Malawi’s listed commercial banks posted record profits in 2024, with the sector expected to nearly double those results in 2025. FDH Bank doubled profit to K74 billion in 2024. NBS Bank posted a 148% profit increase to K73 billion. National Bank of Malawi similarly reported strong results. Sector-wide, four listed banks are projected to post K630 billion in combined profit in 2025.

These are significant numbers for a country with GDP growth of just 1.8% in 2024.

Why the banks are so profitable

The source of the profits tells the real story. Analysts and commentators have noted that Malawian banks are primarily generating returns from investment in government securities — treasury bills and bonds that pay high interest rates in line with the policy rate of 26%.

With government borrowing heavily to finance a 9.5% fiscal deficit, and treasury securities offering near-risk-free returns at rates above 30% in some periods, the incentive for banks to lend to the government rather than to businesses is straightforward. Government lending is low-risk, high-yield, and requires no client relationship management.

The headline from Nyasa Times captures the dynamic bluntly: “Banks Feast as Malawi Bleeds.”

What this means for borrowing businesses

The practical consequence of this dynamic is that credit to the private sector — businesses and households — is expensive and limited. Commercial lending rates in Malawi sit well above 30% annually. Borrowing to fund a business investment at these rates is viable only for very high-margin activities.

Most foreign companies operating in Malawi fund their local operations through parent company capital or international development finance rather than local bank debt. This is the right approach in the current environment.

The high-rate environment is a function of the Reserve Bank’s decision to maintain the policy rate at 26% to control inflation. As inflation declines from its 2024 peak of 32.3%, there is eventually room for rates to fall and credit conditions to ease.

Banking sector health

Despite the structural question about the source of profits, the banking sector’s underlying health has improved. The Reserve Bank’s October 2025 Financial Stability Report noted that non-performing loans dropped to 5.1% — a positive indicator that the sector can absorb shocks.

FDH Bank’s 2025 acquisition move (announced intention to acquire a controlling stake in Ecobank Mozambique) signals private sector confidence in the regional banking market.

What it means for companies entering Malawi

For a company planning to establish in Malawi:

  • Do not plan to fund your operation with local bank debt. The rate environment makes this prohibitively expensive for most investment cases.
  • The banking infrastructure is functional. Opening accounts, making local payments, and basic treasury operations are manageable with the right bank relationships.
  • Exchange rate and forex handling require explicit planning — not every bank has the same capacity or willingness to manage international transactions.
  • Payroll and supplier payment in MWK is operationally straightforward once accounts are established.

Sources: Nyasa Times, Malawi Freedom Network, Nation Online, Reserve Bank of Malawi.