Date Of Article: 3/26/2003
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NBS turning commercial this year
By: Ayam Maeresa
Insurance and asset management group National Insurance Company of Malawi (Nico) plans to turn the New Building Society (NBS) into a full commercial bank this year, a top official has said. Managing director Felix Mlusu said in Blantyre that the NBS, a leading mortgage bank, will be structured to perform the full functions of a commercial bank, joining a fray of eight existing commercial banks in the industry. He said the group, which has a 74 percent stake in NBS, is currently consulting financial market authorities for guidance. Mlusu said NBS, which has emerged a star performer in its maiden financial year as a subsidiary of Nico amongst its seven companies, forms part of Nico’s future growth pillar. Some banking gurus have argued that the commercial banking industry has reached a saturation point. The industry has seen new giant entrants like South Africa-based Stanbic Africa, which bought 60 percent shares in the Commercial Bank of Malawi (CBM) through privatisation to become the controlling shareholder. Others like Nedbank, also from South Africa, have also taken a share of the market, which surprisingly has remained resilient in troubled times even when the local industry is on ‘bed rest’. “We do not believe that the industry is too saturated,” said Mlusu. “There is a lot of an unbanked proportion of the nation and so we see ourselves having a niche market.” He said the bank will use its muscle and experience to carve out a commercially viable banking entity out NBS but he did not say when exactly the bank will start. According to the group’s financial results for last year, NBS is a turn around stock that has proved a worthwhile investment. Nico said the excellent performance by NBS, coupled with the upward growth in the group’s insurance business —life and general insurance—pushed gross income to K2.5 billion from K2.1 billion in 2001. Mlusu said the group will exploit expansion opportunities, with an idea to further strengthen its position both at home and in the two regional trade blocs of Southern African Development Community (Sadc) and Common Market for Eastern and Southern Africa (Comesa). “The vision is to become a strong and high rewarding insurance and financial services group,” said Mlusu, whose company is listed on the Malawi Stock Exchange (MSE).
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