By Brown Mdalla
Standard Bank Group has forecast that higher agricultural production expected this year due to favourable rainfall patterns will result in good economic performance for Malawi despite the prevalence of the coronavirus (Covid-19) which continues to weigh on the country’s economy.
In a summary of audited financial results for the year ended December 31, 2020, the Bank says business activities slowed down in the year 2020 due to economic challenges caused by Covid-19 pandemic.
It says the downward business trend resulted in drought in foreign currency, the challenge the organization believes will persist this year due to the the pandemic.
“The negative economic effects of Covid-19 pandemic will likely continue in 2021 and currency pressures are expected to continue, largely driven by weak foreign currency inflows which can partly be attributed to the ongoing pandemic,” reads the statement in part.
The statement also says, besides Covid-19 effects on the organization’ activities, volatile political environment during the first half of the year also impacted its operations.
In 2020, the statement says, inflation rate was notably low, the development that has been attributed to lower food inflation rate in the year whose gross inflation rate was 8.6 percent from 9.4 percent in 2019. In the same year, food inflation and non-food inflation averaged 13 percent and 4.7 percent from 14.3 percent and 5.3 percent in 2019.
The statement says during the same period, the local currency weakened against the Unites States Dollar, which was partly due to reduced supply of foreign exchange on local foreign exchange markets.
“2020 was a challenging year due to the impact of the coronavirus on the macro-economy and the group’s operations. However, despite the challenging operating environment, the group posted a strong set of results,” reads the statement.
The statement further says, after paying its taxes, the group registered a profit of K23.7 billion, which was 50 percent above the profit the bank made in 2019.
During the year, the Bank experienced six percent growth in net interest income, which was a result of growth in loans and advances to customers that grew by 11 percent, despite reduced appetite in the lending space due to the pandemic.