Malawi | MSE

The Malawi All Share Index inched up 50bps during the quarter to close at 32,562.96 influenced by banking stocks which rallied on stellar results while the rest of the counters retreated weighing down the increase in the index. Malawi banks seem to have defied the general downward trend in earnings brought about by the effects of Covid-19. In general net interest margins seem to be the drivers of revenue across the board – only reducing marginally suggesting that there was little adjustment in existing loan facilities in response to the pandemic. The banks are not the most popular lot in the court of public opinion as a result.

Airtel Malawi continued to perform ahead of expectations, returning a 39% growth in PAT to MWK22.1bln on the back of a 46% and 55% increase in data and other revenues to MWK38.4bln and MWK10.6bln respectively, a lower 9% push in operating expenses and a reduction in the tax rate to 30% from 37%. The calculated return to equity was an ROE of 111%, with a dividend of MWK2.10 per share was declared.

Non-funded income (NFI) registered the most growth of17% to MWK28.6bln, significantly augmenting the 9% rise of net interest income to MWK49.9bln. Adding up the two revenue lines, we get a total banking income of MWK76.1bln,up 16%. The net interest margin of11% pa was 100bps lower than last year.

Sunbird Tourism (Sunbird) as a hospitality group suffered the most in 2020, as MICE (meetings, incentives, conferences,and exhibitions) ground to a halt due to the Covid -19 pandemic. These activities which involve large gatherings have traditionally beenmajor revenue sources for hotels;second to but also driving demand for rooms. The result was that the occupancy levels for Sunbird averaged 32%, down from 52% in FY19.

NBS released a solid set of results headlined by a 58% rise in the PAT to MWK7 billion. ROE at 42%, was up 700bps on FY19 and is one of the highest in the sector. The total capital ratio of 18.5% is sufficiently above the regulatory minimum of 15%, giving the Board room to recommend a MWK1.15/share dividend. NPLs also improved to 5% from 15% in FY19, on prudent underwriting and the aggressive growth in the loan book. Despite the good innings, some ratios like leverage at 11.39x, suggest overtrading and the cost to income ratio in the 70s is not yet at optimum levels.

The NITL portfolio grew 11% to MWK12.9bln, outperforming the MSE which rose 7.08% in 2020. The portfolio which is 100% invested in MSE listed equities, with cash resources amounting to just MWK277mln had a fair value (FV) gain of MWK1.4bln, compared with MWK1.7bln in the prior year. This ultimately affected the PAT growth rate.