	(863)	(558)	(731)
(131)	10	1,042	-	-	-
-	-	(93)	-	-	(93)
(55)	553	126	(55)	553	126
3,445	4,884	6,141	3,345	4,737	2,785
55,498	41,826	82,496	51,447	40,487	77,944
(21,726)	(50,456)	(81,201)	(17,384)	(50,772)	(58,534)
-	-	(2,174)	-	-	6,173
(21,543)	-	(16,037)	(21,692)	-	(21,551)
13,793	71,646	256,547	66,522	46,739	115,564
26,022	63,016	239,631	78,893	36,454	119,596
(14,560)	(9,647)	(18,511)	(14,080)	(9,288)	(18,350)
11,462	53,369	221,120	64,813	27,166	101,246
(23,118)	(7,863)	(38,927)	(23,677)	(3,996)	(41,654)
(8,360)	(19,024)	(27,567)	(13,100)	(18,558)	(29,690)
(20,016)	26,482	154,626	28,036	4,612	29,902
317,442	111,139	162,816	136,906	57,494	107,004
297,426	137,621	317,442	164,942	62,106	136,906

				30th June 2023			30th June 2022
				K'm			K'm
	DIRECTORS:
	Balance at beginning of the half year		173		429
	Loans granted during the half year		130		140
	Repayments		(67)		(361)
	Balance at end of half year		236		208
	SENIOR MANAGEMENT OFFICIALS:
	Balance at beginning of year		12,861		1,150
	Loans granted during the half year		5,266		157
	Repayments		(68)		(134)
	Balance at end of half year		18,059		1,173
	OTHER RELATED PARTIES:
	Balance at beginning of half year		1,098		7,554
	Loans granted during the half year		135		6,726
	Repayments		(325)		(2,542)
	Balance at end of half year		908		11,738
	Total related party lending		19,203		13,119
	Total related party lending as a
	percentage of core capital		16%		15%
	INVESTMENTS IN SUBSIDIARIES
				Name of			Percentage
				Subsidiary			Holding
				30th June 2023			30th June 2022
	NBM Capital Markets Limited	100%	100%
		100%
	NBM Securities Limited	100%
	National Bank of Malawi Nominees Limited	100%	100%
	NBM Bureau De Change Limited	100%	100%
	NBM Development Bank Limited	100%	100%
	NBM Pension Administration Limited	100%	100%
	Akiba Commercial Bank	60.48%	60.48%
	Stockbrokers Malawi Limited	75%	75%
	LENDING RATES
				30th June 2023			30th June 2022
	Malawi Kwacha facilities
	Base Lending Rate		21.4%			13.9%
	Lending Rate Spread		1% to 11%			1% to 11%
	Foreign Currency facilities		7% to 12%			7% to 12%

		30th		30th
		June 2023		June 2022
		K'm		K'm
	Directors Remuneration	774	696
	Total Bonuses Paid by
	the Group	6,110	5,959
	DEPOSIT RATES
		30th		30th
	Type of Deposit	June 2023		June 2022
	Rate %		Rate %
	Malawi Kwacha
	Current Account	0.00		0.00
	Savings	6.25		3.50
	Special savings	4.50		2.00
	Savings Bond	12.00		9.00
	Student Save	5.50		2.20
	Fiesta Save	9.25		6.50
	7 Day Call	5.50		3.00
	30 Day Call	6.50		3.50
	2 Months	7.00		4.50
	3 Months	8.00		5.00
	6 Months	8.50		5.50
	9 Months	Negotiable		Negotiable
	12 Months	Negotiable		Negotiable
	Foreign Currency Denominated Accounts (FCDAs)
	USD	0.50		0.50
	GBP	0.50		0.50
	ZAR	1.50		1.50
	EUR	0.25		0.25

THE OPERATING ENVIRONMENT

The growth in the first half of 2023 was adversely affected by exogenous weather-related shocks in the aftermath of tropical cyclone Freddy and dry weather conditions in the Northern Region. The excess foreign exchange demand conditions remain the catalyst for continued local currency depreciation against currencies of the major trading partners despite the ongoing tobacco auction season. The monetary policy authorities signaled the introduction of a foreign exchange rate price discovery initiative by introducing currency auctions, the first one of which was conducted mid-June 2023. The auction resulted in a mild 3% depreciation of the Malawi Kwacha. The country also experienced fuel supply shortages.

Headline inflation edged up to an average of 26.5% in the first quarter of 2023 from 26.0% in the last quarter of 2022. It closed at 27.30% in June 2023 and the reference rate closed at 21% (December 2022: 17.3%).

DIVIDEND

The directors declared an interim dividend of K11.0bn (2022: K8bn) for the half year ended 30 June 2023 representing K23.50

per share (2022: K17.14 per share). The Dividend will be paid on 29th September 2023 to members whose names appear on the register as at the close of business on 15th September 2023.

OUTLOOK

The outlook for 2023 is for inflation to remain elevated, premised on the short crop size and heightened demand side inflationary pressures emanating from fiscal risks, second round effects of cyclone Freddy and the exchange rate depreciation.

The economy is expected to grow by approximately 1.9% in 2023. This is a revision downwards from a preliminary estimate of 2.7%. The downward revision resulted from exogenous weather-related shocks as explained above. It is expected that these conditions will contribute to lower-than-projected agriculture output and affect non-agricultural output as well.

The Board envisages a continuing challenging operating environment. Pressure on inflation and foreign exchange is expected to continue. In spite of this, the Board remains cautiously optimistic and expects the Bank to continue with its strong performance in the second half of the year.

BY ORDER OF THE BOARD

M.M.Kawawa, Chief Executive Officer	M. Katsala, Chief Financial Officer
Mr J.Lipunga, Chairman	Mrs D. Ngwira, Director
28th July, 2023
Registered Office:
7 Henderson Street,
BLANTYRE