Standard Bank : Malawi plc H1 2023 Financials

Standard Bank PLC	HER GROWTH
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE
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Unaudited Summary Consolidated And Separate Financial Statements

SUMMARY STATEMENTS OF COMPREHENSIVE INCOME

In millions of Malawi Kwacha			Consolidated					Separate
		Unaudited		Audited	Unaudited		Audited
		Six	Six	Year	Six	Six		Year
		months	months	ended	months	months		ended
		to 30 June	to 30 June	31 December	to 30 June	to 30 June		31 December
		2023		2022	2022	2023	2022	2022
Interest income	59,099		35,111	85,297		59,088		35,111	85,321
Interest expense	(5,274)		(3,630)	(8,645)		(5,311)		(3,662)	(8,719)
Net interest income	53,825		31,481	76,652		53,777		31,449	76,602
Non-interest revenue	36,871		26,770	51,333		35,584		26,069	50,251
Total income	90,696		58,251	127,985		89,361		57,518	126,853
Credit impairment charges	(8,143)		(4,055)	(7,122)		(8,145)		(4,055)	(7,122)
Income after credit impairment charges	82,553		54,196	120,863		81,216		53,463	119,731
Operating expenses	(33,526)		(29,039)	(60,807)		(33,482)		(29,022)	(60,752)
Profit before taxation	49,027		25,157	60,056		47,734		24,441	58,979
Taxation	(22,105)		(9,322)	(20,854)		(21,728)		(9,117)	(20,231)
Profit after tax	26,922		15,835	39,202		26,006		15,324	38,748
Other comprehensive Income
Net revaluation movement on property and equipment	(838)		-	1,719		(838)		-	1,719
Net change in fair value of financial assets at fair value
through other comprehensive income (OCI)	(46)		153	72		(46)		153	72
Total comprehensive income	26,038		15,988	40,993		25,122		15,477	40,539

SUMMARY STATEMENTS OF CHANGES IN EQUITY

In millions of Malawi Kwacha			Consolidated						Separate
	Unaudited		Audited		Unaudited		Audited
	Six	Six	Year		Six	Six		Year
	months	months	ended		months	months		ended
	to 30 June	to 30 June	31 December		to 30 June	to 30 June		31 December
	2023		2022	2022	2023		2022	2022
Opening equity	148,052		117,059	117,059	143,432		112,893	112,893
Profit for the period	26,922		15,835	39,202	26,006		15,324	38,748
Dividends declared and paid	(12,000)		(7,001)	(10,000)	(12,000)		(7,001)	(10,000)
Net revaluation movement on property and equipment	(838)		-	1,719	(838)		-	1,719
Movement in other reserves	293		205	72	293		206	72
Closing equity	162,429		126,098	148,052	156,893		121,422	143,432
Basic earnings per share (MK per share)	115.05		67.57	167.53	111.14		65.39	165.59
Dividend per share (tambala)	5,128		2,992	4,273	5,128		2,992	4,273
Number of ordinary shares in issue (million)	234		234		234	234		234	234
Market price per share (MK)	2,350		1,600	2,000	2,350		1,600	2,000

SUMMARY STATEMENTS OF FINANCIAL POSITION

	In millions of Malawi Kwacha		Consolidated						Separate
			Unaudited			Audited		Unaudited		Audited
			As at	As at		As at		As at	As at		As at
			30 June	30 June	31 December		30 June	30 June	31 December
			2023	2022	2022	2023	2022	2022
	ASSETS
Cash and balances held with the Central Bank	51,849	38,762	56,385		51,650	38,703	56,199
Non-current assets held for sale	104	612	584		104	612	584
Trading assets and derivatives	42,453	7,042	1,587		42,453	7,042	1,587
Financial Investments	359,409	278,948	352,645	359,409	278,948	352,645
Loans and advances to banks	169,747	111,596	131,454		169,670	111,557	131,189
Loans and advances to customers	274,695	218,821	235,845		274,695	218,821	235,845
Investment in Subsidiaries	-	-	-		100	100	100
Other assets	20,544	11,755	14,962		20,661	11,793	15,002
Property, equipment and right-of-use assets	24,818	18,445	21,907		24,818	18,445	21,907
Intangible assets	13,223	14,736	13,979		13,223	14,736	13,979
Deferred tax asset	-	2	-		-	-	-
Total assets	956,842	700,719	829,348		956,783	700,757	829,037

SUMMARY STATEMENTS OF FINANCIAL POSITION (CONTINUED)

	In millions of Malawi Kwacha			Consolidated						Separate
	Unaudited			Audited			Unaudited		Audited
					As at	As at		As at		As at	As at		As at
					30 June	30 June	31 December		30 June	30 June	31 December
EQUITY AND LIABILITIES
		2023		2022	2022	2023	2022	2022
	Equity
	Issued capital	234		234	234	234	234	234
	Share premium	8,492		8,492	8,492		8,492	8,492	8,492
	Retained earnings	141,764	106,135	126,503	136,228	101,457	121,883
	Other reserves	11,939		11,237	12,823	11,939	11,239	12,823
	Total equity	162,429		126,098	148,052		156,893	121,422	143,432
	Liabilities
	Deposits and loans from banks	17,498		28,179	20,962	17,498	28,179	20,962
	Deposits from customers	692,562		492,554	593,006	698,207	497,408	597,753
	Derivative liabilities	246		316	218	246	316	218
	Other liabilities and provisions	56,628		39,882	48,403	56,658	39,888	48,398
	Income tax payable	17,317		8,236	10,565	17,119	8,090	10,133
	Deferred tax liabilities	10,162		5,454	8,142	10,162	5,454	8,141
	Total liabilities	794,413		574,621	681,296	799,890	579,335	685,605
	Total equity and liabilities	956,842		700,719	829,348	956,783	700,757	829,037
	O balance sheet items
	Letters of credit and guarantees	130,905		170,721	136,482	130,905	170,721	136,482
	Undrawn commitments	76,027		31,650	26,945	76,027	31,650	26,945
	Foreign exchange contracts	58,614		8,823	38,168	58,614	8,823	38,168

SUMMARY STATEMENTS OF CASH FLOWS

In millions of Malawi Kwacha			Consolidated						Separate
Unaudited		Audited			Unaudited		Audited
			Six	Six	Year		Six	Six		Year
			months	months	ended		months	months		ended
			to 30 June	to 30 June	31 December		to 30 June	to 30 June		31 December
	Cash ows from operating activities	2023		2022	2022	2023	2022	2022
	Prot before income tax expense	49,027		25,157	60,056		47,734		24,441	58,979
	Adjustment for non-cash items included within
	the income statement	(43,504)		(25,029)	(66,244)	(43,456)		(24,990)	(67,194)
	Net increase in operating assets/liabilities	(36,653)		(15,944)	(15,335)	(35,967)		(15,373)	(14,658)
	Interest paid	(5,371)		(4,172)	(9,036)	(5,408)		(4,204)	(9,110)
	Interest received	54,285		33,848	73,440	54,274		33,848	73,464
	Dividends received	-		-	-	-		-	1,000
	Income taxes paid	(14,062)		(8,901)	(16,054)	(13,468)		(8,757)	(15,775)
	Net cash generated from operating activities	3,722		4,959	26,827		3,709		4,965	26,706
	Cash ows from investing activities
	Purchase of property and equipment	(4,021)		(1,221)	(3,593)	(4,021)		(1,221)	(3,593)
	Sale of property and equipment	15		196	253	15		196	253
	Net cash used in investing activities	(4,006)		(1,025)	(3,340)	(4,006)		(1,025)	(3,340)
	Cash ows from nancing activities
	Principal lease repayments	(314)		(187)	(319)	(314)		(187)	(319)
	Dividends paid	(3,938)		(6,392)	(8,190)	(3,938)		(6,392)	(8,190)
	Net cash used in nancing activities	(4,252)		(6,579)	(8,509)	(4,252)		(6,579)	(8,509)
	Net (decrease)/increase in cash and cash equivalents	(4,536)		(2,645)	14,978	(4,549)		(2,639)	14,857
	Cash and cash equivalents at beginning of period	56,385		41,407	41,407	56,199		41,342	41,342
	Cash and cash equivalents at end of period	51,849		38,762	56,385	51,650		38,703	56,199

NOTES TO THE SUMMARY CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Impairment losses/Non-performing credit facilities and provisions for losses by Industry sector

	As at 30 June 2023			As at 30 June 2022
		Impaired		Stage 3				Stage 3
	Outstanding		expected	Outstanding	Impaired		expected
	Amount	amount		credit losses	Amount	amount		credit losses
	MKm	MKm		MKm	MKm	MKm		MKm
Agriculture	85,585	65		57	57,397	149		136
Manufacturing	7,198	173		68	10,820	-		-
Mining	1	-		-	-	-		-
Construction	7,501	389		302	4,744	183		142
Energy/Electricity	5,083	108		73	6,046	-		-
Gas/Water	-	-		-	-	-		-
Transport/Communication	37,333	288		195	24,346	123		92
Financial Services	482	53		53	770	-		-
Wholesale/Retail	30,550	1,523		979	30,856	442		383
Individual/Household/Community	111,608	6,835		5,541	90,418	4,787		4,206
Real Estate	5,234	40		25	3,917	-		-
Tourism	286	1		1	2,363	-		-
Total	290,861	9,475		7,294	231,677	5,684		4,959

Credit concentrations

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 our core capital.

		Sector of borrower	As at 30 June 2023		% of Core Capital		As at 30 June 2022	% of Core Capital
			MKm				MKm
		Transport/Communication/Storage	-		-		34,931	34.60%
		Various	34,253		27.75%		-	-
		Loans to directors, senior management and other related parties
					30 June 2023			30 June 2022
					MKm			MKm
		Directors
		Balance at the beginning of the year			162			182
		Loans granted during the year			7			1
		Repayments			(9)			(9)
		Balance at the end of half year			160			174
					30 June 2023			30 June 2022
					MKm			MKm
		Other related parties
		Balance at the beginning of the year			76			27
		Loans granted during the year			3,496			64
		Repayments			(4)			(11)
		Balance at the end of half year			3,568			80
					30 June 2023			30 June 2022
					MKm			MKm
		Senior management ocials
		Balance at the beginning of the year			1,497			1,203
		Loans granted during the year			368			331
		Repayments			(282)			(158)
		Balance at the end of half year			1,583			1,376
		Total loans to directors, senior management and other related parties			5,311			1,630
		Total loans to directors, senior management and other related parties as
		a percentage of core capital			4%			1%
		Investment in subsidiaries
		Name of subsidiary	Number of shares	Percentage holding		Current year	Previous year
							MKm	MKm
		Standard Bank Bureau De Change Limited	99,999,999	100%	100	100
		Standard Bank Nominees Limited	19,999	100%	-	-
Lending rates
					As at 30 June 2023			As at 30 June 2022
		Base lending rate (local currency)			21.0%			13.8%
		Maximum applicable range (percentage points)			11			11
		Lending rates (foreign currency loans)			3.9% - 14.6%			3.8% - 12.9%
		Reserve Bank of Malawi Policy rate			22.0%			14.0%
Director's remuneration, bonuses and franchise fees
					30 June 2023			30 June 2022
					MKm			MKm
		Director's remuneration
		- Directors' fees and expenses			139			72
		- Executive directors' remuneration			272			225
		Total bonuses paid to all staff (relating to prior year provision)			3,178			2,303
		Franchise fees to holding company			2,671			1,732
Deposit rates
		Type of deposit			30 June 2023			30 June 2022
					Rate			Rate
		Malawi Kwacha
		Current account			0%			0%
		Call			2%			3%
		Notice			3.5%			3.5%
		Savings			3%			4%
		Pure save			4%			6.5%
		Contract save			5% - 8%			6%-8%
		1 month Fixed			4%			4.5%
		2 months fixed			4.5%			5.5%
		3 months fixed			5%			6.5%
		More than 3 months			Negotiable			Negotiable
		Foreign currency denominated accounts (FCDAs)
		USD			0.37%			0.37%
		GBP			0.10%			0.10%
		EUR			0%			0%
		ZAR			0%			0%

Additional disclosures on Risk and Capital Management can be accessed on the Bank's website http: www.standardbank.co.mw.

Standard Bank PLC is licensed and regulated by the Reserve Bank of Malawi

Standard Bank PLC

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023

Unaudited Summary Consolidated And Separate Financial Statements

FINANCIAL REVIEW

We present the unaudited financial results of the Group for the six months ended 30 June 2023.

Economic highlights

Foreign exchange demand and supply imbalances persisted in the first half of the year, resulting into a 2.36% cumulative depreciation of the Kwacha by the close of June. As a result, the Kwacha closed the first half at MK1,058.8 against the United States dollar compared to MK1,033.4 at the end of June 2022. Cost pressures on food, utilities tariffs and the weak local currency weighed significantly on headline inflation which closed the period at 27.3% from 23.5% in June 2022. Consequently, the Policy rate was raised from 18% to 22% in April 2023, which triggered increases in the Reference rate and commercial banks Base lending rates. In addition, the liquidity reserve requirement (LRR) for local currency deposits was adjusted upwards from 3.75% to 5.75%.

Performance

The Group's results demonstrated its resilience as it continued to operate in a challenging environment characterized by foreign currency demand and supply imbalances and inflationary pressures. Despite the underlying challenges, the Group grew its revenues, managed costs growth below inflationary levels and grew its balance sheet supported by a strong funding base which in turn resulted in higher profitability.

The Group's profit after tax of MK26.9 billion was 70% above prior year. Total revenue grew by 56% year on year driven by growth in both net interest income and non-interest revenue. Net interest income grew by 71% year on year driven by growth in loans and advances to customers and financial investments which both grew by 26% and 29% year on year respectively. The growth in interest earning assets was as a result of growth in deposits from customers which also grew by 41% year on year.

Non-interest revenue grew by 38% year on year. Net fees and commissions grew by 20% year on year driven by increase in transaction volumes despite reduction in pricing of selected fees and commissions. Trading revenue grew by 51% year on year anchored by an increase in trading volumes.

Credit impairments were significantly up on prior year due to growth in the performing customer loan book as well as financial investments which resulted in increase of performing related credit impairments. In addition, credit impairments also grew as a result of deteriorating macroeconomic factors which led to increase in forward looking credit impairment charges as well as downgrades on some non-performing customer loan balances. The Group will continue its efforts to recover previously written off loans as well as focus on prudent risk taking and management.

Operating costs were 15% up on prior year impacted by increase in prices of goods and services as well as increase in staff costs emanating from annual remuneration adjustment. The Group's continued focus on cost and process optimisation initiatives led to a lower than inflation cost growth. As a result of higher revenue base and lower cost growth, the cost to income ratio reduced from 50% in prior year to 37% in the current year.

Earnings per share for the half year increased from MK67.57 in 2022 to MK115.05 in 2023.

Outlook

The operating environment is expected to remain challenging in the second half of the year given the persistent inflationary pressures emanating from high food prices, utility tariff increases and tight foreign exchange supply conditions. A new Extended Credit Facility programme with the International Monetary Fund before the end of the year could bring about currency stability and foster business confidence.

Dividend

The directors resolved not to pay an interim dividend for the half year ended 30 June 2023. In arriving at this decision, the directors have considered the expected continued currency depreciation emanating from the foreign exchange auctions and the deteriorating macroeconomic factors which will trigger further forward looking credit impairment charges. The directors will continue to review the prevailing and expected market conditions and declare a dividend once macroeconomic conditions improve. A first interim dividend of MK21.31 per ordinary share representing MK5 billion was paid in prior year.

By order of the Board.

NAME	DESIGNATION	SIGNATURE	DATE
1.	C Kapanga	Chairperson		04 August 2023
2.	A Mkandawire	Director		04 August 2023
3.	P Madinga	Chief Executive		04 August 2023
4.	J Mhone	Chief Financial and		04 August 2023

Standard Bank PLC is licensed and regulated by the Reserve Bank of Malawi