Malawi Stock Market Commentary

With Easter approaching the week opened and closed on a low with activity decreasing significantly both in terms of volume and turnover. Turnover went down to MWK 19m from MWK 53m registered last week. Active counters during the week were; TNM, Standard Bank, NITL, NBS, NBM, Mpico and Illovo. For the first time in three weeks the Index closed flat. The highlight of the week was the release of FMB, NBM, NBS and PCL FY11 results.

FMB released its FY11 results, strong growth in the balance sheet was maintained in 2011 with total group assets increasing to MWK 60bn (+20%). Group deposits grew by 27%, but a more conservative lending approach was adopted in response to worsening economic conditions in the country, resulting in the overall credit to deposit ratio being reduced from 71% to 63%. Declining money market yields and competitive pressures on the interest margins were experienced in both Malawi and Botswana. The Directors declared a first interim dividend of MWK 584.1m (25 tambala per share) for the year 2011 and a second interim dividend of MWK 116.8 m (5 tambala per share) was declared on 21 March 2012. This is payable on 20 April 2012. The Directors also propose a final dividend of MWK 46.7m (2 tambala per share) for approval at the forthcoming Annual General Meeting.

NBM reported a group pre-tax profit for FY11 of MWK 5.2bn (2010: MWK 5.1bn). This performance is in spite of the Bank having absorbed a one-off fair value loss of MWK 1.7bn in respect of the new Business Centre and Office Complex. The Bank registered a 13% growth in both total earning assets and customer deposits. An interim dividend of MWK 840m (2010: MWK 700m) was paid in September, 2010 amounted to MWK 2.1bn. The Board has resolved to recommend to the shareholders payment of a final dividend amounting to MWK 1.3bn representing MWK 2.70 per share. The dividend will be payable after the Annual General Meeting which will be held in June 2012.

NBS also announced its FY11 results, a group pre-tax profit of MWK 2.5bn (+21% y/y) and profit after tax MWK 1.7bn (+20% y/y) reflects yet another good year. The growth in profitability has been largely due to 31% growth in interest income arising from a 49% growth in loan portfolio which has been funded by 53% growth in deposits. Total income at MWK 8.640bn was 16% above 2010 whilst net income at MWK 6.8bn was 12% above previous year. The cost to income ratio remained the same as last year at 61% and is above the industry norm of 60%. Final dividend of MWK 400m representing MWK 0.55 per share (2010: MWK 0.50 per share), has been proposed by the Directors and the date of payment will be advised later. The total dividend paid for 2011 shall be MWK 582m, representing MWK 0.90 per share (2010: MWK 384m, representing MWK 0.75 per share).