RESERVE BANK OF MALAWI

CONSOLIDATED AND SEPARATE

ANNUAL FINANCIAL STATEMENTS

For the year ended

31 December 2024
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December 2024

INDEX PAGE

Directors’ report 1–3

Statement of directors’ responsibilities 4

Independent auditors’ report 5-7

Consolidated and separate annual financial statements

Statements of financial position 8

Statements of profit or loss and other comprehensive income 9

Statements of changes in equity 10 - 13

Statements of cash flows 14

Notes to the annual financial statements 15 – 133

RESERVE BANK OF MALAWI
DIRECTORS’ REPORT
For the year ended 31 December 2024

INTRODUCTION
The Directors present the Reserve Bank of Malawi (the “Bank’’) consolidated and separate annual financial statements for the year ended
31 December 2024.

This report addresses the performance and financial position of the Bank and its subsidiary (Export Development Fund Limited) (the
“Group”) during the year ended 31 December 2024. The Deposit Insurance Corporation's transactions were not consolidated, as the Bank
does not have control over the entity, in accordance with IFRS 10 Consolidated Financial Statements. Refer to note 13.6.2 to the
consolidated and separate financial statements.

These consolidated and separate annual financial statements have been prepared on a going concern basis taking cognizance of the unique
aspects relating to some of the Bank’s functions as stipulated under the Reserve Bank of Malawi Act, (Cap. 44:02 of the Laws of Malawi),
as well as the Bank’s relationship with the Government of Malawi.

The consolidated and separate annual financial statements have been prepared by Directors in accordance with IFRS® Accounting Standards
as issued by the International Accounting Standards Board, IAS 29 Directive as issued by the Institute of Chartered Accountants in Malawi
(ICAM) and in the manner required by the Reserve Bank of Malawi Act, (Cap. 44:02 of the Laws of Malawi). They include full and
responsible disclosures and are based on appropriate accounting policies which have been applied consistently and are supported by
reasonable and prudent judgments and estimates. The integrity and objectivity of the information in these annual financial statements are
the Directors’ responsibility. Directors are responsible for ensuring that all information in this report is consistent with the annual
consolidated and separate financial statements.

These consolidated and separate annual financial statements have been audited by the Bank’s independent auditors, Deloitte (Malawi) and
Deloitte & Touche (South Africa), who were given unrestricted access to all financial records and related data, including minutes of the
meetings of the Board and the Board Audit Committee.

NATURE OF BUSINESS
The Reserve Bank of Malawi is the Central Bank of the Republic of Malawi, created and regulated by the Reserve Bank of Malawi Act,
(Cap. 44:02 of the Laws of Malawi) and as per section 4 of the Act the primary objective of the Bank is to maintain price and financial
stability.

Export Development Fund Limited (EDF)

The Export Development Fund Limited (EDF) was set up by the Malawi Government through the Reserve Bank of Malawi with its major
objective being to ensure that Malawi’s vast export potential and business opportunities are exploited in order to generate the much-needed
foreign exchange for the Country.

The authorized share capital of the company is K1 billion (2023: K1 billion) divided into 1,000,000,000 ordinary Shares of 1 kwacha each
(2023: 1,000,000,000 ordinary shares of 1 kwacha each). No new shares were issued in the year (2024: 630 million ordinary shares of 1
kwacha each). The Fund received K10 billion in December 2024 from Reserve Bank of Malawi as part of capital injection and the funds
will be issued as shares in the year ending 31 December 2025.

The shareholder and the related shareholding details as at year-end were as follows:
2024 2023
% %
Reserve Bank of Malawi - EDF 100 100
The EDF is yet to meet the capital adequacy requirement of USD 50 million paid up share capital as stipulated under
Financial Services (Capital Adequacy for Development Finance Institutions) Directive, 2018 and the Bank has granted a waiver to EDF up
to 31 December 2017 or pending the review of the Directive. The Registrar of Financial Institutions (the Registrar) issued a conditional
license on 20 September 2021 to the fund to conduct business as a Development Finance Institution (DFI) till 31 December 2024.
Subsequently, on 27 March 2024, the Registrar granted the Fund an unconditional license to conduct its business in Malawi as a DFI effective
1 January 2025

COMPLIANCE WITH THE REQUIREMENTS OF THE RESERVE BANK OF MALAWI ACT (CAP. 44:02 OF THE LAWS OF
MALAWI)
Malawi Government borrowing from the central bank is governed by Section 39 of the Reserve Bank of Malawi Act (Cap. 44:02 of the
Laws of Malawi). This provision states that the total amount of advances, including overdrafts, provided by the Bank at any given time may
not exceed 10% (2023: 10%) of the Government’s average inflation-adjusted annual domestic revenue over the past three financial years.
As of 31 December 2024, the Government’s outstanding advances remained within the statutory limit, standing at K186.44 billion against
the 2024/25 Fiscal Year legal limit of K231.56 billion calculated with domestic revenue adjusted by an average inflation that included an
estimated inflation for March 2024 for year 3.

Page 1
RESERVE BANK OF MALAWI
DIRECTORS’ REPORT (continued)
For the year ended 31 December 2024

COMPLIANCE WITH THE REQUIREMENTS OF THE RESERVE BANK OF MALAWI ACT (CAP. 44:02 OF THE LAWS OF
MALAWI) (continued)

To ensure compliance with the borrowing limit, the Reserve Bank of Malawi closely monitors the Government’s financial position on a
daily basis and provides regular reports. These reports, which are submitted to the Government each day, include detailed information on
revenue collection, expenditure, overall financial position, sources of financing, and the current and outstanding balance of advances to the
Government, among other indicators.

BOARD OF DIRECTORS
The following Directors served on the Board:

Main Board

Name Position Period Meetings (10)

Dr. Wilson T. Banda Chairperson Full year 10 of 10

Mr. William Matambo Deputy Governor, Operations Full year 8 of 10
Deputy Governor, Economics and 7 of 10
Dr. MacDonald Mwale Full year
Regulation
Secretary to the Treasury - Ex Officio Full year 3 of 10
Prof. Betchani Tchereni
Member
Mrs. Chaupi Chihana Member-Non Executive Director Full year 8 of 10
Dr. Maxwell Mkwezalamba Member-Non Executive Director Full year 8 of 10
Mrs. Nimia Kambili-Mzembe Member-Non Executive Director Full year 9 of 10
Chief Justice Andrew K.C. Nyirenda, SC, JA Member-Non Executive Director Full year 10 of 10
(Rtd)
Mrs. Miriam Wemba Member-Non-Executive Director Full year 9 of 10

Subsequent to the year end, Dr Wilson Banda contract was terminated on 6 January 2025. Dr MacDonald Mwale was appointed as the
Governor of Reserve Bank of Malawi and Dr Kisu Simwaka was appointed as the Deputy Governor, Economics and Regulation.

Audit Committee

Name Position Period Meetings (10)

Dr. Maxwell Mkwezalamba Chairperson-Non Executive Director Full year 9 of 10

Mrs. Chaupi Chihana Member-Non Executive Director Full year 10 of 10
Mrs. Nimia Kambili-Mzembe Member-Non Executive Director Full year 10 of 10
Chief Justice Andrew K.C. Nyirenda, SC, JA Member-Non Executive Director Full year 10 of 10
(Rtd.)
Mrs. Miriam Wemba Member-Non-Executive Director Full year 10 of 10

Risk Oversight Committee

Name Position Period Meetings (8)

Mrs. Nimia Kambili-Mzembe Chairperson-Non Executive Director Full year 8 of 8

Mrs. Chaupi Chihana Member-Non Executive Director Full year 8 of 8
Mr. William Matambo Deputy Governor, Operations 9 months 3 of 8
Dr. Maxwell Mkwezalamba Member-Non Executive Director 3 months 5 of 8
Chief Justice Andrew K.C. Nyirenda, SC, JA 3 months 5 of 8
Member-Non Executive Director
(Rtd)
Secretary to the Treasury - Ex Officio Full year 0 of 8
Prof. Betchani Tchereni
Member
Mrs. Miriam Wemba Member-Non-Executive Director Full year 7 of 8

Page 2
RESERVE BANK OF MALAWI
DIRECTORS’ REPORT (continued)
For the year ended 31 December 2024

GOING CONCERN
The Group recorded a comprehensive profit of K409 565 million (2023: loss of K543 251 million) for the year ended 31 December 2024 and
had foreign liabilities of K2 773 759 million (2023: K2 761 116 million) against foreign assets of K582 604 million (2023: K600 885 million)
as at 31 December 2024. The directors note that the TDB and Afrexim Bank facilities are arrears as detailed in note 3.5.2.

The Bank’s solvency is guaranteed in Section 6 (3) of the Reserve Bank of Malawi Act which states that the Government (Referring to Malawi
Government) shall ensure that the Bank is kept solvent at all times. Additionally, Section 6 (2) of the same Act, states that the Capital shall,
from time to time, be increased by incorporation of reserves, contribution of cash or Government Securities. The government has many different
mechanisms available to it in satisfying this requirement in the Act. To address shortfalls in the past, the Government has compensated the
Bank in full for any losses incurred by issuing Government securities (such as promissory notes).

Accordingly, taking cognizance of the unique aspects of the Bank’s functions as stipulated under the Reserve Bank of Malawi Act, the Directors
have assessed the Group’s ability to continue as a going concern and have a reasonable expectation that the Bank has adequate resources and
the support of the Malawi government to continue in operational existence for the foreseeable future. For this reason, the going concern basis
is appropriate to use in preparing the consolidated and separate financial statements.

EXTERNAL AUDITORS
The auditor is responsible for reporting on whether the consolidated and separate financial statements are fairly presented in accordance
with the IFRS Accounting Standards as issued by the International Accounting Standards Board, IAS 29 Directive as issued by the Institute
of Chartered Accountants in Malawi (ICAM) and the manner required by the Reserve Bank of Malawi Act, (CAP.44.02 of Laws of Malawi).
The Auditors, Deloitte have signified the willingness to continue in office and a resolution is to be proposed at the forthcoming Annual
General Meeting in relation to their appointment as Auditors in respect of the audit of the Bank’s consolidated and separate financial
statements for the year ending 31 December 2025.

COMPANY SECRETARY
The company secretary is the Director, Legal Counsel and Secretariat, Mr George Chioza.

PROFIT AND DIVIDENDS

The Directors reported a Bank profit before foreign exchange revaluations of K396 201 million (2023: K158 090 million) for the year ended
31 December 2024. A total of K47 621 million (2023: K3 540 million) has been transferred to the General Reserve Fund. In line with the
Deposit Insurance Corporation Act, 2022, the Bank injected capital of K4 500 million, which has been recovered from profit, leaving a
balance of K344 080 million as a dividend to the Government. According to Section 64(3) of the Reserve Bank of Malawi Act, in the event
of outstanding advances as provided for in Section 39, or promissory notes issued by the Government to cover losses from currency
revaluations, the net profit shall be used to repay such outstanding advances or redeem the amounts of the promissory notes. In view of this,
the appropriation of net profit to the Government shall be applied toward the partial redemption of outstanding promissory notes amounting
to K660 904 million (2023: K775 260 million) (Note 3.4.1(c) to the consolidated and separate financial statements) in the Government’s
fiscal year ending 31 March 2026.

By order of the Board members

____________________________________ _________________________________
Dr. MacDonald Mwale Dr. Maxwell Mkwezalamba
Governor & Chairperson of the Board Chairperson, Board Audit Committee

Date 18 April 2025 Date 18 April 2025

Page 3
RESERVE BANK OF MALAWI
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
For the year ended 31 December 2024

The Board of Directors (“the Board”) is responsible for ensuring that management fulfills its responsibilities for financial reporting and
internal controls and exercises this responsibility through the Board Audit Committee (“the Committee”). The Committee is therefore
qualified to review the consolidated and separate financial statements of the Reserve Bank of Malawi and to recommend their approval by
the Board. The Committee is mandated by its Charter to meet management and the internal and external auditors.

The Committee evaluates the independence of the external auditors and reviews all services provided by them. The Committee has a duty to
review the adoption of, and changes in accounting principles and procedures that have a material effect on the consolidated and separate
financial statements of the Reserve Bank of Malawi and to review and assess key management proposals including risk management issues
and make recommendations on the same for approval. The Board considers and where necessary, approves the Committee’s
recommendations.
In preparing the consolidated and separate financial statements, the Directors accept responsibility for the following:

• Maintenance of proper accounting records;

• Selection of suitable accounting policies and applying them consistently;
• Making judgments and estimates that are reasonable and prudent;
• Compliance with applicable accounting standards, when preparing financial statements, subject to any material departures being
disclosed and explained in the consolidated and separate financial statements; and
• Preparation of consolidated and separate financial statements on a going concern basis unless it is inappropriate to presume that the
Bank will continue in business.

The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an
effective system of risk management. The Directors’ responsibility includes designing, implementing and maintaining internal controls
relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud
or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

There were no contracts entered into during the year in which Directors or officers of the Group had interests that significantly affected the
affairs or business of the Group.

Approval of the financial statements

The consolidated and separate financial statements on pages 8 to 133 were approved by the Board on 18 April 2025 and are signed on its
behalf by:

____________________________________ _________________________________
Dr. MacDonald Mwale Dr. Maxwell Mkwezalamba
Governor & Chairperson of the Board Chairperson, Board Audit Committee

Date 18 April 2025 Date 18 April 2025

Page 4
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDER OF
RESERVE BANK OF MALAWI

Opinion
We have audited the consolidated and separate financial statements of Reserve Bank of Malawi (“the Group” and “the Bank”),
set out on pages 8 to 133 which comprise the consolidated and separate statements of financial position as at 31 December
2024, and the consolidated and separate statements of profit or loss and other comprehensive income, consolidated and separate
statements of changes in equity and consolidated and separate statements of cash flows for the year then ended, and the notes
to the consolidated and separate financial statements, including material accounting policy information.

In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate
financial position of the Reserve Bank of Malawi as at 31 December 2024, and of its consolidated and separate financial
performance and consolidated and separate cash flows for the year then ended in accordance with IFRS Accounting Standards
as issued by the International Accounting Standards Board, IAS 29 Directive as issued by the Institute of Chartered
Accountants in Malawi (ICAM) and in the manner required by the Reserve Bank of Malawi Act, (CAP. 44:02 of Laws of
Malawi).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial
Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (IESBA Code) together with the ethical requirements that are relevant to performing audits of financial
statements in Malawi. We have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated and separate financial statements of the current year. We did not identify any key audit matters in our audit of
the consolidated and separate financial statements of the current year.

Other Information
The Directors are responsible for the other information. The other information comprises the Directors’ Report and the
Statement of Directors’ Responsibilities as required by the Reserve Bank of Malawi Act, (CAP. 44:02 of Laws of Malawi)
which we obtained prior to the date of this auditor’s report, and the Annual Report, which is expected to be made available to
us after that date. The other information does not include the consolidated and separate financial statements and our auditors’
report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express
an audit opinion or any form of assurance conclusion thereon.

Page 5
Other Information (Continued)
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and
separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.

Responsibilities of the Directors for the Consolidated and Separate Financial Statements
The Directors are responsible for the preparation of consolidated and separate financial statements that give a true and fair
view in accordance with IFRS Accounting Standards as issued by the International Accounting Standard Board, IAS 29
Directive as issued by the Institute of Chartered Accountants in Malawi (ICAM) and in the manner required by the Reserve
Bank of Malawi Act, (CAP. 44:02 of Laws of Malawi) and for such internal control as the Directors determine is necessary to
enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due
to fraud or error.

In preparing the consolidated and separate financial statements, the Directors are responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative
but to do so. The Directors are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Directors;
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern;
• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements,
including the disclosures, and whether the consolidated and separate financial statements represent the underlying
transactions and events in a manner that achieves fair presentation; and
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information
of the entities or business units within the group as a basis for forming an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes
of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.

Page 6
Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements (Continued)
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of
the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

________________________________ ________________________________
DELOITTE DELOITTE & TOUCHE
Chartered Accountants (Malawi) Registered Auditor (South Africa)
Christopher Kapenda Per: Andrew Kilpatrick
Partner Partner

Date: 30 April 2025 Date: 30 April 2025

Page 7
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION
As at 31 December 2024
Consolidated Separate Consolidated Separate
31 Dec 31 Dec 31 Dec 31 Dec
2024 2024 2023 2023
ASSETS Notes K’m K’m K’m K’m
Foreign Assets
Cash and cash equivalents 3.1 182 031 181 598 334 268 333 853
Balances with International Monetary Fund 5 317 923 317 923 194 859 194 859
Foreign bonds-treasury notes 3.2.2 10 528 10 528 10 085 10 085
Gold reserves 6 57 848 57 848 44 139 44 139
Equity Investments 7 14 274 12 615 17 534 12 160

Total Foreign Assets 582 604 580 512 600 885 595 096
Domestic Assets
Cash and cash equivalents 3.1 77 910 30 020 98 277 71 947
Advances to Malawi Government 3.4.2 186 440 186 440 115 419 115 419
Repurchase Agreements 3.3.1 223 259 223 259 - -
Amount due from financial institutions 3.5.2 (b(i)) 558 664 558 664 306 314 306 314
Amount due from related party institutions 3.5.1 491 798 500 366 423 983 432 551
Loans and advances to customers 3.2.1 39 047 - 35 644 -
Other assets 11(a) 148 029 146 134 105 405 102 823
Investments in Malawi Government:
- treasury notes 3.4.1 1 966 861 1 966 861 1 615 173 1 615 173
- treasury bills 3.4.1 - - 29 534 29 534
- promissory notes 3.4.1 664 934 660 904 793 959 775 260
Investment in Export Development Fund Limited 12 - 28 700 - 18 700
Equity Investments 7 4 707 6 107 107
Investment in associate 22 1 067 - - -
Property and equipment 8 199 130 198 527 157 962 157 668
Intangible assets 9 8 335 8 335 5 967 5 967

Total Domestic Assets 4 570 181 4 508 216 3 687 744 3 631 463
TOTAL ASSETS 5 152 785 5 088 728 4 288 629 _4 226 559

LIABILITIES AND EQUITY

Foreign Liabilities
Government deposits 3.4.3 327 991 327 991 546 476 546 476
Liabilities to financial institutions 3.5.2 1 497 421 1 468 796 1 316 695 1 290 051
Derivative liabilities 3.2.3 1 140 1 140 23 798 23 798
Allocation of special drawing rights 5 152 397 152 397 152 428 152 428
Liabilities to International Monetary Fund 5 794 810 794 810 721 719 721 719
Total Foreign Liabilities 2 773 759 2 745 134 2 761 116 2 734 472
Domestic Liabilities
Notes and coins in circulation 10 851 149 851 149 559 944 559 944
Government deposits 3.4.3 151 025 151 025 70 128 70 128
Bankers’ deposits 3.3.2 626 724 626 724 267 936 267 936
Other liabilities 11(b) 373 982 382 897 176 745 179 950
Open market operations (OMO) instruments 3.3.3 113 348 113 348 287 129 287 129
Total Domestic Liabilities 2 116 228 2 125 143 1 361 882 1 365 087

Equity Attributable to Parent

Capital 13.1 19 484 19 484 19 484 19 484
General reserve fund 13.2 160 752 159 122 111 501 111 501
Revaluation reserve 13.4 133 665 133 665 105 906 105 906
Fair value reserve on assets at fair value through other
(93 820) (93 820) (109 891) (109 891)
comprehensive income 13.5
Retained earnings 34 838 - 33 257 -
Loan loss reserve 13.7 5 519 - - -
Capital reserve 13.6.1 2 360 - 5 374 -

Total Equity Attributable to Parent 262 798 218 451 165 631 127 000

TOTAL LIABILITIES AND EQUITY 5 152 785 5 088 728 4 288 629 4 226 559

The consolidated and separate annual financial statements from pages 8 to 133 were approved and authorized for issue by the Board of Directors on 18 April
2025 and were signed on its behalf by:

__________________________________________ ________________________________________
Dr. MacDonald Mwale Dr. Maxwell Mkwezalamba
Governor & Chairman of the Board Chairperson, Board Audit Committee

Page 8
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2024

Consolidated Separate Consolidated Separate

Notes 2024 2024 2023 2023
K’m K’m K’m K’m

Interest income from fair value items 413 662 413 662 272 293 272 293
Interest income from amortised cost items 323 694 307 001 122 468 108 501
Interest expense (174 344) (170 999) (118 619) (113 454)
Net interest income 14 563 012 549 664 276 142 267 340

Fee and commission income 15 1 896 1 896 1 042 1 042

Fee and commission expense (225) (225) (142) (142)
Net fee and commission income 1 671 1 671 900 900

Other income 16 2 387 2 176 9 932 6 194

Total other income 2 387 2 176 9 932 6 194

Total income 567 070 553 511 286 974 274 434

Personnel expenses 17 (76 698) (73 696) (58 390) (55 404)
Operating expenses 18 (74 795) (73 449) (57 175) (56 637)
Depreciation and amortization 8&9 (9 462) (9 268) (7 870) (7 690)
Impairment loss on non-financial assets 11a (476) (476) - -
Expected credit losses on financial assets 4.3 (207) (421) 2 660 3 387
Recoveries of written off loans 1 037 - - -
Share of results of associate accounted for using equity
method 7 (209) - - -

Total expenses (160 810) (157 310) (120 775) (116 344)

Profit before tax and foreign exchange revaluations 406 260 396 201 166 199 158 090
Tax charge 19 (1 329) - 3 144 -

Profit for the year before foreign exchange revaluations 404 931 396 201 169 343 158 090

Foreign exchange revaluations

Net loss on revaluation of IMF facilities 20 (726) (726) (252 817) (252 817)
Net loss on revaluation of other foreign currency 20
(47 872) (47 872) (455 846) (455 846)
denominated balances

Total foreign exchange revaluation losses 20 (48 598) (48 598) (708 663) (708 663)
Profit/(loss) for the year 356 333 347 603 (539 320) (550 573)

Other comprehensive income

Items that will never be reclassified to profit or loss:
Net gain on property revaluation 27 759 27 759 21 709 21 709
Items that are or may be reclassified to profit or loss
Net gain on revaluation of gold holdings 12 416 12 416 4 231 4 231
Net (loss)/gain on revaluation of equity investments (8 241) (5 227) 3 063 -
Net change in fair value in treasury notes and bills 21 298 21 298 (32 934) (32 934)

Total other comprehensive income/(loss) for the year 53 232 56 246 (3 931) (6 994)

Total comprehensive income/(loss) for the year 21 409 565 403 849 (543 251) (557 567)

Page 9
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2024

Fair Gold Loan

General value Revaluation Special revaluation Capital Retained Loss Total
Consolidated Note Capital reserve reserve reserve account reserve reserve earnings reserve equity
31 December 2024 K’m K’m K’m K’m K’m K’m K’m K’m K’m K’m

Balance as at 1 January 2024 19 484 111 501 (109 891) 105 906 - - 5 374 33 257 - 165 631
Total comprehensive income for the year
Profit for the year - - - - - - - 356 333 - 356 333

- - -
Statutory transfer of loss on revaluation of IMF facilities - - - - (726) 726 -
Statutory transfer of loss on revaluation of other foreign
- - -
exchange balances - - - - (47 872) 47 872 -
Other comprehensive income
Property revaluation gain - - - 27 759 - - - - - 27 759

Revaluation of gold holdings - - - - - 12 416 - - - 12 416

Net change in fair value on financial instruments - - 16 071 - - - (3 014) - - 13 057

Total other comprehensive income/(loss) - - 16 071 27 759 - 12 416 (3 014) - - 53 232
Total comprehensive income/(loss) for the year - - 16 071 27 759 (48 598) 12 416 (3 014) 404 931 - 409 565
Transactions with owners of the Group

Contributions and distributions

Transfer to general reserve-RBM - 47 621 - - - - - (47 621) - -
Transfer to general reserve- EDF regulatory reserve - 1 630 - - - (1 630) - -
Transfer to special account - - - - 12 416 (12 416) - - - -
Transfer to loan loss reserve - - - - - - - (5 519) 5 519 -
Promissory note issued - - - - 36 182 - - - - 36 182
Capital Contribution to DIC - - - - - - - (4 500) - (4 500)
Appropriation due to Malawi Government - - - - - - - (344 080) - (344 080)

Total contributions and distributions - 49 251 - - 48 598 (12 416) - (403 350) 5 519 (312 398)

Balance as at 31 December 2024 19 484 160 752 (93 820) 133 665 - - 2 360 34 838 5 519 262 798

Page 10
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY (Continued)
For the year ended 31 December 2024

Fair Gold
General value Revaluation Special revaluation Capital Retained Total
Separate Capital reserve reserve reserve account reserve reserve earnings equity
31 December 2024 K’m K’m K’m K’m K’m K’m K’m K’m K’m

Balance as at 1 January 2024 19 484 111 501 (109 891) 105 906 - - - - 127 000

Total comprehensive income for the year

Profit for the year - - - - - - - 347 603 347 603

Statutory transfer of loss on revaluation of IMF facilities - - - - (726) - - 726 -

Statutory transfer of loss on revaluation of other foreign
- - - - (47 872) - - 47 872 -
exchange balances
Other comprehensive income
Property valuation gain - - - 27 759 - - - - 27 759

Revaluation of gold holdings - - - - - 12 416 - - 12 416

Net change in fair value on financial instruments - - 16 071 - - - - - 16 071

Total other comprehensive income - - 16 071 27 759 - 12 416 - - 56 246

Total comprehensive income/(loss) for the year - - 16 071 27 759 (48 598) 12 416 - 396 201 403 849
Transactions with owners of the Bank

Contributions and distributions

Transfer to general reserve - 47 621 - - - - - (47 621) -
Transfer to special account - - - - 12 416 (12 416) - - -

Promissory note - - - - 36 182 - - - 36 182

Capital Contribution to DIC - - - - - - - (4 500) (4 500)

Appropriation due to Malawi Government - - - - - - - (344 080) (344 080)

Total contributions and distributions - 47 621 - - 48 598 (12 416) - (396 201) (312 398)

Balances as at 31 December 2024 19 484 159 122 (93 820) 133 665 - - - - 218 451

Page 11
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY (Continued)
For the year ended 31 December 2024

Fair Gold Loan

General value Revaluation Special revaluation Capital Retained Loss Total
Consolidated Capital reserve reserve reserve account reserve reserve earnings reserve equity
31 December 2023 K’m K’m K’m K’m K’m K’m K’m K’m K’m K’m

19 484 107 961 (76 957) 84 197 - - 2 311 17 061 4 943 159 000
Balance as at 1 January 2023
Total comprehensive income for the year
Loss for the year - - - - - - - (539 320) - (539 320)

Statutory transfer of loss on revaluation of IMF facilities - - - - (252 817) - - 252 817 - -
Statutory transfer of loss on revaluation of other foreign
- - - - (455 846) - - 455 846 - -
exchange balances
Other comprehensive income
Property valuation gain - - - 21 709 - - - - - 21 709

Revaluation of gold holdings - - - - - - - - - -

Net change in fair value on financial instruments - - - - - 4 231 - - - 4 231

Total other comprehensive (loss)/income - - (32 934) - - - 3 063 - - (32 934)

Total comprehensive (loss)/income for the year - - (32 934) 21 709 - 4 231 3 063 - - (3 931)
Transactions with owners of the Group - - (32 934) 21 709 (708 663) 4 231 3 063 169 343 - (543 251)
Contributions and distributions
Transfer to general reserve fund - 3 540 - - - - - (3 540) - -

Transfer to special account - - - - 4 231 (4 231) - - - -

- -
Transfer to loss reserve - - - - - 4 943 (4 943) -
Promissory note issued - - - - 704 432 - - - - 704 432

Appropriation due to Malawi Government - - - - - - - (154 550) - (154 550)

Total contributions and distributions - 3 540 - - 708 663 (4 231) - (153 147) (4 943) 549 882

Balance as at 31 December 2023 19 484 111 501 (109 891) 105 906 - - 5 374 33 257 - 165 631

Page 12
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY (Continued)
For the year ended 31 December 2024

Fair Gold
General value Revaluation Special revaluation Retained Total
Separate Capital reserve reserve reserve account reserve earnings equity
31 December 2023 K’m K’m K’m K’m K’m K’m K’m K’m

Balance as at 1 January 2023 19 484 107 961 (76 957) 84 197 - - - 134 685

Total comprehensive income for the year

Loss for the year - - - - - - (550 573) (550 573)

Statutory transfer of loss on revaluation of IMF facilities - - - - (252 817) - 252 817 -

Statutory transfer of loss on revaluation of other foreign exchange balances - - - - (455 846) - 455 846 -

Other comprehensive income

Property Valuation - - - 21 709 - - - 21 709

Revaluation of gold holdings - - - - - 4 231 - 4 231

Net change in fair value on financial instruments - - (32 934) - - - - (32 934)

Total other comprehensive income - - (32 934) 21 709 - 4 231 - (6 994)

Total comprehensive income for the year - - (32 934) 21 709 (708 663) 4 231 158 090 (557 567)
Transactions with owners of the Bank
Contributions and distributions
Transfer to general reserve fund - 3 540 - - - - (3 540) -

Transfer to special account - - - - 4 231 (4 231) - -

Promissory note - - - - 704 432 - - 704 432

Appropriation due to Malawi Government - - - - - - (154 550) (154 550)

Total contributions and distributions - 3 540 - - 708 663 (4 231) (158 090) 549 882

Balances as at 31 December 2023 19 484 111 501 (109 891) 105 906 - - - 127 000

Loan loss Reserve

In line with Development Financial Institutions (DFI), Credit Risk Management Directive, 2018, the excess of expected credit losses under the Directive of K5.5 billion (2023: nil), when compared to IFRS 9 losses, has
been transferred to loan loss reserve account. In 2023, there was a transfer of loan loss reserve back to retained earnings after recoveries were made on non-performing credit facilities in line with section 15(4) of Credit
Risk Management Directive, 2018.

Page 13
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS
For the year ended 31 December 2024
Consolidated Separate Consolidated Separate
Notes 2024 2024 2023 2023
K’m K’m K’m K’m
Cash flows from operating activities *Restated *Restated
Interest receipts 553 684 536 991 280 884 274 554
Fees and commission receipts 1 896 1 896 1 042 1 042
Interest payments (8 504) (5 159) (42 498) (41 807)
Fees and commission payments (225) (225) (142) (142)
Cash payments to employees and suppliers (147 871) (143 427) (102 701) (98 858)

398 980 390 076 136 585 134 789

Changes in operating assets and liabilities
(Increase) / decrease in operating assets:
Securities held for regulatory or monetary control purposes (473 002) (487 647) (267 574) (286 634)
Other short-term negotiable securities/assets (115 685) (112 969) (156 045) (141 254)
Balances with International Monetary Fund (122 972) (122 972) (43 550) (43 550)
Advances to Malawi Government (71 021) (71 021) (23 365) (23 365)
Securities held for foreign reserve management purposes (14 119) (14 329) (29 234) (29 234)
(Decrease)/increase in operating liabilities:
Deposits from customers 306 469 302 886 242 052 242 052
Other liabilities 3 209 8 919 10 662 9 878
Deposits held for regulatory or monetary control purposes (181 215) (181 215) 139 270 139 270
Notes and coins in circulation 291 205 291 205 90 358 90 358

Net cash generated from operating activities 21 849 2 933 99 159 92 310

Cash flows from investing activities

Purchase of property and equipment and intangible assets (25 606) (25 102) (17 701) (17 644)
Purchase of short-term Investments - - 7 751 7 762
Investment in Associate (1 276) - - -
Acquisition of equity investments (4 000) - - -
Proceeds from sale of property and equipment 265 244 131 125

Net cash used in investing activities (30 617) (24 858) (9 819) (9 757)

Cash flow from financing activities

Dividend paid 21 (154 550) (154 550) (93 604) (93 604)
Equity Investment - (10 000) - -
Proceeds from long-term borrowings (10 297) (8 694) (15 837) (7 206)

Net cash used in financing activities (164 847) (173 244) (109 441) (100 810)

Net decrease in cash and cash equivalents (173 615) (192 169) (20 101) (18 257)
Cash and cash equivalents at the beginning of the year 432 545 405 800 384 287 355 862
Impact of foreign exchange rate changes 1 011 987 68 359 68 195

Cash and cash equivalents at the end of the year 259 941 211 618 432 545 405 800

Cash and cash equivalents are composed of:

Foreign Assets
Cash and cash equivalents 3.1 182 031 181 598 334 268 333 853

Domestic Assets
Cash and cash equivalents 3.1 77 910 30 020 98 277 71 947

Total cash and cash equivalents 259 941 211 618 432 545 405 800

*Restated- refer to note 1.2 of these financial statements for details of restatement.

Page 14
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December 2024

1.1 General information

The consolidated and separate financial statements present the consolidated and separate financial position financial performance cash
flows and consolidated and separate notes to the consolidated and separate financial statements of the Reserve Bank of Malawi and its
subsidiary Export Development Fund Limited (collectively referred to as the “Group”). When reference is made to the Group in the
accounting policies it should be interpreted as also referring to the Bank where the context requires unless otherwise stated. The Reserve
Bank of Malawi (“the Bank”) is a Central Bank domiciled in Malawi. The Bank’s registered office is at City Centre, Lilongwe. The
main business of the Bank which is governed by the provisions of the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of Malawi)
is central banking and its related activities.

In accordance with the mentioned act the primary objective of the Bank is to promote price and financial stability through formulation
and implementation of sound monetary and macro-prudential policies.

To fulfil its primary objectives, the Bank carries out the following activities:

• Monetary policy: The Bank conducts monetary policy to preserve the value of money by ensuring that inflation levels are low
and stable

• Financial Stability and Supervision: The Bank promotes safe sound and efficient financial systems and is also responsible for
the supervision and regulation of separate participants on the financial market;

• Foreign Reserve Management: The Bank maintains a portfolio of foreign currency reserves for policy and operational purposes;

• Banker to Malawi Government: The Bank acts as a banker and fiscal agent for Malawi Government;

• Currency issuance: The Bank designs issues and distributes Malawi Kwacha bank notes oversees the note distribution system
and ensures a supply of quality banknotes that are readily accepted and secure against counterfeiting; and

• Payment system: The Bank operates the largest payment system in the country called MITASS which processes and settles
interbank and Government payments in local currency and Automated clearing house which clears low value payments in local
currency.

The Bank’s principal place of business is Plot Number Bwaila 1/16, Lilongwe, Malawi.

The Export Development Fund Limited (EDF) was set up by the Malawi Government through the Reserve Bank of Malawi with its
major objective being to ensure that Malawi’s vast export potential and business opportunities are exploited in order to generate the
much-needed foreign exchange for the country.

In pursuance of this major objective, the EDF:

• serves as a pool of financial resources for export diversification and growth;
• offers insurance to exporters against payment risks;
• refinances participating financial institutions;
• provides guidance in export-related activities;
• encourages production and value addition for exports;
• generates foreign exchange; and
• provides guarantees and financial services and products to persons involved in export trade.

The authorized share capital of the company is K1 billion (2023: K1 billion) divided into 1,000,000,000 ordinary Shares of 1 kwacha
each (2023: 1,000,000,000 ordinary shares of 1 kwacha each). No new shares were issued in the year (2023: 630 million ordinary shares
of 1 kwacha each). In December 2024 the Bank injected an additional capital of K10 billion into EDF.

The Deposit Insurance Corporation (DIC) was established in October 2023 by the Central Bank and Malawi Government under Deposit
Insurance Corporation Act with an intention that the Bank and the Malawi Government will have shareholding of 60% and 40%
respectively. The Deposit Insurance Corporation's transactions were not consolidated, as the Bank does not have control over the entity,
in accordance with IFRS 10 Consolidated Financial Statements. Refer to note 13.6.2 to the consolidated and separate financial
statements.

Page 15
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

1.2 Impact of restatement and representation on 2023 consolidated and separate financial statements
Separate Consolidated
Restated Restated Previously Previously stated
restatement restatement
Separate Consolidated stated Separate Consolidated
adjustment adjustment

2023 2023 2023 2023 2023 2023

Cash flows from operating

K’m K’m K’m K’m K’m K’m
activities

Interest receipts 274 554 280 884 274 554 274 571 - 6 313
Fees and commission receipts 1 042 1 042 1 042 1 042 - -
Fees and commission payments (142) (142) (142) (142) - -
Interest payments (41 807) (42 498) (38 242) (38 586) (3 565) (3 912)
Cash payments to employees and
suppliers (98 858) (102 701) (104 811) (108 736) 5 953 6 035
134 789 136 585 132 401 128 149 2 388 8 436
Changes in operating assets and
liabilities
Securities held for regulatory or
monetary control purposes (286 634) (267 574) (286 634) (261 262) - (6 312)
Other short-term negotiable
securities/assets (141 254) (156 045) (144 794) (159 585) 3 540 3 540
Balances with IMF (43 550) (43 550) (43 550) (43 550) - -
Advances to Malawi Government (23 365) (23 365) (23 365) (23 365) - -
Securities held for foreign reserve
management purposes (29 234) (29 234) (29 234) (29 234) - -
Deposits from customers 242 052 242 052 218 065 218 065 23 987 23 987
Other liabilities 9 878 10 662 9 878 10 662 - -
Deposits held for regulatory or
monetary control purposes 139 270 139 270 139 270 139 270 - -
Notes and coins in circulation 90 358 90 358 90 358 90 358 - -
Net cash from other operating
activities - - 2 388 2 388 (2 388) (2 388)
Net cash flow generated from
operating activities
92 310 99 159 64 783 71 896 27 527 27 263
Cash flow from investing
activities
Purchase of property, plant and
equipment and intangible assets (17 644) (17 701) (15 187) (15 244) (2 457) (2 457)
Purchase of short-term Investments 7 762 7 751 25 935 25 924 (18 173) (18 173)
Proceeds from sale of property and
equipment 125 131 184 190 (59) (59)
Net cash flow (used in)/ generated
from investing activities
(9 757) (9 819) 10 932 10 870 (20 689) (20 689)
Cash flow from financing
activities
Proceeds from long-term
borrowings (7 206) (15 837) 772 259 763 528 (779 465) (779 365)
Dividend paid (93 604) (93 604) (93 604) (93 604) - -
Net cash flow (used in)/ generated
from financing activities
(100 810) (109 441) 678 655 669 924 (779 465) (779 365)
Net (decrease)/increase in cash
and cash equivalents (18 257) (20 101) 754 370 752 690 (772 627) (772 791)
Cash and cash equivalents at the
beginning of the year 355 862 384 287 355 862 384 287 - -
Foreign exchange loss on IMF
facilities balances - - (252 817) (252 817) 252 817 252 817
Foreign exchange gain on other
foreign exchange balances 68 195 68 359 (451 615) (451 615) 519 810 519 974
Cash and cash equivalents at the
end of the year 405 800 432 545 405 800 432 545 - -

Page 16
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

1.2 Impact of restatement and representation on 2023 consolidated and separate financial statements (Continued)

Incorrect presentation of unrealised foreign exchange gains and losses on cash equivalents (IAS 8 error)
The 2023 statement of cash flows appropriately presented the effect of unrealized foreign exchange rate gains or losses on cash and cash equivalents
separately. However, the amount presented incorrectly included exchange rate movements for the year arising all foreign denominated assets and liabilities
in addition to cash and cash equivalents. These included assets such as balances with IMF, equity investment, foreign bonds, gold reserves and liabilities
such as government deposits, liabilities to financial institutions, allocation of special drawing rights and liabilities with IMF.

The overall movement on cash and cash equivalents balance includes the following:
• The foreign exchange loss and gain on IMF facilities balances of MWK252.8 billion for consolidated and separate financial statements; and
• The other foreign exchange balances amounting to MWK451.6 billion for consolidated and separate financial statements.

Only the unrealised exchange gain/losses related to cash and cash equivalents should be included in the effect of unrealised foreign exchange rate gains or
losses on cash and cash equivalents. The exchange gain relating only to cash and cash equivalent in 2023 was K68 195 million and K68 359 million for
separate and consolidated cash and cash equivalents respectively. The account balances affected materially were cash and cash equivalents and foreign
liabilities borrowings with adjustments of K772.6 billion for separate cash and cash equivalent balance and K 772.8 billion for consolidated cash and cash
equivalents balance and K779.5 billion for separate foreign liabilities borrowings balance and K779.4 billion for consolidated foreign liabilities borrowings
balance. Other items were also impacted on because of this adjustment as detailed in the extract of 2023 statement of cash flows. The items impacted related
to the foreign currency denominated balances whose foreign exchange impact was removed from the amounts presented.

Change in presentation of classes of property, plant and equipment (IAS 1 Presentation of financial statements)
The disclosure notes for property, plant and equipment included a category of furniture and equipment and motor vehicles packed and disclosed as one
category of PP&E with a combined netbook value of K25.5 billion and K25.2 billion as at 31 December 2023 for the Consolidated and separate financial
statements respectively.

Furniture and equipment, and motor vehicles have been disclosed as one PP&E class in the bank’s disclosure notes. The aggregation was done on the basis
that the amounts are not material in accordance with the aggregation principles of IAS 1, however, the group of assets are not similar in nature as well as in
their use in the Bank’s operations and to enhance disclosure the Bank has represented the PPE disclosure to separately disclose each class of PPE based on
the determination of the classes in accordance with IAS 16.

The property, plant and equipment (PPE) note disclosure has therefore been enhanced in the current period by separately presenting each class of PPE and
the comparative information has been restated accordingly.

The above change will impact the FY2023 statement of presentation of property, plant and equipment as follows:

Group
Furniture & Office Plant & Motor
Represented Total
equipment Machines Machinery vehicles
K’m K’m K’m K’m K’m
2023

Cost or Valuation

At beginning of the year 8 750 18 025 2 255 8 464 37 494

Additions 3 206 461 2 830 2 395 8 892
Transfers - - 114 - 114
Disposals 54 - - (1 041) (987)
Other adjustment 412 (2 870) (466) - (2 924)
Impairment (130) - - - (130)
At end of the year 12 292 15 616 4 733 9 818 45 459

Accumulated
depreciation and
impairment
At beginning of the year 4069 3968 1033 4439 13 509
Disposals (31) - - (830) (861)
Impairment (130) - - - (130)
Charge for the year 1 260 1 175 970 1 021 4 426
Other adjustment 58 - - - 58
At end of the year 5 226 5 143 2 003 4 630 17 002
Carrying amount

At the end of the year 7 066 10 473 2 730 5 188 25 457

Page 17
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

1.2 Impact of restatement and representation on 2023 consolidated and separate financial statements (Continued)

Furniture
Office Plant & Motor
Previously presented equipment and Total
Machines Machinery vehicles
motor vehicles
K’m K’m K’m K’m K’m
2023

Cost or Valuation
At beginning of the year 37 494 - - - 37 494
Additions 8 893 - - - 8 893
Transfers 114 - - - 114
Disposals (988) - - - (988)
Other adjustment (2 924) - - - (2 924)
Impairment (130) - - - (130)
At end of the year 42 459 - - - 42 459

Accumulated
depreciation and
impairment
At beginning of the year 13 509 - - - 13 509
Disposals (861) - - - (861)
Impairment (130) - - - (130)
Charge for the year 4 426 - - - 4 426
Other adjustment 58 - - - 58
At end of the year 17 002 - - - 17 002

Carrying amount
At the end of the year 25 457 - - - 25 457

Represented
adjustment (18 391) 10 473 2 730 5 188 -

Page 18
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

1.2 Impact of restatement and representation on 2023 consolidated and separate financial statements (Continued)

Separate

Furniture
Office Plant & Motor
Represented & Total
Machines Machinery vehicles
equipment
K’m K’m K’m K’m K’m
2023
Cost or Valuation
At beginning of the year 8 025 18 025 2 255 7 876 36 181
Additions 3 149 461 2 830 2 395 8 835
Transfers - - 114 - 114
Disposals 84 - - (988) (904)
Impairment 412 (2 870) (466) - (2 924)
Other adjustment (130) - - - (130)
At end of the year 11 540 15 616 4 733 9 283 41 172

Accumulated depreciation
and impairment
At beginning of the year 3 508 3 968 1 033 4 108 12 617
Disposals - - - (782) (782)
Charge for the year 1 177 1 175 970 924 4 246
Other adjustment 58 - - - 58
Impairment (130) - - - (130)
At end of the year 4 613 5 143 2 003 4 250 16 009

Carrying amount
At the end of the year 6 927 10 473 2 730 5 033 25 163

Page 19
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

1.2 Impact of restatement and representation on 2023 consolidated and separate financial statements (Continued)

Furniture
Separate equipment Office Plant & Motor
Total
Previously represented and motor Machines Machinery vehicles
vehicles
K’m K’m K’m K’m K’m
2023
Cost or Valuation
At beginning of the year 36 181 - - - 36 181
Additions 8 835 - - - 8 835
Transfers 114 - - - 114
Disposals (904) - - - (904)
Impairment (130) - - - (130)
Other adjustment (2 924) - - - (2 924)
At end of the year 41 172 - - - 41 172

Accumulated depreciation and

impairment
At beginning of the year 12 617 - - - 12 617
Disposals (782) - - - (782)
Charge for the year 4 246 - - - 4 246
Other adjustment 58 - - - 58
Impairment (130) - - - (130)

At end of the year 16 009 - - - 16 009

Carrying amount
At the end of the year 25 163 - - - 25 163

Represented adjustment (18 236) 10 473 2 730 5 033 -

Page 20
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

2. Basis of Preparation
The principal accounting policies applied in the preparation of the consolidated and separate annual financial statements are set out in
the relevant areas of the notes to the accounts. These policies have been applied consistently to all years presented unless otherwise
stated.

2.1 Form of Presentation of the financial statements

These consolidated and separate annual financial statements have been prepared in accordance in accordance with IFRS Accounting
Standards as issued by the International Accounting Standard Board, IAS 29 Directive as issued by the Institute of Chartered
Accountants in Malawi and in the manner required by the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of Malawi).

The consolidated and separate annual financial statements have been prepared on historical cost basis except for the following (refer
to note 22 on Fair value):
• Financial instruments at Fair Value through Other Comprehensive Income (FVOCI) measured at fair value;
• Financial instruments at Fair Value through Profit or Loss (FVPL) measured at fair value;
• Monetary gold measured at Fair Value through Other Comprehensive Income; and
• Land and buildings at fair value through other comprehensive income

The presentation of the consolidated and separate financial statements requires the use of certain key accounting estimates. It also
requires management to exercise judgement in the process of applying the accounting policies of the Bank. The areas with a higher
degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated and separate financial
statements are disclosed with the respective note.

2.2 Going Concern

The Group recorded a comprehensive profit of K409 565 million (2023: loss of K543 251 million) for the year ended 31 December
2024 and had foreign liabilities of K2 773 759 million (2023: K2 761 116 million) against foreign assets of K582 604 million (2023:
K600 885 million) as at 31 December 2024. The directors note that the TDB and Afrexim Bank facilities are arrears as detailed in note
3.5.2.

The Bank’s solvency is guaranteed in Section 6 (3) of the Reserve Bank of Malawi Act which states that the Government (Referring to
Malawi Government) shall ensure that the Bank is kept solvent at all times. Additionally, Section 6 (2) of the same Act, states that the
Capital shall, from time to time, be increased by incorporation of reserves, contribution of cash or Government Securities. The
government has many different mechanisms available to it in satisfying this requirement in the Act. To address shortfalls in the past, the
Government has compensated the Bank in full for any losses incurred by issuing Government securities (such as promissory notes).

Accordingly, taking cognizance of the unique aspects of the Bank’s functions as stipulated under the Reserve Bank of Malawi Act, the
Directors have assessed the Group’s ability to continue as a going concern and have a reasonable expectation that the Bank has adequate
resources and the support of the Malawi government to continue in operational existence for the foreseeable future. For this reason,
the going concern basis is appropriate to use in preparing the consolidated and separate financial statements.

2.3 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Bank and the entity controlled by the Bank (its
subsidiary, EDF) made up to 31 December each year. Control is achieved when the Bank:
• Has the power over the investee;
• Is exposed or has rights to variable returns from its involvement with the investee; and
• Has the ability to use its power to affect its returns.
The Bank reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more
of the three elements of control listed above. When the Bank has less than a majority of the voting rights of an investee it considers
that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities
of the investee unilaterally. The Bank considers all relevant facts and circumstances in assessing whether or not the Bank’s voting
rights in an investee are sufficient to give it power including:

• The size of the Bank’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
• Potential voting rights held by the Bank, other vote holders or other parties;
• Rights arising from other contractual arrangements; and
• Any additional facts and circumstances that indicate that the Bank has or does not have the current ability to direct the
relevant activities at the time that decisions need to be made including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases when the Bank loses control of
the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the
date the Bank gains control until the date when the Bank ceases to control the subsidiary. Where necessary adjustments are made to
the financial statements of subsidiaries to bring the accounting policies used into line with the Group’s accounting policies.

All intragroup assets, liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group
are eliminated on consolidation.

Page 21
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

2. Basis of Preparation (Continued)

2.3 Basis of consolidation (Continued)

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling
shareholders that present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may
initially be measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable
net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially
measured at fair value. Subsequent to acquisition the carrying amount of non-controlling interests is the amount of those interests at
initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Bank and to the non-controlling
interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Bank and to the non-controlling interests
even if this results in the non-controlling interests having a deficit balance.

Changes in the Bank’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The
carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to the owners of the Bank.

When the Bank loses control of a subsidiary the gain or loss on disposal recognised in profit or loss is calculated as the difference
between
• the aggregate of the fair value of the consideration received and the fair value of any retained interest; and
• the previous carrying amount of the assets (including goodwill) less liabilities of the subsidiary and any non-controlling
interests.

All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Bank had
directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category
of equity as required/permitted by applicable IFRS Accounting Standards). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS
9 when applicable or the cost on initial recognition of an investment in an associate or a joint venture.

2.4 Functional and presentation currency

These consolidated and separate annual financial statements are presented in Malawi Kwacha which is the Group’s functional and
reporting currency. All amounts have been rounded to the nearest million.

Average exchange rates to Malawi Kwacha at 31 December 2024 and prior year were as follows:

Currency 2024 2023

US Dollar 1 734.01 1 683.37
Euro 1 857.65 1 918.13
Great Britain Pounds 2 240.22 2 212.41
Special Drawing Rights 2 261 38 2 258.52
South African Rand 92.03 93.54

Below are the average rates as at date of signing the consolidated and separate financial statements:

Currency Exchange rates

US Dollar 1 734.01
Euro 2 033.40
Great Britain Pounds 2 393.21
Special Drawing Rights 2 353.17
South African Rand 96.38

Page 22
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

2. Basis of Preparation (Continued)

2.5 Material accounting policy information

The Group has consistently applied the following accounting policies to all periods presented in these consolidated and separate financial
statements except if mentioned otherwise. The information about material accounting policies has been disclosed in the annual consolidated
and separate financial statements in the respective notes.

Set out below is an index of the Group material accounting policies that relate to the financial statements as a whole. When an accounting
policy is applicable to a specific note to the consolidated and separate financial statements, the policy and related disclosures are provided
within that note as identified in the table below.

Note Topic
3 Financial Instruments
4 Risk Management
5 IMF Related Assets and Liabilities
6 Gold Reserves
7 Equity Investment
8 Property and Equipment
9 Intangible Assets
10 Notes and Coins in Circulation
11 Other Assets and Liabilities
12 Investment in Subsidiary
13 Capital General Reserve Fund and other Reserves
14 Interest Income and Expense
15 Fee and Commission Income and Expense
16 Other Income
17 Employee Benefits
18 Operating Expenses
19 Taxation
20 Realized and Unrealized Gains and Losses
21 Profit Distribution
22 Investment in Associate
23 Fair Value of Financial Assets and Financial Liabilities
24 Related Party Transactions
25 Provisions, Contingencies and Commitments

3. Financial Instruments
Material accounting policy information
Recognition
Financial instruments are recognised in the statements of financial position when the Group becomes a party to the contractual
provisions of the instrument.
Initial recognition
Recognised financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at Fair Value
Through Profit Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities as appropriate
on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are
recognised immediately in profit or loss.

Page 23
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Material accounting policy information (Continued)
Derecognition
The Group derecognizes a financial asset when it considers that substantially all the risks and rewards of the asset have been transferred
or when the contractual rights to the cash flows of the financial asset expire. The Group does not derecognize collateral pledged by the
Group under standard repurchase agreements and securities-lending transactions since the Group retains substantially all risk and
rewards on the basis of the predetermined repurchase price. The Group derecognizes financial liabilities when the Group’s obligations
are discharged, cancelled or expire.
Classification and measurement
Financial assets are classified based on the business model used for managing the assets and their contractual cash flows characteristics.
Financial Assets
• Cash and cash equivalent at AC;
• Debt Instruments at FVOCI;
• Debt Instruments at AC;
• Debt Instruments at FVPL;
• Derivative at FVPL;
• Equity instruments at FVOCI; and
• Financial liabilities are measured at amortized cost except for financial liabilities at fair value through profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or
sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or
convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value depending on the
classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
• The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income
(FVTOCI):
• The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling the financial assets; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.

By default all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Despite the foregoing the Group may make the following irrevocable election / designation at initial recognition of a financial asset:
• The Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive
income if certain criteria are met (see (iii) below)
• The Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at
FVTPL if doing so eliminates or significantly reduces an accounting mismatch (see (iv) below)

(i) Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over
the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit impaired on initial
recognition) the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid
or received that form an integral part of the effective interest rate transaction costs and other premiums or discounts) excluding expected
credit losses through the expected life of the debt instrument or where appropriate a shorter period to the gross carrying amount of the
debt instrument on initial recognition. For purchased or originated credit-impaired financial assets a credit-adjusted effective interest
rate is calculated by discounting the estimated future cash flows including expected credit losses to the amortised cost of the debt
instrument on initial recognition.

Page 24
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Material accounting policy information (Continued)

(i) Amortised cost and effective interest method (Continued)
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal
repayments plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the
maturity amount adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial
asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at
FVTOCI. For financial assets other than purchased or originated credit-impaired financial assets interest income is calculated by
applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that have subsequently
become credit-impaired (see below). For financial assets that have subsequently become credit-impaired interest income is recognised
by applying the effective interest rate to the amortised cost of the financial asset. If in subsequent reporting periods the credit risk on
the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired interest income is recognised
by applying the effective interest rate to the gross carrying amount of the financial asset.
For purchased or originated credit-impaired financial assets the Group recognises interest income by applying the credit-adjusted
effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross
basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.
Interest income is recognised in profit or loss and is included in the "interest income-amortised cost" line item.

(ii) Debt instruments classified as at FVTOCI

The corporate bonds held by the Group are classified as at FVTOCI. The corporate bonds are initially measured at fair value plus
transaction costs. Subsequently changes in the carrying amount of these corporate bonds as a result of foreign exchange gains and
losses (see below) impairment gains or losses (see below) and interest income calculated using the effective interest method (see (i)
above) are recognised in profit or loss. The amounts that are recognised in profit or loss are the same as the amounts that would have
been recognised in profit or loss if these corporate bonds had been measured at amortised cost. All other changes in the carrying amount
of these corporate bonds are recognised in other comprehensive income and accumulated under the heading of investments revaluation
reserve. When these corporate bonds are derecognised the cumulative gains or losses previously recognised in other comprehensive
income are reclassified to profit or loss.

(iii) Equity instruments designated as at FVTOCI

On initial recognition the Group may make an irrevocable election (on an instrument-by-instrument basis) to designate investments
in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is
contingent consideration recognised by an acquirer in a business combination.
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently they are measured
at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in
the investment revaluation reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity investments
instead it is transferred to retained earnings.
Dividends on these investments in equity instruments are recognised in profit or loss in accordance with IFRS 9 unless the dividends
clearly represent a recovery of part of the cost of the investment. Dividends are included in the ‘other income line item in profit or loss.
The Group designated all investments in equity instruments that are not held for trading as at FVTOCI on initial recognition.
A financial asset is held for trading if either:
• It has been acquired principally for the purpose of selling it in the near term; or
• On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has
evidence of a recent actual pattern of short-term profit-taking It is a derivative (except for a derivative that is a financial
guarantee contract or a designated and effective hedging instrument).

Page 25
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Material accounting policy information (Continued)

(iv) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see (i) to (iii) above) are measured at
FVTPL. Specifically:
• Investments in equity instruments are classified as at FVTPL unless the Group designates an equity investment that is neither
held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition; (see
(iii) above); and
• Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria (see (i) and (ii) above) are classified as
at FVTPL. In addition debt instruments that meet either the amortised cost criteria or the FVTOCI criteria may be designated
as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition
inconsistency (so called ‘accounting mismatch’) that would arise from measuring assets or liabilities or recognising the gains
and losses on them on different bases. The Group has not designated any debt instruments as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period with any fair value gains or losses
recognised in profit or loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised
in profit or loss includes any dividend or interest earned on the financial asset.

Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at
the spot rate at the end of each reporting period. Foreign exchange differences are recognised in profit or loss under foreign exchange
revaluation line item.

Impairment
For financial assets classified as measured at AC and FVOCI an allowance for expected credit losses is recognized. The recognized
amount comprises expected credit losses within the 12 months after the reporting date. In the event of a substantial increase in credit risk
an expected loss allowance is recognized over the expected life of the asset.
Expected Credit Losses
The Group recognizes loss allowances for Expected Credit Losses on the following financial instruments that are not measured at FVTPL:
• Loans and advances;
• Debt investment securities;
• Deposits at other institutions;
• Reverse Repo Agreements with Commercial banks;
• IMF related assets;
• Loan commitments issued; and
• No impairment loss is recognised on equity investments.

ECLs are required to be measured through a loss allowance at an amount equal to:
• 12-month ECL i.e. lifetime ECLs that result from those default events on the financial instrument that are possible within
12 months after the reporting date (referred to as Stage 1); or
• Full lifetime ECL i.e. lifetime ECLs that result from all possible default events over the life of the financial instrument
(referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that financial instrument has increased
significantly since initial recognition. For all other financial instruments ECLs are measured at an amount equal to the 12-month ECL.
ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as the present value of the difference
between the cash flows due to the Group under the contract and the cash flows that the Group expects to receive arising from the weighting
of multiple future economic scenarios discounted at the asset’s Effective Interest Rate. The Group measures ECL on an individual basis or
on a collective basis for portfolios of loans that share similar economic risk characteristics. The measurement of the loss allowance is based
on the present value of the asset’s expected cash flows using the asset’s original EIR regardless of whether it is measured on an individual
basis or a collective basis.

Page 26
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Material accounting policy information (Continued)

Credit-impaired financial assets
A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred. Credit-impaired financial assets are referred to as Stage 3 assets. Evidence of credit-impairment includes
observable data about the following events:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or past due event;
• the disappearance of an active market for a security because of financial difficulties;
• the restructuring of a loan or advance by the Bank on terms that the Bank would not consider otherwise; or
• an increased / higher probability that the borrower will enter bankruptcy or undertake a financial re-organisation; or
It may not be possible to identify a single discrete event instead; the combined effect of several events may have caused financial assets
to become credit-impaired. The Group assesses whether debt instruments that are financial assets measured at amortised cost or
FVTOCI are credit-impaired at each reporting date. To assess if sovereign and corporate debt instruments are credit impaired the
Group considers factors such as bond yields credit ratings and the ability of the borrower to raise funding.
A loan is considered credit-impaired when a concession is granted to the borrower due to a deterioration in the borrower’s financial
condition unless there is evidence that as a result of granting the concession the risk of not receiving the contractual cash flows has
reduced significantly and there are no other indicators of impairment. For financial assets where concessions are contemplated but
not granted the asset is deemed credit impaired when there is observable evidence of credit-impairment including meeting the
definition of default. The definition of credit impairment includes default unlikeliness to pay indicators and a backstop if amounts
are overdue for 90 days or more.

Definition of default
Critical to the determination of ECL is the definition of default. The definition of default is used in measuring the amount of ECL and
in the determination of whether the loss allowance is based on 12-month or lifetime ECL as default is a component of the probability
of default (PD) which affects both the measurement of ECLs and the identification of a significant increase in credit risk: The Group
considers the following as constituting an event of default:
• The borrower is past due more than 90 days on any material credit obligation to the Group; or
• The borrower is unlikely to pay its credit obligations to the Group in full.
When assessing if the borrower is unlikely to pay its credit obligation the Group considers both qualitative and quantitative indicators.
Quantitative indicators such as overdue status and non-payment on another obligation of the same counterparty are key inputs in this
analysis. The Group uses a variety of sources of information to assess default which is either developed internally or obtained from
external sources.
Significant increase in credit risk
The Group monitors all financial assets to assess whether there has been a significant increase in credit risk since initial recognition. If
there has been a significant increase in credit risk the Group will measure the loss allowance based on lifetime rather than 12-month
ECL.
The quantitative information is a primary indicator of significant increase in credit risk and is based on the change in lifetime PD by
comparing:
• the remaining lifetime PD at the reporting date; with
• the remaining lifetime PD for this point in time that was estimated based on facts and circumstances at the time of initial
recognition of the exposure.
The PDs used are forward looking and the Group uses the same methodologies and data used to measure the loss allowance for ECL.
The qualitative factors that indicate significant increase in credit risk are reflected in PD models on a timely basis.

Page 27
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Material accounting policy information (Continued)

Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default loss given default (i.e. the magnitude of the loss
if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical
data adjusted by forward-looking information as described above. As for the exposure at default for financial assets this is represented
by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts the exposure includes the amount of
guaranteed debt that has been drawn down as at the reporting date together with any additional guaranteed amounts expected to be
drawn down by the borrower in the future by default date determined based on historical trend the Group’s understanding of the specific
future financing needs of the debtors and other relevant forward-looking information.
For financial assets the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group
in accordance with the contract and all the cash flows that the Group expects to receive discounted at the original effective interest rate.
For a financial guarantee contract as the Group is required to make payments only in the event of a default by the debtor in accordance
with the terms of the instrument that is guaranteed the expected loss allowance is the expected payments to reimburse the holder for a
credit loss that it incurs less any amounts that the Group expects to receive from the holder the debtor or any other party.
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting
period but determines at the current reporting date that the conditions for lifetime ECL are no longer met the Group measures the loss
allowance at an amount equal to 12-month ECL at the current reporting date except for assets for which the simplified approach was
used.
The Group recognises an impairment gains or loss in profit or loss for all financial instruments with a corresponding adjustment to
their carrying amount through a loss allowance account except for investments in debt instruments that are measured at FVTOCI for
which the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve and
does not reduce the carrying amount of the financial asset in the statement of financial position.

Modification and derecognition of financial assets

A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial asset are renegotiated or
otherwise modified between initial recognition and maturity of the financial asset. A modification affects the amount and/or timing of
the contractual cash flows either immediately or at a future date. In addition, the introduction or adjustment of existing covenants of
an existing loan would constitute a modification even if these new or adjusted covenants do not yet affect the cash flows immediately
but may affect the cash flows depending on whether the covenant is or is not met (e.g. a change to the increase in the interest rate that
arises when covenants are breached).
When a financial asset is modified the Group assesses whether this modification results in derecognition. In accordance with the
Group’s policy a modification results in derecognition when it gives rise to substantially different terms. To determine if the modified
terms are substantially different from the original contractual terms the Group considers the following:
• Qualitative factors such as contractual cash flows after modification are no longer SPPI change in currency or change of
counterparty the extent of change in interest rates maturity covenants. If these do not clearly indicate a substantial
modification, then; and
• A quantitative assessment is performed to compare the present value of the remaining contractual cash flows under the
original terms with the contractual cash flows under the revised terms both amounts discounted at the original effective
interest rate. If the difference in present value is greater than 10% the Group deems the arrangement is substantially different
leading to derecognition.
In the case where the financial asset is derecognised the loss allowance for ECL is remeasured at the date of derecognition to determine
the net carrying amount of the asset at that date. The difference between this revised carrying amount and the fair value of the new
financial asset with the new terms will lead to a gain or loss on derecognition. The new financial asset will have a loss allowance
measured based on 12-month ECL except in the rare occasions where the new loan is considered to be originated-credit impaired. This
applies only in the case where the fair value of the new loan is recognised at a significant discount to its revised par amount because
there remains a high risk of default which has not been reduced by the modification. The Group monitors credit risk of modified
financial assets by evaluating qualitative and quantitative information such as if the borrower is in past due status under the new terms.
When the contractual terms of a financial asset are modified and the modification does not result in derecognition the Group
determines if the financial asset’s credit risk has increased significantly since initial recognition by comparing: the remaining lifetime
PD estimated based on data at initial recognition and the original contractual terms; with; the remaining lifetime PD at the reporting
date based on the modified terms. Where a modification does not lead to derecognition the Group calculates the modification gain/loss
comparing the gross carrying amount before and after the modification (excluding the ECL allowance). Then the Group measures ECL
for the modified asset where the expected cash flows arising from the modified financial asset are included in calculating the expected
cash shortfalls from the original asset.

Page 28
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Modification and derecognition of financial assets (Continued)

The Group derecognises a financial asset only when the contractual rights to the asset’s cash flows expire (including expiry arising
from a modification with substantially different terms) or when the financial asset and substantially all the risks and rewards of
ownership of the asset are transferred to another entity. If the Group neither transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred asset the Group recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received. On derecognition of a financial asset in its entirety the difference between the asset’s carrying amount and the sum of the
consideration received and receivable and the cumulative gain/loss that had been recognised in OCI and accumulated in equity is
recognised in profit or loss with the exception of equity investment designated as measured at FVTOCI where the cumulative gain/loss
previously recognised in OCI is not subsequently reclassified to profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred
asset) the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing
involvement and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The
difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for
the part no longer recognised and any cumulative gain/loss allocated to it that had been recognised in OCI is recognised in profit or
loss. A cumulative gain/loss that had been recognised in OCI is allocated between the part that continues to be recognised and the part
that is no longer recognised on the basis of the relative fair values of those parts. This does not apply for equity investments designated
as measured at FVTOCI as the cumulative gain/loss previously recognised in OCI is not subsequently reclassified to profit or loss.

Write-off policy
Loans and debt securities are written off when the Group has no reasonable expectations of recovering the financial asset (either in its
entirety or a portion of it). This is the case when the Group determines that the borrower does not have assets or sources of income that
could generate sufficient cash flows to repay the amounts subject to the write-off. A write-off constitutes a derecognition event. The
Group may apply enforcement activities to financial assets written off. Recoveries resulting from the Group’s enforcement activities
will result in impairment gains and rejoined in profit or loss.

Offsetting
Financial assets and financial liabilities are offset so that the Group presents in the statement of financial position the net amount when
the Group has a legal right to offset the amounts and intends either to settle them on a net basis or realizes the asset and settle the
liability simultaneously.

Financial liabilities and equity

Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Group are recognised at the proceeds received net of direct issue costs.
Repurchase of the Bank ’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit
or loss on the purchase sale issue or cancellation of the Company’s own equity instruments.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. However,
financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement
approach applies, and financial guarantee contracts issued by the Group are measured in accordance with the specific accounting
policies set out below.

Page 29
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Financial liabilities and equity

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business
combination (ii) held for trading or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if either:
• It has been acquired principally for the purpose of repurchasing it in the near term;
• On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a
recent actual pattern of short-term profit-taking; or
• It is a derivative except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination
may be designated as at FVTPL upon initial recognition if either:
• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise
• The financial liability forms part of a group of financial assets or financial liabilities or both which is managed and its
performance is evaluated on a fair value basis in accordance with the Group’s documented risk management or investment
strategy and information about the grouping is provided internally on that basis; or
• It forms part of a contract containing one or more embedded derivatives and IFRS 9 permits the entire combined contract to
be designated as at FVTPL.
Financial liabilities at FVTPL (Continued)
Financial liabilities at FVTPL are measured at fair value with any gains or losses arising on changes in fair value recognised in profit
or loss to the extent that they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability.
However, for financial liabilities that are designated as at FVTPL the amount of change in the fair value of the financial liability that
is attributable to changes in the credit risk of that liability is recognised in other comprehensive income unless the recognition of the
effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit
or loss. The remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable
to a financial liability’s credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss;
instead they are transferred to retained earnings upon derecognition of the financial liability.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination (ii) held-for trading or (iii)
designated as at FVTPL are measured subsequently at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees
and points paid or received that form an integral part of the effective interest rate transaction costs and other premiums or discounts)
through the expected life of the financial liability or (where appropriate) a shorter period to the amortised cost of a financial liability.
Financial guarantee contract liabilities
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contract liabilities are measured initially at their fair values and if not designated as at FVTPL and do not arise
from a transfer of an asset are measured subsequently at the higher of:
• The amount of the loss allowance determined in accordance with IFRS 9 (see financial assets above); and
• The amount recognised initially less where appropriate cumulative amortisation recognised in accordance with the revenue
recognition policies set out above.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting
period the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange
gains and losses are recognised in the ‘Other gains and losses’ line item in profit or loss for financial liabilities that are not part of a
designated hedging relationship. For those which are designated as a hedging instrument for a hedge of foreign currency risk foreign
exchange gains and losses are recognised in other comprehensive income and accumulated in a separate component of equity.

Page 30
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Material accounting policy information (Continued)

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at
the end of the reporting period. For financial liabilities that are measured as at FVTPL the foreign exchange component forms part of the fair
value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.
Modification and derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable is recognised in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is
accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the group
accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and
the recognition of a new liability. To determine if the modified terms of a liability are substantially different to the original terms a similar
process with modification of financial assets is followed. The modification is assessed at first on a qualitative basis. If it is not clear from the
qualitative assessment that a modification has resulted in a substantial change in a financial liability, a quantitative assessment is applied. It is
assumed that the terms of the financial liability are substantially different if the discounted present value of the cash flows under the new
terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from
the discounted present value of the remaining cash flows of the original financial liability.

If the modification is not substantial, the group recalculates the amortised cost of the modified financial liability by discounting the modified
contractual cash flows using the original EIR. The group recognises any adjustment to the amortised cost of the financial liability in profit or
loss as income or expense at the date of the modification. Modification gains are presented in ‘other income’ and modification losses are
presented in ‘other expenses’ in the statement of profit or
loss.

Derivative financial instruments

Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair
value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and
effective as a hedging instrument in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is disclosed as a financial asset whereas a derivative with a negative fair value is disclosed as a financial
liability in the notes to the financial statements. Derivatives are recognized as net position on the face of the financial statements.

Accounting judgement and estimates

Business Model assessment
In applying the Group’s accounting policies which are described under accounting policy the Directors are required to make judgements (other
than those involving estimations) that have a significant impact on the amounts recognized and to make estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects
both current and future periods.
The Group assesses the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way
the business is managed and information is provided to management. The information considered includes:
• Objectives of holding the portfolio for trading for contractual cash flows collection etc.;
• Frequency value and timing of sales (both past and future);
• How the performance of the business model and financial assets are evaluated and reported to the Bank’s
• key management personnel;
• The risks that affect the performance of the business model in particular the way in which those risks are
• managed (to meet the objectives);
• How managers of the business are compensated; e.g. whether compensation is based on the fair value of
• the assets managed or the contractual cash flows collected; and
• Whether collection of contractual cash flows (e.g. interest income received) represents significant part of
• the portfolios return.
The Group’s objective is achieved by both collecting contractual cash flows and selling financial assets.

Page 31
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Accounting judgement and estimates (Continued)

Classification and measurement of financial assets depends on the results of the SPPI and the business model test. The Group
determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular
business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is
evaluated and their performance measured the risks that affect the performance of the assets and how these are managed and how the
managers of the assets are compensated. The Group monitors financial assets measured at amortised cost or fair value through other
comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons
are consistent with the objective of the business for which the asset was held. Monitoring is part of the Group’s continuous assessment
of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate
whether there has been a change in business model and so a prospective change to the classification of those assets. No such changes
were required during the periods presented.

Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI):
For the purposes of this assessment ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is
defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a
particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs) as well as a profit
margin.

Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI): (Continued)
In assessing whether the contractual cash flows are SPPI the Bank considers the contractual terms of the instrument. This includes
assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such
that it would not meet this condition. In making this assessment the Bank considers the following:
• contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate including variable-rate features;
• leverage features that modify consideration of the time value of money such as periodic reset of interest rates;
• prepayment and extension features; and
• terms that limit the Bank’s claim to cash flows from specified assets (e.g. nonrecourse).

Significant increase in credit risk

ECL are measured as an allowance equal to 12-month ECL for stage 1 assets or lifetime ECL for stage 2 or stage 3 assets. An asset
moves to stage 2 when its credit risk has increased significantly since initial recognition. IFRS 9 does not define what constitutes a
significant increase in credit risk. In assessing whether the credit risk of an asset has significantly increased the Group takes into
account qualitative and quantitative reasonable and supportable forward-looking information.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.

Calculation of loss allowance

When measuring ECL the Group uses reasonable and supportable forward-looking information which is based on assumptions for the
future movement of different economic drivers and how these drivers will affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and
those that the lender would expect to receive taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over
a given time horizon the calculation of which includes historical data assumptions and expectations of future conditions.

Page 32
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Disclosures
The Group’s financial instruments consist of the following:
Financial Instrument Categories Group's Business Model Cash flow Characteristics

Financial Assets
Fair Value Through Other Comprehensive Income
(FVOCI)
Treasury notes Solely payment of principal
Held to collect and sale
and interest
Treasury bills
Foreign Bonds-US Government Treasury
Designated Financial Assets at FVOCI
Investment in NITEL Equity Instrument designated under FVOCI
because of their nature. These are non-traded
Investment in Norsad Finance Limited, Blantyre
investments in equity instruments except for N/A
Hotels plc,
Blantyre Hotels plc which is traded on Malawi
Investment in Afrexim Bank Stock Exchange.
Investment in Swift
Measured at Amortised Cost
Balance with International Monetary Fund
Repurchase Agreements
Loan and advances to customers
Staff Loans and advances included in other assets
Collect contractual cash flows hold for cash flow Solely payment of principal
Advances to Malawi Government management and interest
Balances with foreign banks excluding items at
FVTPL
Amount due from related Party Institutions
Amount due from financial Institutions
Cash and cash equivalents
Promissory notes
Measured at Fair Value Through Profit or loss The contractual cash flows
Other than held to collect and held to collect and
are not payment of
Investment with fund managers sale
principal and interest

Financial Liabilities
Measured at amortised cost
Notes and coins in circulation
OMO instruments
Liabilities with the International Monetary Fund
Allocations of special drawing rights
Pay contractual cash flows N/A
Bankers’ deposits
Government deposits (Foreign and Local)
Other deposits
Afrexim Bank Note Program
Other liabilities
Measured at Fair Value Through Profit or loss
Derivative Liability Pay contractual cash flows N/A

Page 33
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

Disclosures (Continued)
3.1 Cash and Cash Equivalents
Cash equivalents comprise short-term highly liquid investments that are readily convertible to known amounts of cash are subject to
an insignificant risk of changes in value and are held for the purpose of meeting short term commitments. The balances include cash
on hand and short-term deposits.
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
Cash and cash equivalents K’m K’m K’m K’m
Foreign
Cash on hand 1 183 1 183 3 230 3 230
Current accounts in foreign currencies 165 049 164 616 128 558 128 143
Term deposits with local financial
12 062 12 062 199 056 199 056
institutions up to 90 days
Cash at hand with fund managers 3 740 3 740 3 475 3 475
Less: Loss allowance (3) (3) (51) (51)

Sub-total 182 031 181 598 334 268 333 853

Domestic
Overnight loans - - 71 943 71 943
Reverse repurchase agreements 30 015 30 015 - -
Cash on hand 47 895 5 26 334 4
Less: Loss allowance - - - -
Sub-total 77 910 30 020 98 277 71 947

Total cash and cash equivalents 259 941 211 618 432 545 405 800

All short-term investments are due to mature within three months and there were no foreign investments placed with local banks (2023:
nil). Additionally, the Debt Service Reserve Accounts (DRSA) held with Afrexim under current account deposits designated for
purpose of servicing the Bank’s obligations closed with K1 820 million balance as at 31 December 2024 (2023: nil).

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m

DRSA Accounts balance 1 820 1 820 - -

Page 34
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.2 Foreign Reserve Financial Instruments

The Bank’s foreign reserve financial instruments include the following categories:
Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Financial assets measured at AC
Term Deposits with Foreign financial institutions 12 059 12 059 199 056 199 056

Debt instruments measured at FVOCI

Foreign Bonds 10 528 10 528 10 085 10 085

Equity Investments measured at FVOCI

Equity Investments 14 274 12 615 17 534 12 160

Financial Derivatives at FVPL

Liabilities 1 140 1 140 23 798 23 798

3.2.1 Financial assets at AC

Loans and advances to customers

The Group`s credit risk is attributed to loan facilities extended to its customers. The amounts presented in the statement of financial
position are net of expected credit losses. These loans bear an average annual interest rate of 29 percent (2023:29 percent) for kwacha
facilities and 8.37 percent (2023: 8.37 percent) for US dollar facilities. The majority of outstanding loans as at 31 December 2024,
relate to facilities issued to NASCOMEX K3.9 billion(2023: K2.9 billion), AHL Commodities Limited K1.1 billion (K1.5 billion),
Press Agriculture Limited K10.6 billion (2023: K8.2 billion), National Economic Empowerment Company Limited (NEEF) nil (2023:
K4.97 billion) and Malawi Leaf Company Limited K24.4 (2023: K17.7 billion) denominated in USD, Ideal Group Limited K3.2 billion
( K2.2 billion) and the Foods Company Limited K1.2 billion (2023: K1.7 billion).

The suspended interest has been debited to interest income and credited to provision for suspended interest in the loans receivables as
noted above to account for the credit-impaired financial assets in stage 3 that interest income is calculated by applying the effective
interest rate to the amortized cost of the credit-impaired assets (i.e. the gross carrying amount less the allowance for expected credit
losses (ECLs)). The related recoveries have been debited to provision for suspended interest and credited to interest income in the year
in which suspended interest has been recovered.

Consolidated
2024 2023

Loans 35 409 36 017

Accrued interest 11 783 7 654
Gross loans receivables 47 192 43 671
Expected Credit Losses
At 1 January (8 028) (7 083)
Current year recoveries from impairment losses 2 416 2 835
ECL write off 2 796 11
Loss allowances arising in the year (5 329) (3 791)
Total expected credit losses (8 145) (8 028)
At 31 December 39 047 35 644

Current 15 918 34 169

Non-current 23 129 1 475
39 047 35 644

Page 35
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE
ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.2 Foreign reserve Financial Instruments

Consolidated
3.2.1 Financial assets at AC (Continued)

2024 2023
Aging of the loans receivables was as follows:
Over 2 years 4 358 7 889
Between 1 to 2 years 21 832 359
Between 3 months to 1 year 8 20 992
Not past due 20 994 14 431
47 192 43 671
Analysis by currency
Kwacha facilities 22 559 23 506
US Dollar facilities 24 633 20 165
Gross loans receivables 47 192 43 671

Suspended interest
At 1 January (1 611) (1 388)
Current year addition (3 687) (1 421)
Write off 1 661 6
Current year recoveries 560 1 192

At 31 December (3 077) (1 611)

Net expected credit losses

Current year loss allowances (1 642) (2 370)
Current year recoveries 1 856 1 643
214 (727)
Net current year expected credit losses

3.2.2 Financial assets at FVOCI

Foreign Bond
The Group invests in Treasury Bonds with the bonds issued by United States Government and other government agencies.
Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Debt securities
Gross carrying amount 10 543 10 543 10 109 10 109
Fair value loss (15) (15) (24) (24)
Less loss allowance - - - -
10 528 10 528 10 085 10 085

Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Debt securities
Maturing within 1 year 3 487 3 487 8 377 8 377
Maturing between 1-5 year 7 041 7 041 1 708 1 708
10 528 10 528 10 085 10 085

Page 36
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
3. Financial Instruments (Continued)
3.2 Foreign reserve Financial Instruments (Continued)
3.2.3 Financial assets at FVPL

Derivative liabilities
The Group entered into short term foreign currency and cross currency swaps. Foreign currency swaps are usually with local banks
whilst cross currency swaps are with foreign financial institutions. These are volatile and have a relatively small movement in the value
of the asset. Changes in the market rates or index underlying the contract have an impact on the profit or loss of the Group. Over the
counter derivatives may expose the Bank to the risk associated with the absence of an exchange market on which to close out an open
position. The table below shows the fair values of derivative financial instruments recorded as assets or liabilities together with their
notional amounts. As at 31 December 2024 the total sum for outstanding deals for swap transactions was K191.3 billion equivalent of
US$111 million (2023: K216.6 billion equivalent of US$142 million) and will mature within one year.
31 December 2024
Consolidated Separate
Forward Forward
Derivative value Derivative value
2024 2024 2024 2024
K’m K’m K’m K’m

Derivative Liabilities
Foreign currency swaps with local Banks 301 32 984 301 32 984
Foreign Financial Institutions-cross currency swaps 839 158 334 839 158 334

Total 1 140 191 318 1 140 191 318

31 December 2023
Consolidated Separate
Forward Forward
Derivative value Derivative value
2023 2023 2023 2023
K’m K’m K’m K’m

Derivative Liabilities
Foreign currency swaps with local Banks 11 537 28 949 11 537 28 949
Foreign Financial Institutions-cross currency swaps 12 261 187 644 12 261 187 644

Total 23 798 216 593 23 798 216 593

The derivative liabilities of K1 843 million and derivatives assets of K703 million have been netted off to give rise to net derivative
liabilities of K1 140 million (2023: The derivative liabilities of K23 814 million and derivatives assets of K16 million have been
netted off to give rise to net derivative liabilities of K23 798 million).

No Bank triggered the margin call on any swap contract in the year (2023: $40 million). The Ecobank Limited swap agreement
specified that a 10% depreciation of the Malawi Kwacha would trigger a margin call. However, no currency devaluation occurred
during the year that would have necessitated such a request from Ecobank.

Page 37
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE NOTES TO THE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.3 Monetary policy financial instruments (Continued)

Disclosure-Monetary Policy Financial Instruments

Monetary policy and other domestic financial instruments are classified as AC and FVOCI. As at 31 December 2024 the Group
held the following categories of monetary policy and other domestic financial instruments.

31 December 2024 31 December 2023

FV
Average Average Collateral
remaining FV remaining received
maturity Collateral maturity
Value days Average received Value days Average
Interest Interest
K’m rate K’m rate
Assets
10% hair 10% hair
Overnight loans - - - cut 71 943 4 24.0% cut
Reverse repurchase 10% hair 10% hair
agreements 253 274 9-181 18% cut - - cut

Liabilities
Bankers Deposits 626 724 n/a n/a n/a 267 936 n/a n/a n/a
Repurchase 10% hair 10% hair
agreements 113 348 n/a 23.6% cut 287 129 n/a 23.6% cut

3.3.1 Financial assets purchased under resale agreements (reverse repo)

Securities purchased under resale agreements are composed of overnight repurchase (repo) operations and term repo operations in
which the Group purchases securities from designated counterparties with an agreement to sell them back at a predetermined price
on an agreed transaction date.

The overnight repo matures the next business day and is used to support the effective implementation of monetary policy by
injecting intraday liquidity thereby reinforcing the Group ’s target for the overnight rate. The term repo generally matures between
1 to 365 business days after issuance. The objective is to promote the orderly functioning of financial markets and to provide the
Group with information on conditions in short-term funding markets. Purchase transactions of credit instruments under repurchase
“REPO” agreements (liquidity injection transactions) are classified and measured at AC on an effective rate basis. For such
transactions the Group recognises the cash disbursement and constitutes a right (an asset) initially measured at the price agreed or
reimbursement amount which relates to its fair value. Collateral received (securities purchased) are not recognized in the statement
of financial position.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Tenure
Less than 91 days 30 015 30 015 - -
More than 91 days but less than 365 days 223 259 223 259 - -
253 274 253 274 - -

Page 38
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED ANDSEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.2 Monetary policy financial instruments (Continued)

3.3.2 Bankers Deposits

These balances are for Liquidity Reserve Requirement (LRR) in Malawi Kwacha. Local commercial banks are required to maintain
a mandatory liquidity reserves requirement with the central bank calculated as 7.75% (2023: 7.75%) of commercial banks’ eligible
liabilities denominated in national currencies. Bankers’ deposits as at 31 December 2024 amounted to K626 724 million (2023: K267
936 million). These deposits do not accrue interest.

3.3.3 Open market Operations (OMO) instruments)

Securities sold under resale agreements consists of overnight repurchase (repo) operations and term repo operations in which the
Group sells securities to designated counterparties with an agreement to purchase them back at a predetermined price on an agreed
transaction date. They are used either for withdrawing liquidity from the market or for financial stability purposes and their
accounting treatment is the opposite of reverse repos described in point 3.3.1.

Balances outstanding as at 31 December 2024 of K113 348 million (2023: K287 129 million) consist of repo agreements with
original terms to maturity ranging from 4 to 372 days (2023: 28 to 307).

3.3.4 Collateral pledged under sale and repurchase agreements

Collateral received in the form of securities through secured lending and borrowing transactions where the Group has the right to
sell or pledge the security is not recognised in the statement of financial position unless reinvested. As at 31 December 2024, a
total sum of K117 499 million (2023: K324 208 million) of Treasury Notes were pledged as collateral under OMO repurchase
agreements.

3.4 Malawi Government Securities and Balances

Monetary policy and other domestic financial instruments are classified as AC and FVOCI. As at 31 December 2024 the Group
held the following categories of monetary policy and other domestic financial instruments.

Consolidated 2024 2023

remaining Remaining
days to Average days to Average
Fair value maturity yields Fair Value maturity yields
K’m K’m
Assets
Government Securities
Treasury Notes 1 966 861 6-3583 16%-35% 1 615 173 2-3051 14%-31%
Treasury Bills - - - 29 534 73-304 1%-19%
Promissory notes 664 934 1 459 26% 793 959 365-1 825 24%
Advances to Malawi
Government 186 440 On demand 26% 115 419 On demand 24%

Labilities
Foreign Denominated
Deposit account 327 991 On demand n/a 546 476 On demand n/a
Government deposit in
local currency 151 025 On demand n/a 70 128 On demand n/a

Page 39
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.4 Malawi Government Securities and Balances (Continued)

Separate
2024 2023
remaining Remaining
days to Average Fair days to Average
Fair value maturity yields Value maturity yields
K’m K’m
Assets
Government Securities
Treasury Notes 1 966 861 6-3583 16%-35% 1 615 173 2-3051 14%-31%
Treasury Bills - - - 29 534 73-304 1%-19%
Promissory notes 660 904 1 459 26% 775 260 1 465-1 825 24%

Advances to Malawi Government 186 440 On demand 26% 115 419 On demand 24%

Labilities
Foreign Denominated Deposit
account 327 991 On demand n/a 546 476 On demand n/a
Government deposit in local
currency 151 025 On demand n/a 70 128 On demand n/a

Government of Malawi treasury bills and notes are issued in local currency. Government securities are typically held for monetary
policy purposes and usually not held to maturity. The Bank participates in the secondary market in a neutral manner to re-invest
the funds at market rates. These securities are also given as collateral in monetary policy operations or used for securities lending.
At 31 December 2024 the Bank used a total value of K117 499 million (2023: K324 208 million) as collateral against OMO
liabilities and K183 003 million (2023: K116 450 million) against Afrexim loan facility.

Consolidated 31 December 2024 31 December 2023

Carrying Average Carrying Average

Amount Coupon rate Amount Coupon rate
K'm K'm
Assets
Malawi Government Treasury Notes
Maturing within 1 year 688 351 10%-15.5% 503 400 10%-14%
Between 1 year and below 5 years 853 788 10%-16% 954 612 10%-16%
Between 5 year and below 10 years 424 722 13.5%-16% 157 161 13.5%-16%
Malawi Government Treasury Bills
Maturing within 1 year - - 29 534 7.85%-9.28%

Malawi Government Promissory notes

Maturing within 1 years 4 030 26% 18 699 24%
Maturing above 1 to 5 years 660 904 26% 775 260 24%
Total 2 631 795 2 438 666

Page 40
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.4 Malawi Government Securities and Balances (Continued)

Separate
31 December 2024 31 December 2023

Carrying Average Carrying Average

Amount Coupon rate Amount Coupon rate
K'm K'm
Assets
Malawi Government Treasury Notes
Maturing within 1 year 688 351 10%-14% 503 400 10%-14%
Between 1 year and below 5 years 853 788 10%-16% 954 612 10%-16%
Between 5 year and below 10 years 424 722 13.5%-16% 157 161 13.5%-16%
Malawi Government Treasury Bills
Maturing within 1 year - - 29 534 7.85%-9.28%

Malawi Government Promissory notes

Maturing within 1 years - - - -
Maturing above 1 to 5 years 660 904 26% 775 260 24%
Total 2 627 765 2 419 967

3.4.1 Treasury Notes, Treasury Bills and Promissory Notes

a) Treasury Notes
Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Debt securities
Gross carrying amount 2 055 439 2 055 439 1 720 299 1 720 299
Fair value loss (88 578) (88 578) (105 126) (105 126)
1 966 861 1 966 861 1 615 173 1 615 173

b) Treasury Bills
Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Debt securities
Gross carrying amount - - 29 287 29 287
Fair value gain/(loss) - - 247 247

__- __- 29 534 29 534

Page 41
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.4 Malawi Government Securities and Balances (Continued)

c) Promissory Notes
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Debt securities
Gross carrying amount 661 717 657 339 800 193 778 825
Fair value gain/(loss) 3 217 3 565 (6 234) (3 565)

664 934 660 904 793 959 775 260

Promissory Notes Redemption through dividend

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m

Promissory Notes Balance

At 1 January 793 959 775 260 196 697 175 328

Government dividend applied to Promissory Note (154 550) (154 550) (93 604) (93 604)
New Promissory Note issued 40 560 36 182 704 433 704 433
Redemption of Promissory Note (21 881) - (7 332) (7 332)
Accrued interest 3 117 447 - -
Exchange gain 512 - - -
Fair value 3 217 3 565 (6 235) (3 565)

At 31 December 664 934 660 904 793 959 775 260

The Government of Malawi's promissory note for the year 2023 was partially repaid in April 2024, using dividends payable to the
Government of K154 550 million (2023: K93 604 million). Further Malawi Government issued promissory notes to EDF in
settlement of loan balances owed by ADMARC Limited and National Economic Empowerment Fund Limited (NEEF). The
Ministry of Finance issued 1-year zero-Coupon promissory notes amounting to USD 10 180 482.88 (issued in USD 100 000 notes)
for ADMARC Limited in October 2023 and K4.4 billion and K4.37 billion (issued in K500 million notes) NEEF in October 2023
and May 2024 respectively. All 2023 promissory notes were matured and realized in October 2024 while the remaining K4.37
billion is expected to mature in May 2025.

Section 64(8) stipulates that any losses arising from currency fluctuations or revaluation shall be deducted from the special account,
and if the special account balance is exhausted, shall be covered by promissory notes of the Government on such terms and
conditions as shall be agreed upon between the Minister and the Bank. In this regard, as of 31 December 2024, Malawi Government
issued promissory notes of K36 182 (2023: K704 432 million) to cover for 2024 foreign exchange revaluation losses incurred by
the Bank as disclosed in note 20 to the financial statements.

3.4.2 Advances to Government

Advances to the Government represent an overdraft offered to Government to finance short term financial gap between the receipts
from budgeted revenue and Government expenditures.

Government borrowing from the Reserve Bank of Malawi is guided by section 39(a) of the Reserve Bank of Malawi Act
(Cap. 44:02 of the Laws of Malawi) which stipulates that the total amount of advances outstanding at any time made by the Bank
under the section may not exceed 10 percent (2023: 10 percent) of the average inflation adjusted annual domestic revenue of the
Government for the previous three financial years.

Under the terms of Section 39 of the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of Malawi) short-term advances will
mature and will have to be reimbursed in cash at the latest by the end of the Malawi Government’s financial year. These advances
bear interest at the ruling Bank rate; 26% (2023: 24%) as at 31 December 2024 payable monthly.

Page 42
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.4 Malawi Government Securities and Balances (Continued)

3.4.2 Advances to Government (Continued)

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Opening balance 115 419 115 419 92 054 92 054
Advances made during the year 2 939 767 2 939 767 1 762 197 1 762 197
Repayments (2 868 746) (2 868 746) (1 738832) (1 738 832)

Closing balance 186 440 186 440 115 419 115 419

3.4.3 Government deposits

Under the provisions of the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of Malawi) one of the principal objectives of the
Bank is to act as banker and adviser to the Government. Acting in this capacity the Bank receives deposits which represent all receipts
accruing to the Government. Further, section 172 of the Constitution of the Republic of Malawi instituted the consolidated fund with
the purpose of supporting government operations and section 42 of the Public Finance Act empowers the Secretary to the Treasury
(ST) to ascertain the revenue allocated to the consolidated fund. Additionally, the ST is authorized to establish accounts deemed
necessary for the proper accounting of funds within the consolidated fund. Foreign currency deposited are not netted off with domestic
deposit since these are conditional grants. However, domestic Government Deposits comprise of what is termed Ways and Means
accounts (eligible to the advances from the Bank); State Owned Enterprises and deposits from local councils (SOEs). The balance for
the SOEs was K32 490 million (2023: K16 472 million). In line with IAS 32 a total sum of these domestic deposit’s balances are
reported as a net figure on the Bank’s balance sheet despite whether the account is in debit or credit.

The Bank also facilitates the operation of the Government Credit Ceiling Authority (“CCA”) through the maintenance of holding
accounts held at Commercial Banks which are used to fund the operating accounts of Government Ministries for their day-to-day
operating activities. The Credit Ceiling Authority is a mechanism used by the Ministry of Finance and is facilitated by the Bank to
control the amount of credit that government ministries, departments, and agencies (MDAs) can access or spend within a specified
period in the Government accounts held at Commercial Banks.

No interest is payable on these deposits which are repayable on demand.

Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Government deposits
Denominated in foreign currencies 327 991 327 991 546 476 546 476
Denominated in local currency 151 025 151 025 70 128 70 128

Total deposits 479 016 479 016 616 604 616 604

3.5 Loans due from and to financial institutions

Accounting policy
Loan due from and to financial institutions are initially measured at fair value net of transaction costs and are subsequently measured
at amortized cost using effective interest rate method with interest expense recognized on an effectively yield basis.

Page 43
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.5 Loans due from and to financial institutions (Continued)

3.5.1 Amount due from related party institutions

As disclosed in note 3.5.2 (a), the amount due from related party institutions includes the Kwacha receivable on the Trade Development
Bank facility for the $307 million facility strategic import and export (refer to TDB note) utilised by NOCMA, Malawi Government
and a related party loan granted to EDF. EDF receivable is for the kwacha deposits yet to be received from EDF for the payment made
on its behalf to TDB as repayment for Tranche C facility. Malawi Government fully honoured the kwacha receivable under the Afrexim
note facility.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Strategic imports kwacha receivable-NOCMA 459 570 459 570 391 976 391 976
Strategic imports kwacha receivable Malawi
32 228 32 228 32 007 32 007
Government
Receivable from Export Development Fund - 8 568 - 8 568

Closing balance 491 798 500 366 423 983 432 551

3.5.2 Liabilities to Financial Institutions

The Group contracted loans and facilities from regional financial institutions to accelerate economic growth.
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Trade Development Bank (TDB) 666 413 666 413 592 825 592 825
Afrexim Note Facility 791 317 762 692 684 179 657 535
Baobab Securities Limited 39 691 39 691 39 691 39 691
1 497 421 1 468 796 1 316 695 1 290 051

Trade Development Bank and the Afrexim loan facilities are in arrears and discussions are underway to restructure the facilities to
sustainable level.

Page 44
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.5 Loans due from and to financial institutions (Continued)

3.5.2 Liabilities to Financial Institutions (Continued)

a) Trade Development Bank (TDB)

As disclosed in note 3.5.1, the Bank entered into a committed facility with Trade and Development Bank where TDB makes available
to the Bank a revolving multi-tranche special commodity and trade financing facility in form of a dollar denominated uncommitted
drawdown in an aggregate amount equal to $307 million. The facility comprises of the following Tranches: Tranche A: Revolving
structured petroleum facility (NOCMA); Tranche B: Structured special commodities import facilities; Tranche C: Export facility
(EDF); Tranche E: Malawi Government. If certain agreed conditions are met the Bank requests from TDB a draw down for an
irrevocable letter of credit in the case of fuel importation by NOCMA or commodity financing for EDF. The beneficiaries are expected
to deposit local currency with the Bank sufficient to cover the next repayment. Although legally the borrower is the Group these loans
are serviced by the beneficiary of the Tranches. The Bank is substantially a financial guarantor as its obligation is to guarantee the
availability of foreign reserves and to make good of any defaulted amounts by the beneficiaries. In view of this a payable has been
recognised in the statement of the financial position as follows:

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
US$307 million TDB facility 650 275 650 275 582 380 582 380
Add Facility fees payable 16 138 16 138 10 445 10 445
666 413 666 413 592 825 592 825
Classification of loans as current or non- current
Current 666 413 666 413 592 825 592 825

Opening Balance 592 825 592 825 326 552 326 552
Interest and other charges 55 804 55 804 75 370 75 370
Foreign exchange difference 17 784 17 784 190 903 190 903
666 413 666 413 592 825 592 825

The US$ 307 million facility is a revolving short-term fund and attract interest with varying rates ranging from 3%-13%. As at 31
December, 2024, the revolving loan facility was in arrears, and negotiations for debt restructuring with TDB are anticipated are
ongoing. As the facility agreement if the borrower fails to pay any amount payable on its due date, interest shall on the overdue amount
from the due date up to the date of actual payment at a rate of 2% per annum over and above the normal rate of interest.

b) Afrexim Note Facility

In June 2020 the Group restructured $350 million swap facilities with Afrexim Bank into a note purchase facility and obtained an
additional $100 million as part of Covid-19 pandemic response. In September 2021 the Group obtained an additional facility of $210
million under the floating rate amortization notes on which the Group had made drawdowns fully the facility as at 31 December 2024
to repay part of the $100 million and $350 million facility. EDF negotiated Afrexim note facility in 2019 aimed at supporting the
financing of various trade and trade enabling initiatives being undertaken by eligible customers. The Bank issued unconditional counter
IFRS 9 financial guarantee. As at 31 December, 2024, a total sum K616 564 million were in arrears, and negotiations for debt
restructuring with the Afrexim Bank are ongoing. The outstanding overdue balances attract an average penalty charge of 2%.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
At 1 January 684 179 657 535 414 580 391 163
Interest and penalties 88 108 85 432 22 120 20 316
Foreign exchange difference 20 633 19 725 259 752 249 698
Repayments (1 603) - (12 273) (3 642)

31 December 791 317 762 692 684 179 657 535

Page 45
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.5 Loans due from and to financial institutions (Continued)

3.5.2 Loans due to financial institutions (Continued)

Interest rate is aggregation of the applicable (a) margin and (b) 3 months SOFR.

Interest rate Margin Margin Margin Margin

Tranche 1 5.95 5.95 5.95 5.95
Tranche 2 4.95 4.95 4.95 4.95
Tranche 3 5.75 5.95 5.75 5.95

Classification of loan as current or non-current

Current 791 317 762 692 684 179 657 535

Amount due from Financial Institutions

The haircut margin on the note facility is set at 20% of the outstanding amount as of 31 December 2024. The facility is adequately
collateralized, and negotiations for debt restructuring are ongoing.

Additionally, the Malawi Government secured a note facility from Afrexim Bank, represented by the Reserve Bank of Malawi, to
finance various trade and trade-enabling initiatives, amounting to up to US$350 million. The obligation is honored by the Malawi
Government, and the Group considers the facility, a Government liability rather than a Bank liability.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
At 1 January 61 063 61 063 122 406 122 406
Repayments (55 252) (55 252) (61 343) (61 343)

31 December 5 811 5 811 61 063 61 063

No bank triggered the margin call on any swap contract in the year (2023: $40 million).
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m

Afrexim receivable 565 654 565 654 290 141 290 141
Ecobank receivable (3.2.3(b)) - - 22 703 22 703
Expected credit losses (6 990) (6 990) (6 530) (6 530)

558 664 558 664 306 314 306 314

Page 46
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

3. Financial Instruments (Continued)

3.5.2 Loans due to financial institutions (Continued)

Outlined below are the securities that were either sold outright or pledged to Afrexim Bank, along with the cash balances held with the
Afrexim Bank under various facilities, including one extended to the Government of Malawi.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Pledged Securities
-Less than one year 71 850 71 850 - -
-Between one year and five years 80 553 80 553 183 003 183 003
-Between five year and ten years 30 601 30 601 - -

183 004 183 004 183 003 183 003

Outright sale
-Less than one year 91 292 91 292 161 919 161 919
-Between one year and five years 157 340 157 340 214 182 214 182
-Between five year and ten years 50 000 50 000 - -
298 632 298 632 376 101 376 101
Cash held by for matured securities
-Principal on maturity 161 919 161 919 - -
-Coupon Receipts 107 391 107 391 74 483 74 483
269 310 269 310 74 483 74 483

c) Baobab Securities Limited –Frontera

The Group entered into a borrowing arrangement with Frontera Capital Group Limited (FCGL) who acted as an arranger and calculated
agent of local currency fixed income transactions. The borrowing was facilitated on behalf of Baobab Securities Limited, with the
Bank conducting a kwacha-to-USD swap amounting to K36 127 million against USD 45 million. However, the local currency
payments to Frontera are currently held by the Bank and are scheduled for payment five years from the date the deal was structured.
In this context, the kwacha leg transaction has been recognized as a loan for a duration of five years, carrying an annual interest rate of
24%, with interest payments made on a quarterly basis.

No security is pledged against this loan.

Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m

At 1 January 39 691 39 691 39 691 39 691

Accrued Interest 8 694 8 694 3 564 3 564
Repayment (8 694) (8 694) (3 564) (3 564)

31 December 39 691 39 691 39 691 39 691

Classification of loans as current or non- current
Current 3 564 3 564 3 564 3 564
Non-current 36 127 36 127 36 127 36 127

31 December 39 691 39 691 39 691 39 691

Page 47
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management
Accounting Judgements and Estimates
The Bank assesses the ECLs on all instruments measured at Amortized cost or debt instruments measured at Fair Value through
Other Comprehensive Income.

a) Impairment
Judgment is required when determining whether there is objective evidence that impairment exists and if so the appropriate amount of
ECLs to be recognized. The measurement of ECLs reflects an unbiased and probability-weighted amount that is determined by
evaluating a range of possible outcomes the time value of money and reasonable and supportable information that is available without
undue cost or effort at the reporting date regarding past events current conditions and forecasts of future economic conditions.
Significant judgments that are required for measuring ECLs include:
• determining criteria for assessing whether a financial asset is considered to have low credit risk;
• determining criteria for assessing what constitutes a significant increase in credit risk;
• choosing appropriate models and assumptions for the measurement of ECLs;
• establishing the number and relative weightings of forward-looking scenarios for each type of financial
instrument and the associated ECL; and
• establishing groups of similar financial assets for the purposes of measuring ECLs.

Financial assets are categorized into the following three stages depending on their assessed credit risk.

Stage 1 - Financial assets are typically categorized as Stage 1 when first recognized -unless purchased or originated credit-impaired.
The Group records an allowance for 12-month ECLs in profit or loss and interest revenue is calculated on the gross carrying amount
of the asset;

Stage 2 - Financial assets are categorized as Stage 2 when they have experienced a significant increase in credit risk since initial
recognition. The Group records an allowance for lifetime ECLs and interest revenue is calculated on the gross carrying amount of
the asset; and

Stage 3 - Financial assets are categorized as Stage 3 when they are considered as credit impaired. The Bank records an allowance
for lifetime ECLs and interest revenue is calculated based on the net carrying amount of the asset (gross carrying amount less the
loss allowance) rather than on its gross carrying amount.

a) Low credit risk

The Group considers debt investment securities to have low credit risk when their credit risk rating is equivalent to the globally
understood definition of ‘investment grade’. Considering the Bank’s strict investment guidelines which propose holding of
extremely high credit-rated investments financial instruments held as international reserves are considered to have low credit risk.
In addition the Group considers exposure to the Malawi Government which is denominated in local currency to be low credit risk.
Such an approach reflects the general assumption that sovereign debt denominated in local currency is considered to have an
extremely low risk of default (usually referred to as “risk-free” from a market participant’s perspective) as well as the fact that due
to the unique link between the Group and the Government of Malawi and also the fact that the Bank maintains the main current
account of Government. The Bank does not apply the low credit risk exemption to any other financial instruments.

b) Significant increase in credit risk

In determining whether the credit risk on a financial instrument has increased significantly from initial recognition in estimating
ECLs the Group considers reasonable and sustainable information that is available without undue cost or effort. This includes
quantitative and qualitative information and analyses based on the Group’s historical experience and an informed credit assessment
including forward-looking information.

c) ECL measurement
The key inputs into the measurement of ECL are the term structure of the following variables:
• probability of default (PD);
• loss given default (LGD);
• exposure at default (EAD).

These parameters are derived from external ratings which incorporate a range of forward-looking information and other historical
data.

Page 48
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

Accounting Judgements and Estimates (Continued)
c) ECL measurement (Continued)

PD estimates are estimates at a certain date which are calculated based on external ratings and assessed using rating tools tailored
to the various categories of counterparties and exposures. These ratings are based on externally compiled data comprising both
quantitative and qualitative factors including forward-looking information. Transition matrices are used to derive the PD for foreign
counterparties. If a counterparty or exposure migrates between rating classes, then this will lead to a change in the estimate of the
associated PD.

LGD is the magnitude of the likely loss if there is a default. The Group estimates LGD parameters based on the history of recovery
rates or parameters calculated by rating agencies and regulatory institutions such as the BIS in Basel of claims against defaulted
counterparties. The LGD models consider the structure collateral seniority of the claim counterparty industry and recovery costs
of any collateral that is integral to the financial asset.

EAD represents the expected exposure in the event of a default. The Group derives the EAD from the current exposure to the
counterparty and potential changes to the current amount allowed under the contract including amortization. The EAD of a financial
asset is its gross carrying amount (including accrued interest owing). EAD estimates are calculated on a discounted cash flow basis
using the effective interest rate as the discounting factor.

As described above and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not significantly
increased the Bank measures ECL considering the risk of default over the maximum contractual period over which it is exposed
to the credit risk even if for risk management purposes the Group considers a longer period. The maximum contractual period
extends to the date at which the Group has the right to require repayment.
Where modelling of a parameter is carried out on a collective basis the financial instruments are grouped based on shared risk
characteristics that include:
• instrument type;
• credit risk grading;
• collateral type;
• date of initial recognition;
• remaining term to maturity;
• industry; and
• geographic location of the borrower.

The groupings are subject to regular review to ensure that exposures within a particular group remain appropriately homogeneous.
For portfolios in respect of which the Group has limited historical data external benchmark information is used to supplement the
internally available data.

Definition of default
All financial assets measured at AC or FVOCI which are overdue for 90 days or more are considered to be in default except for
exposure to the Government of Malawi which would be considered to be in default if overdue for more than 180 days. This
represents a rebuttal of the presumption of IFRS 9 that the default does not occur later than when the financial asset is 90 days past
due. However it reflects the circumstances of the Government’s budgetary approval processes and the Bank’s unique relationship
with the Government as it acts as banker and fiscal agent of the Government.

Disclosure
The Group is exposed to various types of risks. These include financial risks in the form of market credit currency interest rate
price and liquidity risks. Due to its unique role and functions the Group’s risk management and control is not only based on the
institutional risk and return considerations but also considers the national interest in line with its statutory responsibilities prescribed
in the Reserve Bank of Malawi Act. The Group views risk management as an integral part of overall management process and an
essential element of good corporate governance. The Board of the Group is ultimately responsible for the oversight of the risk
management framework overseeing the management of the key risks and reviewing its risk management policies and procedures.

To support the effective and efficient risk management system the Group established three lines of defence model. The model
allocates clear roles and responsibilities for business departments’ risk management and internal audit. The first line of defence
(department level) is responsible for identifying assessing and managing the risks in their respective departments by designing
implementing and maintaining an adequate and effective system of controls.

Page 49
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

Accounting Judgements and Estimates (Continued)

c) ECL measurement (Continued)

The second line of defense comprises groups that are responsible for the ongoing monitoring of the design and operation of controls
in the first line of defense including groups providing advice and facilitating risk management activities. The Group has an
established Strategy and Risk Management Department responsible for defining and implementing an effective non-financial risk
management framework that is consistent to standards and approaches of best international practices. The Risk Management
Department provides independent forward-looking assessment of the risks identified by management facilitates risk management
processes and provides business continuity support. The Department is accountable to the Governor and reports quarterly to the
Board Risk Oversight Committee.

Internal Audit represents the third line of defense which ensures the effectiveness and appropriateness of the risk management and
internal control systems. Internal Audit reports administratively to the Governor and functionally to the Audit Committee. Internal
Audit examines both the adequacy of internal controls and the Group’s compliance with the procedures on a regular basis and
reports its findings and recommendations to the Audit Committee.

Disclosure
The Group compared to other financial institutions in the market is involved in policy-orientated activities rather than profit-
oriented activities. Therefore, the Group’s risk management framework differs from the risk management frameworks for other
financial institutions. The main financial risks to which the Group is exposed include credit risk liquidity risk and market risk
(interest price and currency). In the management of foreign reserves minimizing liquidity risk is the prime consideration in order
to maintain an effective foreign exchange intervention capability. Like most other central banks the nature of the Bank’s operations
creates exposures to a range of operational risks.

The Group compared to other financial institutions in the market is involved in policy-orientated activities rather than profit-
oriented activities. Therefore, the Group’s risk management framework differs from the risk management frameworks of most
other financial institutions. The main financial risks to which the Group is exposed include credit risk liquidity risk and market risk
(interest and currency). In the management of foreign reserves minimizing liquidity risk is the prime consideration in order to
maintain an effective foreign exchange intervention capability. Like most other central banks the nature of the Bank’s operations
creates exposures to a range of operational risks.

The Group uses financial instruments as a means of achieving its monetary policy and financial stability objectives (in domestic
currency) and also for managing international reserves (in foreign currency). These two portfolios have different risk policies and
characteristics both of them are managed by the Financial Market Department. The following description of financial risks presents
the main risks to which these two portfolios of financial instruments are exposed to as well as the management policy of these risks.

a) Foreign exchange reserves

According to the Reserve Bank Act the Bank is eligible to hold and manage foreign reserve portfolio. The Bank maintains a
portfolio to support its monetary and exchange policies and normal functioning of domestic and foreign payments. Reserves are
also employed to protect the Country from external vulnerabilities by maintaining sufficient liquidity to absorb shocks during a
financial crisis. Therefore the multiple objectives of holding foreign reserves feature safety liquidity and profitability. Hence assets
under the foreign reserve portfolio are invested on a conservative basis to facilitate these objectives with an emphasis on liquidity
and capital preservation. For instance the Bank’s Foreign Reserve Investment policy prioritize the preservation of capital and a
high level of liquidity of reserves. Once these conditions are met return is to be maximized.

The portfolio is managed in line with investment guidelines approved by the Board the Board Risk Oversight Committee is
responsible for monitoring and implementation of financial risk mitigation measures prescribed in the investment guidelines and
making sure that the Bank operates within the established risk parameters. Typical activities of the Committee are reviewing the
quarterly reports approving the list of eligible counterparties approving changes to the strategy before submitting them to the Board
and occasionally making important tactical decisions on asset allocation.

The Strategy and Risk Department

Department is responsible for the overall day-to-day risk management and compliance functions ensuring the implementation of
common principles and methods for identifying measuring managing and reporting risks.

Page 50
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.1 Framework for financial risk

b) Monetary policy portfolio

Monetary policy is executed mainly through financial instruments such as Malawi government securities loans to commercial banks
and liquidity reserve requirements for commercial banks. The Monetary Policy Committee acts as an advisory body to the Governor
on monetary policy issues that affect the level of interest and foreign exchange rates.

Disclosure
Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an
obligation.

a) Foreign exchange reserves

In order to control the credit risk of the financial instruments used in the foreign reserve’s operations the strategic asset allocation
limits the exposures to credit risk of countries counterparties and issuers by setting concentration limits and minimum long-term
credit ratings established by international rating agencies (Standard & Poor’s Moody’s and Fitch).
Additionally the Investment Guidelines limit the concentration into non-benchmark financial instruments and the portfolio is
diversified into various money market instruments as well as fixed income and floating rate securities (Government Bonds Agencies
including Regional Governments and Supranational Securities) and other liquid highly secure instrument types. Eligible
counterparties are selected based on a number of criteria such as credit rating country of residence the volume of its assets and
capital and its relevant experience.

b) Assets denominated in domestic currency

Assets denominated in domestic currency are mainly related to instruments in the monetary policy portfolio and include loans to
banks investment in debt securities issued by Malawi Government and loans to employees included in other financial assets. As
the primary purpose of the Bank’s actions is the successful implementation of its monetary policy operations the Bank’s credit risk
management for assets denominated in domestic currency is subject to the requirements of policy implementation.

4.2 Credit risk

For the monitoring of credit risk for these assets the Bank uses both external and internally developed analysis and information
which includes also information available to the Bank due to its role as regulator and central bank.

For loans to domestic commercial banks (overnight loans and reverse repo transactions) the Bank mitigates the credit risk through
collateral which consists of debt securities issued by the Malawi Government. The collateral value for each transaction is not lower
than the value of the granted loan plus haircut. If the value of the security placed as collateral drops below a defined level the Bank
requires that the commercial bank places additional collateral based on the revaluation of the securities.

Investment securities denominated in domestic currency consist of Treasury bills issued by the Government with maturity of up to
one year. This portfolio is acquired as the Bank intervenes in the money market through outright transactions intended to manage
the liquidity structure of the banking system with potential impact on the short-term interest rates in the market.

Page 51
 RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
4. Risk Management (Continued)
4.3 Credit quality analysis
The total assets of the Bank that are exposed to credit risk are presented in the table below according to the asset’s classification. The classification according to external credit rating is done based on
average credit ratings published by Standard & Poor’s and Fitch. If there is a difference in rating the lowest rating is used.
Consolidated Credit Limits
31 December 2024
Credit limit as Actual holding as
percentage of percentage of Carrying
Cash balances in Foreign currency Location Rating total portfolio total portfolio Stage 1 Stage 3 Stage 3 Amount
Foreign Banks K’m K’m K’m K’m
Bank of England United Kingdom AA 20.00% 0.06% 110 - - 110
Bank of Canada Canada AA 20.00% 0.00% 4 - - 4
Deutsche Bundesbank Germany AAAU 20.00% 0.11% 198 - - 198
South African Reserve Bank South Africa BA2 20.00% 0.43% 775 - - 775
Federal Reserve Bank United States of America AAA No Limit 53.86% 97 407 - - 97 407
Citibank New York United States of America A+ 20.00% 34.11% 61 693 - - 61 693
The Bank of Tokyo- Mitsubishi UFJ Ltd Japan A+ 20.00% 0.00% - - - -
Standard Chartered Bank London United Kingdom BBB+ 20.00% 0.00% - - - -
Bank Of Mauritius Mauritius BBB- 20.00% 0.31% 561 - - 561
African Export and Import Bank Multilateral Issuer BBB 60.00% 1.01% 1 820 - - 1 820
Crown Agents Bank Limited* United Kingdom BB 3.00% 1.03% 1 858 - - 1 858
Crown Agents Fund manager* United Kingdom - No Limit 2.07% 3 740 - - 3 740
World Bank RAMP United States - No Limit 0.00% - - - -
Mizuho Asia A 20% 0.00% - - - -
Simutomo Asia A 20% 6.67% 12 062 - - 12 062
Domestic Bank
Ecobank Limited Africa - 5% 0% - - - -
FDH Bank Africa - 5% 0.23% 423 - - 423
National Bank of Malawi Africa - 5% 0.11% 200 - - 200
Less Loss allowance (3) - - (3)
Net carrying amount 180 848 - - 180 848

*As percentage of the total portfolio investment with crown agent of 1.03% (2023: 1.05%) includes a diversified portfolio of investments held with Government institutions.
The analysis of official reserves in foreign currency excludes balances for foreign bonds, gold reserves, Afrexim equity investment, vault cash and foreign cash on hand.

Page 52
 RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

The total assets of the Bank that are exposed to credit risk are presented in the table below according to the asset’s classification. The classification according to external credit rating is done
based on average credit ratings published by Standard & Poor’s and Fitch. If there is a difference in rating the lowest rating is used.
Separate Credit Limits
31 December 2024
Credit limit as Actual holding as
percentage of percentage of total Carrying
Cash balances in Foreign currency Location Rating total portfolio portfolio Stage 1 Stage 3 Stage 3 Amount
Foreign Banks K’m K’m K’m K’m
Bank of England United Kingdom AA 20.00% 0.06% 110 - - 110
Bank of Canada Canada AA 20.00% 0.00% 4 - - 4
Deutsche Bundesbank Germany AAAU 20.00% 0.11% 198 - - 198
South African Reserve Bank South Africa BA2 20.00% 0.43% 775 - - 775
Federal Reserve Bank United States of America AAA No Limit 53.99% 97 407 - - 97 407
Citibank New York United States of America A+ 20.00% 34.20% 61 693 - - 61 693
The Bank of Tokyo- Mitsubishi UFJ Ltd Japan A+ 20.00% 0.00% - - - -
Standard Chartered Bank London United Kingdom BBB+ 20.00% 0.00% - - - -
Bank Of Mauritius Mauritius BBB- 20.00% 0.31% 561 - - 561
African Export and Import Bank Multilateral Issuer BBB 60.00% 1.01% 1 820 - - 1 820
Crown Agents Bank Limited* United Kingdom BB 3.00% 1.03% 1 858 - - 1 858
Crown Agents Fund manager* United Kingdom - No Limit 2.07% 3 740 - - 3 740
World Bank RAMP United States - No Limit 0.00% - - - -
Mizuho Asia A 20% 0.00% - - - -
Simutomo Asia A 20% 6.68% 12 062 - - 12 062
Domestic Bank - -
Ecobank Limited Africa - 5% 0% - - - -
FDH Bank Africa - 5% 0% - - - -
National Bank of Malawi Africa - 5% 0.11% 190 - - 190
Less Loss allowance (3) - - (3)
Net carrying amount 180 415 - - 180 415

*As a percentage of the total portfolio investment with crown agent of 1.03% and 2.07 % includes a diversified portfolio of investments held with Government institutions.

Page 53
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
4. Risk Management (Continued)
4.3 Credit quality analysis (Continued)
The total assets of the Bank that are exposed to credit risk are presented in the table below according to the asset’s classification. The classification according to external credit rating is done
based on average credit ratings published by Standard & Poor’s and Fitch. If there is a difference in rating the lowest rating is used.

Consolidated Credit Limits

31 December 2023
Credit limit as Actual holding as
percentage of percentage of Carrying
Cash balances in Foreign currency Location Rating total portfolio total portfolio Stage 1 Stage 3 Stage 3 Amount
Foreign Banks K’m K’m K’m K’m
Bank of England United Kingdom AA 20.00% 0.03% 107 - - 107
Bank of Canada Canada AAA 20.00% 0.00% 4 - - 4
Deutsche Bundesbank Germany AAA 20.00% 31.26% 103 478 - - 103 478
South African Reserve Bank South Africa BB 20.00% 0.08% 921 - - 921
Federal Reserve Bank United States of America AAA No Limit 4.23% 13 977 - - 13 977
Citibank New York United States of America A+ 20.00% 2.21% 7 318 - - 7 318
The Bank of Tokyo- Mitsubishi UFJ Ltd Japan A+ 20.00% 0.00% - - - -
Standard Chartered Bank London United Kingdom BBB+ 20.00% 0.24% 795 - - 795
Bank Of Mauritius Mauritius BBB- 20.00% 0.14% 478 - - 478
African Export and Import Bank Multilateral Issuer BBB 60.00% 16.80% 55 017 - - 55 017
Crown Agents Bank Limited* United Kingdom BB 3.00% 0.52% 1 716 - - 1 716
Crown Agents Fund manager* United Kingdom - No Limit 1.05% 3 475 - - 3 475
World Bank RAMP United States - No Limit 0.00% - - - -
Mizuho Asia A 20% 20.18% 66 669 - - 66 669
Simutomo Asia A 20% 23.22% 76 719 - - 76 719
Domestic Bank - -
Ecobank Limited Africa - 5% 0% - - - -
FDH Bank Africa - 5% 0% 414 - - 414
National Bank of Malawi Africa - 5% 0% 1 - - 1
Less Loss allowance (51) - - (51)
Net carrying amount 331 038 - - 331 038

Page 54
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Separate Credit Limits

31 December 2023
Credit limit as Actual holding as
percentage of percentage of Carrying
Cash balances in Foreign currency Location Rating total portfolio total portfolio Stage 1 Stage 3 Stage 3 Amount
Foreign Banks K’m K’m K’m K’m
Bank of England United Kingdom AA 20.00% 0.03% 107 - - 107
Bank of Canada Canada AAA 20.00% 0.00% 4 - - 4
Deutsche Bundesbank Germany AAA 20.00% 31.26% 103 478 - - 103 478
South African Reserve Bank South Africa BB 20.00% 0.08% 921 - - 921
Federal Reserve Bank United States of America AAA No Limit 4.23% 13 977 - - 13 977
Citibank New York United States of America A+ 20.00% 2.21% 7 318 - - 7 318
The Bank of Tokyo- Mitsubishi UFJ Ltd Japan A+ 20.00% 0.00% - - - -
Standard Chartered Bank London United Kingdom BBB+ 20.00% 0.24% 795 - - 795
Bank Of Mauritius Mauritius BBB- 20.00% 0.14% 478 - - 478
African Export and Import Bank Multilateral Issuer BBB 60.00% 16.80% 55 017 - - 55 017
Crown Agents Bank Limited* United Kingdom BB 3.00% 0.52% 1 716 - - 1 716
Crown Agents Fund manager* United Kingdom - No Limit 1.05% 3 475 - - 3 475
World Bank RAMP United States - No Limit 0.00% - - - -
Mizuho United Kingdom A 20.00% 20.18% 66 669 - - 66 669
Simutomo United States A 20.00% 23.22% 76 719 - - 76 719
Domestic Bank - -
Ecobank Limited Africa - 5% 0% - - - -
Less Loss allowance (51) - - (51)
Net carrying amount 330 623 - - 330 623

Page 55
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Consolidated
Carrying
As at 31 December 2024 Stage 1 Stage 2 Stage 3 Amount

Cash and cash Equivalents

Gross carrying amount K’m K’m K’m K’m
Foreign 182 034 - - 182 034
Domestic 77 910 - - 77 910
Less loss allowance (3) - - (3)
Net carrying amount 259 941 - - 259 941
Gross carrying amount - - - -
Less loss allowance - - - -
Net carrying amount - - - -
Balance with IMF
Gross carrying amount 317 923 - - 317 923
Less loss allowance - - - -
Net carrying amount 317 923 - - 317 923
Foreign Bonds - -
Net fair value 10 528 - - 10 528
Less loss allowance - - - -
Net carrying amount 10 528 - - 10 528
Equity Investments
Gross carrying amount
Foreign 14 274 - - 14 274
Domestic 4 707 - - 4 707
Less loss allowance - - - -
Net carrying amount 18 981 - - 18 981
Domestic government exposure
Advance to Malawi Government
Gross carrying amount 186 440 - - 186 440
Less loss allowance - - - -
Net carrying amount 186 440 - - 186 440
Government Debt Securities
Treasury Notes 1 966 861 - - 1 966 861
Treasury Bills - - - -
Promissory Note 664 934 - - 664 934
2 631 795 - - 2 631 795
Less loss allowance - - - -
Net carrying amount 2 631 795 - - 2 631 795
Afrexim receivable
Gross carrying amount 559 124 - 6 530 565 654
Less loss allowance (460) - (6 530) (6 990)
Net carrying amount 558 664 - - 558 664

Page 56
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Consolidated (Continued)

Carrying
31 December 2024 Stage 1 Stage 2 Stage 3
Amount
K’m K’m K’m K’m
Repurchase Agreements
Gross carrying amount 223 259 - - 223 259
Less loss allowance - - - -
Net carrying amount 223 259 - - 223 259

Amount due from related party institutions

Gross carrying amount 491 798 - - 491 798
Less loss allowance - - - -

Net carrying amount 491 798 - - 491 798

Other financial assets (loans to customers and staff)

Loans and advances to customers 10 311 - 36 881 47 192
Receivables (Other assets) 2 635 - - 2 635
Staff loans (Other assets) 37 232 - - 37 232
Less loss allowance (8 371) - - (8 371)

Net carrying amount 41 807 - 36 881 78 688

Page 57
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)
Separate
Carrying
As at 31 December 2024 Stage 1 Stage 2 Stage 3 Amount

Cash and cash Equivalents

Gross carrying amount K’m K’m K’m K’m
Foreign 181 601 - - 181 601
Domestic 30 020 - - 30 020
Less loss allowance (3) - - (3)
Net carrying amount 211 618 - - 211 618
Balances with Foreign Banks
Gross carrying amount - - - -
Less loss allowance - - - -
Net carrying amount - - - -
Balance with IMF
Gross carrying amount 317 923 - - 317 923
Less loss allowance - - - -
Net carrying amount 317 923 - - 317 923
Foreign Bonds - -
Net fair value 10 528 - - 10 528
Less loss allowance - - - -
Net carrying amount 10 528 - - 10 528
Equity Investments
Gross carrying amount
Foreign 12 615 - - 12 615
Domestic 6 - - 6
Less loss allowance - - - -
Net carrying amount 12 621 - - 12 621
Domestic government exposure
Advance to Malawi Government
Gross carrying amount 186 440 - - 186 440
Less loss allowance - - - -
Net carrying amount 186 440 - - 186 440
Government Debt Securities
Treasury Notes 1 966 861 - - 1 966 861
Treasury Bills - - - -
Promissory Note 660 904 - - 660 904
2 627 765 - - 2 627 765
Less loss allowance - - - -
Net carrying amount 2 627 765 - - 2 627 765
Afrexim receivable
Gross carrying amount 559 124 - 6 530 565 654
Less loss allowance (460) - (6 530) (6 990)
Net carrying amount 558 664 - - 558 664

Page 58
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Separate (Continued)

Carrying
31 December 2024 Stage 1 Stage 2 Stage 3
Amount
K’m K’m K’m K’m
Repurchase Agreements
Gross carrying amount 223 259 - - 223 259
Less loss allowance - - - -
Net carrying amount 223 259 - - 223 259

Amount due from related party institutions

Gross carrying amount 500 366 - - 500 366
Less loss allowance - - - -

Net carrying amount 500 366 - - 500 366

Other financial assets (loans to customers and staff)

Receivables (Other assets) 2 635 - - 2 635

Staff loans (Other assets) 36 920 - - 36 920
Less loss allowance (226) - - (226)

Net carrying amount 39 329 - - 39 329

Page 59
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Consolidated
Carrying
As at 31 December 2023 Stage 1 Stage 2 Stage 3 Amount

Cash and cash Equivalents

Gross carrying amount K’m K’m K’m K’m
Foreign 334 319 - - 334 319
Domestic 98 277 - - 98 277
Less loss allowance (51) - - (51)
Net carrying amount 432 545 - - 432 545
Balances with Foreign Banks
Gross carrying amount - - - -
Less loss allowance - - - -
Net carrying amount - - - -
Balance with IMF
Gross carrying amount 194 852 - - 194 852
Less loss allowance - - - -
Net carrying amount 194 852 - - 194 852
Foreign Bonds - -
Net fair value 10 085 - - 10 085
Less loss allowance - - - -
Net carrying amount 10 085 - - 10 085
Equity Investments
Gross carrying amount - -
Foreign 17 534 - - 17 534
Domestic 107 - - 107
Less loss allowance - - - -
Net carrying amount 17 641 - - 17 641
Domestic government exposure
Advance to Malawi Government - -
Gross carrying amount 115 419 - - 115 419
Less loss allowance - - - -
Net carrying amount 115 419 - - 115 419
Net fair value Government Debt Securities
Treasury Notes 1 615 173 - - 1 615 173
Treasury Bills 29 534 - - 29 534
Promissory Note 793 959 - - 793 959
2 438 666 - - 2 438 666
Less loss allowance - - - -
Net carrying amount 2 438 666 - - 2 438 666
Amount due from financial institutions
Gross carrying amount
Afrexim Bank receivable 283 821 - 6 530 290 351
Ecobank Limited receivable 22 703 - - 22 703
Less loss allowance (210) - (6 530) (6 740)
Net carrying amount 306 314 - - 306 314
Page 60
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Consolidated (Continued)

Carrying
31 December 2023 Stage 1 Stage 2 Stage 3
Amount
K’m K’m K’m K’m

Amount due from related party institutions

Gross carrying amount 423 983 - - 423 983
Less loss allowance - - - -
Net carrying amount 423 983 - - 423 983

Other financial assets (loans to customers and staff)

Loans and advances to customers 14 429 1 095 28 148 43 672
Receivables (Other assets) 2 534 - - 2 534
Staff loans (Other assets) 15 019 - - 15 019
Net carrying amount (1 982) - (6 052) (8 034)
Net carrying amount 30 000 1 095 22 096 53 191

Page 61
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Separate
Carrying
As at 31 December 2023 Stage 1 Stage 2 Stage 3 Amount

Cash and cash Equivalents

Gross carrying amount K’m K’m K’m K’m
Foreign 333 904 - - 333 904
Domestic 71 947 - - 71 947

Less loss allowance (51) - - (51)

Net carrying amount 405 800 - - 405 800
Balances with Foreign Banks
Gross carrying amount - - - -
Less loss allowance - - - -

Net carrying amount - - - -

Balance with IMF
Gross carrying amount 194 852 - - 194 852
Less loss allowance - - - -

Net carrying amount 194 852 - - 194 852

Foreign Bonds - -
Net fair value 10 085 - - 10 085
Less loss allowance - - - -
Net carrying amount 10 085 - - 10 085
Equity Investments
Gross carrying amount
Foreign 12 160 - - 12 160
Domestic 107 - - 107
Less loss allowance - - - -

Net carrying amount 12 267 - - 12 267

Domestic government exposure
Advance to Malawi Government - -
Gross carrying amount 115 419 - - 115 419
Less loss allowance - - - -

Net carrying amount 115 419 - - 115 419

Net fair value for Government Debt Securities
Treasury Notes 1 615 173 - - 1 615 173
Treasury Bills 29 534 - - 29 534
Promissory Note 775 260 - - 775 260
2 419 967 - - 2 419 967
Less loss allowance - - - -

Net carrying amount 2 419 967 - - 2 419 967

Amount due from financial institutions
Gross carrying amount
Afrexim Receivable 283 821 - 6 530 290 351
Ecobank Receivable 22 703 - - 22 703
Less loss allowance (210) - (6 530) (6 740)

Net carrying amount 306 314 - - 306 314

Page 62
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Consolidated (Continued)

Carrying
31 December 2023 Stage 1 Stage 2 Stage 3
Amount
K’m K’m K’m K’m

Amount due from related party institutions

Gross carrying amount 423 983 - - 423 983
Less loss allowance - - - -
Net carrying amount 423 983 - - 423 983

Other financial assets (loans to customers and staff)

Receivables (Other assets) 2 534 - - 2 534
Staff loans (Other assets) 14 735 - - 14 735
Less loss allowance (6) - - (6)

Net carrying amount 17 263 - - 17 263

Page 63
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.3 Credit quality analysis (Continued)

Loss allowance reconciliation

The following information shows reconciliation from the opening balance to the closing balance of the loss allowance by class of financial instruments

Consolidated
2024 2023
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Lifetime ECL
Lifetime ECL not Lifetime ECL Lifetime ECL
12 month ECL 12 month ECL not credit
credit impaired credit impaired credit impaired
impaired
K'm K'm K'm K'm K'm K'm K'm K'm
Loss allowance
Opening balance as at 1 January 2 243 - 12 582 14 825 8 592 3 172 14 295 26 059
Total net P/L charge during the year (1 553) - 1 760 207 (3 353) - 693 (2 660)
Financial assets derecognized - - - - (2 996) (3 172) (2 406) (8 574)
Balance as at 31 December 690 - 14 342 15 032 2 243 - 12 582 14 825
2024 2023
Separate Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Lifetime ECL
Lifetime ECL not Lifetime ECL Lifetime ECL
12 month ECL 12 month ECL not credit
credit impaired credit impaired credit impaired
impaired
K'm K'm K'm K'm K'm K'm K'm K'm
Loss allowance
Opening balance as at 1 January 267 - 6 530 6 797 3 655 - 6 530 10 185
Total net P/L charge during the year 421 - - 421 (3 387) - - (3 387)
Financial assets derecognized - - - - (1) - - (1)
Balance as at 31 December 688 - 6 530 7 218 267 - 6 530 6 797

Page 64
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE NOTES TO THE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4 Risk Management (Continued)

4.4 Concentration Risk

a) Geographical Concentration (Continued)

The Group’s geographical concentration risk of its financial assets and liabilities were as follows as at 31 December 2024: -

United
Consolidated States of EU
America Countries Europe Asia Malawi Africa Total
ASSETS K’m K’m K’m K’m K’m K’m K’m
Cash and cash equivalents
Foreign 159 251 198 5 391 12 229 1 805 3 157 182 031
Domestic - - - - 77 910 - 77 910
Repurchase Agreements - - - - 223 259 - 223 259
Balances with foreign banks - - - - - - -
Balances with International Monetary Fund 317 923 - - - - - 317 923
Equity Investments
Foreign - 281 - - - 13 993 14 274
Domestic - - - - 4 707 - 4 707
Foreign bonds-treasury notes 10 528 - - - - - 10 528
Investment in associate - - - - 1 067 - 1 067
Advances to Malawi Government - - - - 186 440 - 186 440
Loans and advances to customers - - - - 39 047 - 39 047
Amount due from Financial Institutions - - - - - 558 664 558 664
Amount due from related party institutions - - - - 491 798 - 491 798
Other assets - - - - 148 029 - 148 029
Investments in Malawi Government:
- treasury notes - - - - 1 966 861 - 1 966 861
- treasury bills - - - - - - -
- promissory note - - - - 664 934 - 664 934

Total 487 702 479 5 391 12 229 3 805 857 575 814 4 887 472

LIABILITIES

Government deposits
Foreign - - - - 327 991 - 327 991
Domestic - - - 151 025 - 151 025
Liabilities to Financial Institutions - - - - - 1 497 421 1 497 421
Derivative Liabilities - - - - 1 140 - 1 140
Allocation of special drawing rights 152 397 - - - - - 152 397
Liabilities to International Monetary Fund 794 810 - - - - - 794 810
Notes and coins in circulation - - - - 851 149 - 851 149
Bankers' deposits - - - - 626 724 - 626 724
Other liabilities - - - - 373 982 - 373 982
Open market operations (OMO)
- - - - 113 348 - 113 348
instruments
Total 947 207 - - - 2 445 359 1 497 421 4 889 987

Page 65
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE NOTES TO THE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)

a) Geographical Concentration (Continued)

The Group’s geographical concentration risk of its financial assets and liabilities were as follows as at 31 December 2024: -

United
Separate States of EU
America Countries Europe Asia Malawi Africa Total
ASSETS K’m K’m K’m K’m K’m K’m K’m
Cash and cash equivalents
Foreign 159 251 198 5 391 12 229 1 372 3 157 181 598
Domestic - - - - 30 020 - 30 020
Repurchase Agreements - - - - 223 259 - 223 259
Balances with foreign banks - - - - - - -
Balances with International Monetary Fund 317 923 - - - - - 317 923
Equity Investments
Foreign - 281 - - - 12 334 12 615
Domestic - - - - 6 - 6
Foreign bonds-treasury notes 10 528 - - - - - 10 528
Advances to Malawi Government - - - - 186 440 - 186 440
Amount due from Financial Institutions - - - - - 558 664 558 664
Amount due from related party institutions - - - - 500 366 - 500 366
Other assets - - - - 146 134 - 146 134
Investments in Malawi Government:
- treasury notes - - - - 1 966 861 - 1 966 861
- treasury bills - - - - - - -
- promissory note - - - - 660 904 - 660 904

Total 487 702 479 5 391 12 229 3 715 362 574 155 4 795 318

LIABILITIES

Government deposits
Foreign - - - - 327 991 - 327 991
Domestic - - - 151 025 - 151 025
Liabilities to Financial Institutions - - - - - 1 468 796 1 468 796
Derivative Liabilities - - - - 1 140 - 1 140
Allocation of special drawing rights 152 397 - - - - - 152 397
Liabilities to International Monetary Fund 794 810 - - - - - 794 810
Notes and coins in circulation - - - - 851 149 - 851 149
Bankers' deposits - - - - 626 724 - 626 724
Other liabilities - - - - 382 897 - 382 897
Open market operations (OMO)
- - - - 113 348 - 113 348
instruments
Total 947 207 - - - 2 454 274 1 468 796 4 870 277

Page 66
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE NOTES TO THE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)

a) Geographical Concentration (Continued)
The Bank’s geographical concentration risk of its financial assets and liabilities were as follows as at 31 December 2023:-
United
Consolidated States of EU
America Countries Europe Asia Malawi Africa Total
ASSETS K’m K’m K’m K’m K’m K’m K’m
Cash and cash equivalents
Foreign 21 295 103 478 6 046 143 388 3 645 56 416 334 268
Domestic - - - - 98 277 - 98 277
Balances with foreign banks - - - - - - -
Balances with International Monetary Fund 194 859 - - - - - 194 859
Equity Investments
Foreign - 162 - - - 17 372 17 534
Domestic - - - - 107 - 107
Foreign bonds-treasury notes 10 085 - - - - - 10 085
Advances to Malawi Government - - - - 115 419 - 115 419
Loans and advances to customers - - - - 35 644 - 35 644
Afrexim Bank receivable - - - - 22 703 283 611 306 314
Amount due from related party institutions - - - - 423 983 - 423 983
Other assets - - - - 105 405 - 105 405
Investments in Malawi Government:
- treasury notes - - - - 1 615 173 - 1 615 173
- treasury bills - - - - 29 534 - 29 534
- promissory note - - - - 793 959 - 793 959

Total 226 239 103 640 6 046 143 388 3 243 849 357 399 4 080 561

LIABILITIES

Government deposits
Foreign - - - - 546 476 - 546 476
Domestic - - - 70 128 - 70 128
Liabilities to Financial Institutions - - - - - 1 316 695 1 316 695
Derivative Liabilities - - - - 23 798 - 23 798
Allocation of special drawing rights 152 428 - - - - - 152 428
Liabilities to International Monetary Fund 721 719 - - - - - 721 719
Notes and coins in circulation - - - - 559 944 - 559 944
Bankers' deposits - - - - 267 936 - 267 936
Other liabilities - - - - 176 745 - 176 745
Open market operations (OMO)
- - - - 287 129 - 287 129
instruments
Total 874 147 - - - 1 932 156 1 316 695 4 122 998

Page 67
RESERVE BANK OF MALAWI
CONSOLIDATED AND SEPARATE NOTES TO THE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)
a) Geographical Concentration (Continued)
The Bank’s geographical concentration risk of its financial assets and liabilities were as follows as at 31 December 2023:-
United
Separate States of EU
America Countries Europe Asia Malawi Africa Total
ASSETS K’m K’m K’m K’m K’m K’m K’m
Cash and cash equivalents
Foreign 21 295 103 478 6 046 143 388 3 230 56 416 333 853
Domestic - - - - 71 947 - 71 947
Balances with foreign banks - - - - - - -
Balances with International Monetary Fund 194 859 - - - - - 194 859
Equity Investments
Foreign - 162 - - - 11 998 12 160
Domestic-Nitel - - - - 107 - 107
Foreign bonds-treasury notes 10 085 - - - - - 10 085
Advances to Malawi Government - - - - 115 419 - 115 419
Amount due from Financial Institutions
- - - - 22 703 283 611 306 314
receivable
Amount due from related party institutions - - - - 432 551 - 432 551
Other assets - - - - 102 823 - 102 823
Investments in Malawi Government:
- treasury notes - - - - 1 615 173 - 1 615 173
- treasury bills - - - - 29 534 - 29 534
- promissory note - - - - 775 260 - 775 260

Total 226 239 103 640 6 046 143 388 3 168 747 352 025 4 000 085

LIABILITIES

Government deposits
Foreign - - - - 546 476 - 546 476
Domestic - - - 70 128 - 70 128
Liabilities to Financial Institutions - - - - - 1 290 051 1 290 051
Derivative Liabilities - - - - 23 798 - 23 798
Allocation of special drawing rights 152 428 - - - - - 152 428
Liabilities to International Monetary Fund 721 719 - - - - - 721 719
Notes and coins in circulation - - - - 559 944 - 559 944
Bankers' deposits - - - - 267 936 - 267 936
Other liabilities - - - - 179 950 - 179 950
Open market operations (OMO)
- - - - 287 129 - 287 129
instruments
Total 874 147 - - - 1 935 361 1 290 051 4 099 559

Page 68
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)

b) Concentration of funding
The Group’s counterparty/sector concentration funding of its financial liabilities was as follows:

31 December 2024

Consolidated
Foreign
Governments &
Malawi Public & local financial
Government institutions institutions Total
Foreign Currency K’m K’m K’m K’m
Financial liabilities
Government Deposits 327 991 - - 327 991
Liabilities due to Financial Institutions* - - 1 497 421 1 497 421
Derivatives Liabilities - 1 140 - 1 140
Allocation of Special Drawing rights - - 152 397 152 397
Liabilities to IMF - - 794 810 794 810
Total 327 991 1 140 2 444 628 2 773 759

Local Currency
Financial liabilities
Government deposits 151 025 - - 151 025
Bankers deposits - 626 724 - 626 724
OMO Instruments - 113 348 - 113 348
Total 151 025 740 072 - 891 097

Other liabilities
Notes and coins in circulation - 851 149 - 851 149
Other liabilities 344 080 29 902 - 373 982
Total 344 080 881 051 - 1 225 131
Total liabilities 823 096 1 622 263 2 444 628 4 889 987

*Included in the liabilities to financial institutions are local currency payments held by the Bank on Baobab securities swap
arrangement totaling K39 691 million. The local currency is set to be payable in five years from the inception of the deal. The
categorization of this liability under foreign liabilities is due to its non-resident nature (see note 3.5.2 (d)).

Page 69
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)

b) Concentration of funding (Continued)

31 December 2024

Separate

Foreign
Governments &
Malawi Public & local financial
Government institutions institutions Total
Foreign Currency K’m K’m K’m K’m
Financial liabilities
Government Deposits 327 991 - - 327 991
Liabilities due to Financial Institutions* - - 1 468 796 1 468 796
Derivatives Liabilities - 1 140 - 1 140
Allocation of Special Drawing rights - - 152 397 152 397
Liabilities to IMF - - 794 810 794 810
Total 327 991 1 140 2 416 003 2 745 134

Local Currency
Financial liabilities
Government deposits 151 025 - - 151 025
Bankers deposits - 626 724 - 626 724
OMO Instruments - 113 348 - 113 348
Total 151 025 740 072 - 891 097

Other liabilities
Notes and coins in circulation - 851 149 - 851 149
Other liabilities 344 080 38 817 - 382 897

Total 344 080 889 966 - 1 234 046

Total liabilities 823 096 1 631 178 2 416 003 4 870 277

*Included in the liabilities to financial institutions are local currency payments held by the Bank on Baobab securities swap
arrangement totaling K39 691 million. The local currency is set to be payable in five years from the inception of the deal. The
categorization of this liability under foreign liabilities is due to its non-resident nature (see note 3.5.2 (d)).

Page 70
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)

b) Concentration of funding (Continued)

The Group’s counterparty/sector concentration funding of its financial liabilities was as follows:

31 December 2023

Consolidated
Foreign
Governments &
Malawi Public & local financial
Government institutions institutions Total
Foreign Currency K’m K’m K’m K’m
Financial liabilities
Government Deposits 546 476 - - 546 476
Liabilities due to Financial Institutions* - - 1 316 695 1 316 695
Derivatives Liabilities - 23 798 - 23 798
Allocation of Special Drawing rights - - 152 428 152 428
Liabilities to IMF - - 721 719 721 719
Total 546 476 23 798 2 190 842 2 761 116

Local Currency
Financial liabilities
Government deposits 70 128 - - 70 128
Bankers deposits - 267 936 - 267 936
OMO Instruments - 287 129 - 287 129
Total 70 128 555 065 - 625 193

Other liabilities
Notes and coins in circulation - 559 944 - 559 944
Other liabilities 154 242 22 503 - 176 745
Total 154 242 582 447 - 736 689

Total liabilities 770 846 1 161 310 2 190 842 4 122 998

*Included in the liabilities to financial institutions are local currency payments held by the Bank on Baobab securities swap
arrangement totaling K39 691 million. The local currency is set to be payable in five years from the inception of the deal. The
categorization of this liability under foreign liabilities is due to its non-resident nature (see note 3.5.2 (d)).

Page 71
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Concentration Risk (Continued)

b) Concentration of funding (Continued)

31 December 2023

Separate
Foreign
Governments &
Malawi Public & local financial
Government institutions institutions Total
Foreign Currency K’m K’m K’m K’m
Financial liabilities
Government Deposits 546 476 - - 546 476
Liabilities due to Financial Institutions* - - 1 290 051 1 290 051
Derivatives Liabilities - 23 798 - 23 798
Allocation of Special Drawing rights - - 152 428 152 428
Liabilities to IMF - - 721 719 721 719
Total 546 476 23 798 2 164 198 2 734 472

Local Currency
Financial liabilities
Government deposits 70 128 - - 70 128
Bankers deposits - 267 936 - 267 936
OMO Instruments - 287 129 - 287 129
Total 70 128 555 065 - 625 193

Other liabilities
Notes and coins in circulation - 559 944 - 559 944
Other liabilities 154 553 25 397 - 179 950
Total 154 553 585 341 - 739 894

Total liabilities 771 157 1 164 204 2 164 198 4 099 559

*Included in the liabilities to financial institutions are local currency payments held by the Bank on Baobab securities swap
arrangement totaling K39 691 million. The local currency is set to be payable in five years from the inception of the deal. The
categorization of this liability under foreign liabilities is due to its non-resident nature (see note 3.5.2 (d)).

4.5 Market Risk

Disclosure
Market risk is the risk that the value of financial instruments will fluctuate due to changes in market variables such as interest rates and
foreign exchanges rates. Market risks comprise currency risk interest rate risk and other price risks. Market risk arises from open
positions in interest rate currency and equity financial instruments which are exposed to general and specific market movements and
changes in the level of volatility of market prices.

a) Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign currency exchange rates.
Subject to the currency structure of assets the value of the Bank’s assets is exposed to the risk of changes in exchange rates of its main
foreign currencies. Within the overall exposure and to a limited extent foreign currency risk can be partially mitigated by holding assets
across a diversified portfolio of currencies.

Page 72
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4 Risk Management (Continued)

4.5 Market Risk (Continued)

a) Currency risk
Currency risk is the risk of loss resulting from changes in exchange rates. The Bank has assets and liabilities in various currencies;
however the most significant exposure arises from assets denominated in the XDR, USD, GBP and EURO currencies. The following
table demonstrates sensitivity to reasonably possible changes in the currencies in which the Group transacts with all other variables
held constant on the Group’s profit earned.
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m

Effect on profit of a +5% change in exchange rates (107 573) (106 246) (63 050) (62 003)

Effect on profit of a -5% change in exchange rates 107 573 106 246 63 050 62 003

Effect on equity of a +5% change in exchange rates (107 573) (106 246) (63 050) (62 003)

Effect on equity of a -5% change in exchange rates 107 573 106 246 63 050 62 003

Currency risk relates to the exposure of the Group’s foreign exchange position to adverse movements in foreign exchange rates. These
movements may impact on the Group’s future cash flows. The Group manages this risk by adhering to currency exposure limits as
stipulated in Foreign Exchange Reserves Management Policy.

Consolidated
Currency composition as at
Figures in Millions Malawi Kwacha equivalents
31 December 2024
Currency USD CAD GBP JPY EUR ZAR XDR Other Total
Financial liabilities
Government deposits 288 275 - - - 39 716 - - - 327 991
Allocation of special drawing
- - - - - - 152 397 - 152 397
rights
Liabilities to Financial
1 457 730 - - - - - - - 1 457 730
Institutions*
Derivative liability 1 140 - - - - - - - 1 140
Liabilities to International
- - - - - - 794 810 - 794 810
Monetary Fund
Total 1 747 145 - - - 39 716 - 947 207 - 2 734 068

Assets
Cash and cash equivalents
- Cash at hand 1 094 - - - 28 8 - 53 1 183
- Foreign nostros 162 251 4 1 651 47 198 775 - 123 165 049
- IP-Foreign Time
12 062 - - - - - - - 12 062
deposits
- Funds under foreign
3 740 - - - - - - - 3 740
management
Balances with foreign banks
- IP-Time deposits - - - - - - - - -
Balances with IMF - - - - - - 317 923 - 317 923
Gold reserve account 57 848 - - - - - - - 57 848
Foreign Bonds-US
10 528 - - - - - - - 10 528
Government Treasury Notes
Equity Investments 13 993 - - - 28 - - - 14 274
Total 261 516 4 1 651 47 500 783 317 923 176 582 607

*Liabilities to financial institutions exclude the liability in local currency to Baobab securities limited totaling K39 691 million, which the
Bank holds for the $45 million-kwacha swap agreement and the local currency is set to be settled in five years from the inception of the deal.
The categorization of this liability under foreign liabilities is due to its non-resident nature and there is no currency risk exposure on the Group
as the amount will be repaid in local currency.
Page 73
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Market Risk (Continued)

Separate
Currency composition as at
Figures in Millions Malawi Kwacha equivalents
31 December 2024
Currency USD CAD GBP JPY EUR ZAR XDR Other Total
Financial liabilities
Government deposits 288 275 - - - 39 716 - - - 327 991
Allocation of special drawing
- - - - - - 152 397 - 152 397
rights
Liabilities to Financial
1 468 796 - - - - - - - 1 468 796
Institutions*
Derivative liability 1 140 - - - - - - - 1 140
Liabilities to International
- - - - - - 794 810 - 794 810
Monetary Fund
Total 1 758 211 - - - 39 716 - 947 207 - 2 745 134

Assets
Cash and cash equivalents
- Cash at hand 1 094 - - - 28 8 - 53 1 183
- Foreign nostros 161 818 4 1 651 47 198 775 - 123 164 616
- IP-Foreign Time
12 062 - - - - - - - 12 062
deposits
- Funds under foreign
3 740 - - - - - - - 3 740
management
Balances with foreign banks
- IP-Time deposits - - - - - - - - -
Balances with IMF - - - - - - 317 923 - 317 923
Gold reserve account 57 848 - - - - - - - 57 848
Foreign Bonds-US
10 528 - - - - - - - 10 528
Government Treasury Notes
Equity Investments 12 334 - - - 281 - - - 12 615
Total 259 424 4 1 651 47 507 783 317 923 176 580 515

*Liabilities to financial institutions exclude the liability in local currency to Baobab securities limited totaling K39 691 million, which the
Bank holds for the $45 million-kwacha swap agreement and the local currency is set to be settled in five years from the inception of the deal.
The categorization of this liability under foreign liabilities is due to its non-resident nature and there is no currency risk exposure on the Group
as the amount will be repaid in local currency.

Page 74
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.4 Market Risk (Continued)

a) Currency risk (Continued)

Consolidated
Currency composition as at
Figures in Millions Malawi Kwacha equivalents
31 December 2023
Currency USD CAD GBP JPY EUR ZAR XDR Other Total
Financial liabilities
Government deposits 438 440 - 1 751 - 106 285 - - - 546 476
Allocation of special drawing
- - - - - - 152 428 - 152 428
rights
Liabilities to Financial
1 277 004 - - - - - - - 1 277 004
Institutions*
Derivative liability 23 798 - - - - - - - 23 798
Liabilities to International
- - - - - - 721 719 - 721 719
Monetary Fund
Total 1 739 242 - 1 751 - 106 285 - 874 147 - 2 721 425

Assets
Cash and cash equivalents
- Cash at hand 3 163 - - - 27 12 - 28 3 230
- Foreign nostros 23 126 4 1 641 29 103 478 280 - 128 558
- IP-Local Time
199 005 - - - - - - - 199 005
deposits
- Funds under foreign
3 475 - - - - - - - 3 475
management
Balances with foreign banks
- IP-Time deposits - - - - - - - - -
Balances with IMF - - - - - - 194 859 - 194 859
Gold reserve account 44 139 - - - - - - - 44 139
Foreign Bonds-US
10 085 - - - - - - - 10 085
Government Treasury Notes
Equity Investments 17 372 - - - 162 - - - 17 534
Total 300 365 4 1 641 29 103 667 292 194 859 28 600 885

*Liabilities to financial institutions exclude the liability in local currency to Baobab securities limited totaling K39 691 million, which the
Bank holds for the $45 million-kwacha swap agreement and the local currency is set to be settled in five years from the inception of the deal.
The categorization of this liability under foreign liabilities is due to its non-resident nature and there is no currency risk exposure on the Group
as the amount will be repaid in local currency.

Page 75
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

5. Risk Management (Continued)

4.4 Market Risk (Continued)

a) Currency risk (Continued)

Separate
Currency composition as at
Figures in Millions Malawi Kwacha equivalents
31 December 2023
Currency USD CAD GBP JPY EUR ZAR XDR Other Total
Financial liabilities
Government deposits 438 440 - 1 751 - 106 285 - - - 546 476
Allocation of special drawing
- - - - - - 152 428 - 152 428
rights
Liabilities to Financial
1 250 360 - - - - - - - 1 250 360
Institutions*
Derivative liability 23 798 - - - - - - - 23 798
Liabilities to International
- - - - - - 721 719 - 721 719
Monetary Fund
Total 1 712 598 - 1 751 - 106 285 - 874 147 - 2 694 781

Assets
Cash and cash equivalents
- Cash at hand 3 163 - - - 27 12 - 28 3 230
- Foreign nostros 22 711 4 1 641 29 103 478 280 - 128 143
- IP-Local Time
199 005 - - - - - - - 199 005
deposits
- Funds under foreign
3 475 - - - - - - - 3 475
management
Balances with foreign banks
- IP-Time deposits - - - - - - - - -
Balances with IMF - - - - - - 194 859 - 194 859
Gold reserve account 44 139 - - - - - - - 44 139
Foreign Bonds-US
10 085 - - - - - - - 10 085
Government Treasury Notes
Equity Investments 11 998 - - - 162 - - - 12 160
Total 294 576 4 1 641 29 103 667 292 194 859 28 595 096

*Liabilities to financial institutions exclude the liability in local currency to Baobab securities limited totaling K39 691 million, which the
Bank holds for the $45 million-kwacha swap agreement and the local currency is set to be settled in five years from the inception of the deal.
The categorization of this liability under foreign liabilities is due to its non-resident nature and there is no currency risk exposure on the Group
as the amount will be repaid in local currency.

Page 76
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4 Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk

Interest rate risk is the risk of loss resulting from changes in interest rates including changes in the shape of yield curves. The Group
bases its analysis on the interest sensitivity gap. The sensitivity computations assume that financial assets maintain a constant rate of
return from one year to the next. The effect on profit due to reasonable possible changes in interest rates with all other variables held
constant is as follows:
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Effect on profit of a +5% change in interest rates 108 014 105 304 72 787 70 494
Effect on profit of a -5% change in interest rates (108 014) (105 304) (72 787) (70 494)
Effect on equity of a +5% change in interest rates 108 014 105 304 72 787 70 494
Effect on equity of a-5% change in interest rates (108 014) (105 304) (72 787) (70 494)

Interest rate risk is the risk of a change in the value of an investment as a result of a change in the absolute level of interest rates.

The Group manages this risk in its foreign reserve investments by prescribing a benchmark index that has an acceptable level of risk
specifying target duration for each sub portfolio. Currently the Group uses a composite of Merrill Lynch 1-3 Year US Government
Bond Index (80%) and the Merrill Lynch 3 month US Dollar Deposit Offer Rate (20%) as its benchmark for foreign reserves being
managed by external fund managers. Further a risk budget is allocated to external fund managers expressed in terms of acceptable
level of underperformance versus the benchmark.

The value of the external funds being managed by the external fund managers stood at K3 740 million as at 31 December 2024
(2023: K3 475 million).

For domestic investments in securities such as treasury bills the Group does not actively manage the related interest rate risk because
these investments are largely for monetary policy purposes and the overriding concern is the monetary policy consideration and not
the interest rate risk.

The Group uses the existing contractual interest rates and maturity profiles for the various assets and liabilities held at year-end
in preparing the interest rate risk sensitivity gap analysis. The table on the following page summarises the carrying amount of
interest rate sensitive assets and liabilities and the notional amounts of financial instruments in the period in which they next
reprice to market rates or mature. The sum of these reflects the interest rate sensitivity gap.

Page 77
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Consolidated
Interest rate sensitivity gap analysis 31 December Up to 1–3 4– 12 Over 12 Non-rate
Total
2024 1 month months months months sensitive
K’m K’m K’m K’m K’m K’m
Financial and other assets
Balances with International Monetary Fund - - - 317 923 - 317 923
Investments in Malawi Government:
Treasury notes 18 784 86 500 583 067 1 278 510 - 1 966 861
Treasury bills - - - - - -
Promissory note - - - 664 934 - 664 934
Foreign Bonds-US Government Treasury Notes - - 3 487 7 041 - 10 528
Amount due from Financial Institutions 309 319 30 335 91 005 128 005 - 558 664
Liquid assets:
Cash and cash equivalents 229 926 30 015 - - - 259 941
Advances to Malawi Government 186 440 - - - - 186 440
Repurchase Agreements 43 852 58 893 120 514 - - 223 259
Amount due from related party Institutions 491 798 - - - - 491 798
Loan and advances to customers - - 39 047 - - 39 047

Total interest-bearing assets 1 280 119 205 743 837 120 2 396 413 - 4 719 395

Non-interest-bearing assets - - - - 433 390 433 390

Total financial and other assets 1 280 119 205 743 837 120 2 396 413 433 390 5 152 785

Page 78
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Consolidated
Over 12 Non-rate
Up to 1 month 1 – 3 months 1 – 4 months Total
months sensitive
31 December 2024
K’m K’m K’m K’m K’m K’m
Financial liabilities
Allocation of Special Drawing Rights - - - 152 397 - 152 397
Liabilities to International Monetary Fund - - - 794 810 - 794 810
Liabilities to Financial Institutions 1 497 421 - - - - 1 497 421
Derivative Liability 517 (1 331) 1 954 1 140
OMO Instruments 81 341 30 023 1 984 - - 113 348
Total interest-bearing liabilities 1 579 279 28 692 3 938 947 207 - 2 559 116
Non-interest-bearing liabilities - - - - 2 330 871 2 330 871
Shareholders’ funds - - - - 262 798 262 798

Total financial liabilities 1 579 279 28 692 3 938 947 207 2 593 669 5 152 785

Interest rate sensitivity gap (299 160) 177 051 833 182 1 449 206 (2 160 279) -

Cumulative interest rate sensitivity gap (299 160) (122 109) 711 073 2 160 279 - -

Page 79
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Separate
Interest rate sensitivity gap analysis 31 December Up to 1–3 4– 12 Over 12 Non-rate
Total
2024 1 month months months months sensitive
K’m K’m K’m K’m K’m K’m
Financial and other assets
Balances with International Monetary Fund - - - 317 923 - 317 923
Investments in Malawi Government:
Treasury notes 18 784 86 500 583 067 1 278 510 - 1 966 861
Treasury bills - - - - - -
Promissory note - - - 660 904 - 660 904
Foreign Bonds-US Government Treasury Notes - - 3 487 7 041 - 10 528
Amount due from Financial Institutions 309 319 30 335 91 005 128 005 - 558 664
Liquid assets:
Cash and cash equivalents 181 603 30 015 - - - 211 618
Advances to Malawi Government 186 440 - - - - 186 440
Repurchase Agreements 43 852 58 893 120 514 - - 223 259
Amount due from related party Institutions 500 366 - - - - 500 366

Total interest-bearing assets 1 240 364 205 743 798 073 2 392 383 - 4 636 563

Non-interest-bearing assets - - - - 452 165 452 165

Total financial and other assets 1 240 364 205 743 798 073 2 392 383 452 165 5 088 728

Page 80
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Separate
Over 12 Non-rate
Up to 1 month 1 – 3 months 1 – 4 months Total
months sensitive
31 December 2024
K’m K’m K’m K’m K’m K’m
Financial liabilities
Allocation of Special Drawing Rights - - - 152 397 - 152 397
Liabilities to International Monetary Fund - - - 794 810 - 794 810
Liabilities to Financial Institutions 1 468 796 - - - - 1 468 796
Derivative Liability 517 (1 331) 1 954 1 140
OMO Instruments 81 341 30 023 1 984 - - 113 348
Total interest-bearing liabilities 1 550 654 28 692 3 938 947 207 - 2 530 491
Non-interest-bearing liabilities - - - - 2 339 786 2 339 786
Shareholders’ funds - - - - 218 451 218 451

Total financial liabilities 1 550 654 28 692 3 938 947 207 2 558 237 5 088 728

Interest rate sensitivity gap (310 290) 177 051 794 135 1 445 176 (2 106 072) -

Cumulative interest rate sensitivity gap (310 290) (133 239) 660 896 2 106 072 - -

Page 81
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Consolidated
Interest rate sensitivity gap analysis 31 December Up to 1–3 4– 12 Over 12 Non-rate
Total
2023 1 month months months months sensitive
K’m K’m K’m K’m K’m K’m
Financial and other assets
Balances with International Monetary Fund - - - 194 859 - 194 859
Investments in Malawi Government:
Treasury notes 25 612 42 650 248 821 1 298 090 - 1 615 173
Treasury bills - 15 063 14 471 - - 29 534
Promissory note - - - 793 959 - 793 959
Foreign Bonds-US Government Treasury Notes 3 336 - 3 443 3 306 - 10 085
Amount due from financial institutions 180 129 - 22 897 103 288 - 306 314
Liquid assets:
Cash and cash equivalents 432 545 - - - - 432 545
Advances to Malawi Government 115 419 - - - - 115 419
Amount due from related party Institutions 423 983 - - - - 423 983
Loan and advances to customers - - 35 644 - - 35 644

Total interest-bearing assets 1 181 024 57 713 325 276 2 393 502 - 3 957 515

Non-interest-bearing assets - - - - 331 114 331 114

Total financial and other assets 1 181 024 57 713 325 276 2 393 502 331 114 4 288 629

Page 82
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Consolidated
Over 12 Non-rate
Up to 1 month 1 – 3 months 1 – 4 months Total
months sensitive
31 December 2023
K’m K’m K’m K’m K’m K’m
Financial liabilities
Allocation of Special Drawing Rights - - - 152 428 - 152 428
Liabilities to International Monetary Fund - - - 721 719 - 721 719
Liabilities to Financial Institutions 708 134 110 708 53 684 444 169 - 1 316 695
Derivative Liability 13 156 10 184 458 - - 23 798
OMO Instruments 138 171 115 048 33 910 - - 287 129
Total interest-bearing liabilities 859 461 235 940 88 052 1 318 316 - 2 501 769
- - - - 1 621 229 1 621 229
Non-interest-bearing liabilities
Shareholders’ funds - - - - 165 631 165 631

Total financial liabilities 859 461 235 940 88 052 1 318 316 1 786 860 4 288 629

Interest rate sensitivity gap 321 563 (178 227) 237 224 1 075 186 (1 455 746) -

Cumulative interest rate sensitivity gap 321 563 143 336 380 560 1 455 746 - -

Page 83
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Separate
Interest rate sensitivity gap analysis 31 December Up to 1–3 4– 12 Over 12 Non-rate
Total
2023 1 month months months months sensitive
K’m K’m K’m K’m K’m K’m
Financial and other assets
Balances with International Monetary Fund - - - 194 859 - 194 859
Investments in Malawi Government:
Treasury notes 25 612 42 650 248 821 1 298 090 - 1 615 173
Treasury bills - 15 063 14 471 - - 29 534
Promissory note - - - 775 260 - 775 260
Foreign Bonds-US Government Treasury Notes 3 336 - 3 443 3 306 - 10 085
Amount due from financial institutions 180 129 - 22 897 103 288 - 306 314
Liquid assets:
Cash and cash equivalents 405 800 - - - - 405 800
Advances to Malawi Government 115 419 - - - - 115 419
Amount due from related party institutions 432 551 - - - - 432 551

Total interest-bearing assets 1 162 847 57 713 289 632 2 374 803 - 3 884 995

Non-interest-bearing assets - - - - 341 564 341 564

Total financial and other assets 1 162 847 57 713 289 632 2 374 803 341 564 4 226 559

Page 84
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.5 Market Risk (Continued)

b) Interest rate risk (continued)

Separate
Over 12 Non-rate
Up to 1 month 1 – 3 months 1 – 4 months Total
months sensitive
31 December 2023
K’m K’m K’m K’m K’m K’m
Financial liabilities
Allocation of Special Drawing Rights - - - 152 428 - 152 428
Liabilities to International Monetary Fund - - - 721 719 - 721 719
Liabilities to Financial Institutions 708 134 110 708 53 684 417 525 - 1 290 051
Derivative Liability 13 156 10 184 458 - - 23 798
OMO Instruments 138 171 115 048 33 910 - - 287 129
Total interest-bearing liabilities 859 461 235 940 88 052 1 291 672 - 2 475 125
Non-interest-bearing liabilities - - - - 1 624 434 1 624 434
Shareholders’ funds - - - - 127 000 127 000

Total financial liabilities 859 461 235 940 88 052 1 291 672 1 751 434 4 226 559

Interest rate sensitivity gap 303 386 (178 227) 201 580 1 083 131 (1 409 870) -

Cumulative interest rate sensitivity gap 303 386 125 159 326 739 1 409 870 - -

4.6 Liquidity risk

Liquidity risk is the potential that an institution will be unable to meet its obligations as they fall due because of inability to liquidate assets or obtain adequate funding or that it cannot unwind or
offset specific exposures without significantly affecting market prices.

The Group manages its foreign exchange liquidity risk through appropriate structuring of its portfolios and investing in liquid assets and deep markets including short term deposits and bonds
issued by governments of the G7 countries.

Under International Monetary Fund (IMF) liabilities (note 5), the Bank agrees with the IMF monetary targets that are to be achieved for macroeconomic stability.

Page 85
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.6 Liquidity risk (continued)
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and financial liabilities. The tables have been drawn based on the contractual
maturities of the financial assets and cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
Consolidated
31 December 2024 Up to 1 month 1 – 3 months 4 – 12 months Over 12 months
Total
K’m K’m K’m K’m
K’m
Financial and other assets
Balance with International Monetary Fund - - - 317 923 317 923
Equity Investments - - - 14 274 14 274
Amount due from financial institutions 309 319 30 335 91 005 128 005 558 664
Investments in Malawi Government
Treasury notes 18 784 86 500 583 067 1 278 510 1 966 861
Treasury bills - - - - -
Promissory note - - - 664 934 664 934
Foreign Bonds-US Government Treasury - - 3 487 7 041 10 528
Advances to Malawi Government 186 440 - - - 186 440
Loan and Advances to Customers - - 39 047 - 39 047
Liquid assets
Cash and cash equivalents 229 926 30 015 - - 259 941
Repurchase Agreements 43 852 58 893 120 514 - 223 259
Amount due from related party Institutions 491 798 - - - 491 798
Other assets – advances to staff - - 39 641 - 39 641
Total financial and other assets 1 280 119 205 743 876 761 2 410 687 4 773 310
Financial liabilities
Allocation of Special Drawing Rights - - - 152 397 152 397
Liabilities to International Monetary Fund - - - 794 810 794 810
OMO instruments 81 341 30 023 1 984 - 113 348
Notes and coins in circulation 851 149 - - - 851 149
Bankers’ deposits 626 724 - - - 626 724
Government deposits 479 016 - - - 479 016
Liabilities to Financial Institutions 1 497 421 - - - 1 497 421
Derivative Liability 517 (1 331) 1 954 - 1 140
Other liabilities - 373 982 - - 373 982

Total financial liabilities 3 536 168 402 674 3 938 947 207 4 889 987

Page 86
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.6 Liquidity risk (continued)
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and financial liabilities. The tables have been drawn based on the contractual
maturities of the financial assets and cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
Separate
31 December 2024 Up to 1 month 1 – 3 months 4 – 12 months Over 12 months
Total
K’m K’m K’m K’m
K’m
Financial and other assets
Balance with International Monetary Fund - - - 317 923 317 923
Equity Investments - - - 12 615 12 615
Amount due from financial institutions 309 319 30 335 91 005 128 005 558 664
Investments in Malawi Government
Treasury notes 18 784 86 500 583 067 1 278 510 1 966 861
Treasury bills - - - - -
Promissory note - - - 660 904 660 904
Foreign Bonds-US Government Treasury - - 3 487 7 041 10 528
Advances to Malawi Government 186 440 - - - 186 440
Liquid assets
Cash and cash equivalents 181 603 30 015 - - 211 618
Repurchase Agreements 43 852 58 893 120 514 - 223 259
Amount due from related party Institutions 500 366 - - - 500 366
Other assets – advances to staff - - 39 329 - 39 329
Total financial and other assets 1 240 364 205 743 837 402 2 404 998 4 688 507
Financial liabilities
Allocation of Special Drawing Rights - - - 152 397 152 397
Liabilities to International Monetary Fund - - - 794 810 794 810
OMO instruments 81 341 30 023 1 984 - 113 348
Notes and coins in circulation 851 149 - - - 851 149
Bankers’ deposits 626 724 - - - 626 724
Government deposits 479 016 - - - 479 016
Liabilities to Financial Institutions 1 468 796 - - - 1 468 796
Derivative liability 517 (1 331) 1 954 - 1 140
Other liabilities - 382 897 - - 382 897

Total financial liabilities 3 507 543 411 589 3 938 947 207 4 870 277

Page 87
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.6 Liquidity risk (continued)
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and financial liabilities. The tables have been drawn based on the contractual
maturities of the financial assets and cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

Consolidated
31 December 2023 Up to 1 month 1 – 3 months 4 – 12 months Over 12 months
Total
K’m K’m K’m K’m
K’m
Financial and other assets
Balance with International Monetary Fund - - - 194 859 194 859
Equity Investments - - - 17 534 17 534
Amount due from financial institutions 180 129 - 22 897 103 288 306 314
Investments in Malawi Government
Treasury notes 25 612 42 650 248 821 1 298 090 1 615 173
Treasury bills - 15 063 14 471 - 29 534
Promissory note - - - 793 959 793 959
Foreign Bonds-US Government Treasury 3 336 - 3 443 3 306 10 085
Advances to Malawi Government 115 419 - - - 115 419
Loan and Advances to Customers - - 35 644 - 35 644
Liquid assets
Cash and cash equivalents 432 545 - - - 432 545
Amount due from related party Institutions 423 983 - - - 423 983
Other assets – advances to staff - - 29 436 - 29 436
Total financial and other assets 1 181 024 57 713 354 712 2 411 036 4 004 485
Financial liabilities
Allocation of Special Drawing Rights - - - 152 428 152 428
Liabilities to International Monetary Fund - - - 721 719 721 719
OMO instruments 138 171 115 048 33 910 - 287 129
Notes and coins in circulation 559 944 - - - 559 944
Bankers’ deposits 267 936 - - - 267 936
Government deposits 616 604 - - - 616 604
Liabilities to Financial Institutions 708 134 110 708 53 684 444 169 1 316 695
Derivative liability 13 156 10 184 458 - 23 798
Other liabilities - 176 745 - - 176 745

Total financial liabilities 2 303 945 412 685 88 052 1 318 316 4 122 998

Page 88
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.6. Liquidity risk (continued)

Separate
31 December 2023 Up to 1 month 1 – 3 months 4 – 12 months Over 12 months
Total
K’m K’m K’m K’m
K’m
Financial and other assets
Balance with International Monetary Fund - - - 194 859 194 859
Equity Investments - - - 12 160 12 160
Amount due from financial institutions 180 129 - 22 897 103 288 306 314
Investments in Malawi Government
Treasury notes 25 612 42 650 248 821 1 298 090 1 615 173
Treasury bills - 15 063 14 471 - 29 534
Promissory note - - - 775 260 775 260
Foreign Bonds-US Government Treasury 3 336 - 3 443 3 306 10 085
Advances to Malawi Government 115 419 - - - 115 419
Liquid assets
Cash and cash equivalents 405 800 - - - 405 800
Amount due from related party Institutions 432 551 - - - 432 551
Other assets – advances to staff - - 29 152 - 29 152
Total financial and other assets 1 162 847 57 713 318 784 2 386 963 3 926 307
Financial liabilities
Allocation of Special Drawing Rights - - - 152 428 152 428
Liabilities to International Monetary Fund - - - 721 719 721 719
OMO instruments 138 171 115 048 33 910 - 287 129
Notes and coins in circulation 559 944 - - - 559 944
Bankers’ deposits 267 936 - - - 267 936
Government deposits 616 604 - - - 616 604
Liabilities to Financial Institutions 708 134 110 708 53 684 417 525 1 290 051
Derivative Liability 13 156 10 184 458 - 23 798
Other liabilities - 179 950 - - 179 950

Total financial liabilities 2 303 945 415 890 88 052 1 291 672 4 099 559

Page 89
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.6 Liquidity risk (continued)

As part of management of liquidity risk arising from financial liabilities the Group holds liquid assets comprising cash and cash equivalents
and debt securities issued by sovereign governments which can be readily sold to meet liquidity requirements. In addition the Group maintains
agreed lines of credit with other financial institutions and holds unencumbered assets eligible for use as collateral with other financial
institutions. The following table sets out the availability of the Group’s financial assets to support future funding.

Consolidated Encumbered Unencumbred Other

Pledged as collateral Other* Available Collateral Total
31 December 2024 K’m K’m K’m K’m K’m
Cash and Cash Equivalent
Foreign - 1 820 180 211 - 182 031
Domestic - - 77 910 - 77 910
Treasury Bills - - - -
Treasury Notes 117 499 - 1 849 362 - 1 966 861
Promissory Note - - 664 934 - 664 934
Foreign Bonds - - 10 528 - 10 528
Amount from financial
558 664 - -
institutions - 558 664

Separate Encumbered Other

Unencumbred
Pledged as collateral Other* Available Collateral Total
31 December 2024 K’m K’m K’m K’m K’m
Cash and Cash Equivalent
Foreign - 1 820 179 778 - 181 598
Domestic - - 30 020 - 30 020
Treasury Bills - - - -
Treasury Notes 117 499 - 1 849 362 - 1 966 861
Promissory Note - - 660 904 - 660 904
Foreign Bonds - - 10 528 - 10 528
Amount from financial
558 664 - -
institutions - 558 664

* Represents assets that are not pledged but that the Group believes it is restricted from using to secure funding for legal or other
reasons.

As at 31 December 2024 the balance in the Debt Service Reserve Account (DRSA) was K1 820 billion (2023: nil). The current account
balance with the Afrexim Bank is held for purpose of servicing the Afrexim note facility. As at 31 December 2024, there were no term
deposits placed with Afrexim bank (2023: K55 548 million).

Page 90
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.6 Liquidity risk (continued)

Consolidated Encumbered Unencumbred Other

Pledged as collateral Other* Available Collateral Total
31 December 2023 K’m K’m K’m K’m K’m
Cash and Cash Equivalent
Foreign - 55 540 278 728 - 334 268
Domestic - - 98 277 - 98 277
Treasury Bills - - 29 534 29 534
Treasury Notes 324 209 - 1 290 964 - 1 615 173
Promissory Note - - 793 959 - 793 959
Foreign Bonds - - 10 085 - 10 085
Amount from financial
institutions 306 314 - - - 306 314

Separate Encumbered Unencumbred Other

Pledged as collateral Other* Available Collateral Total
31 December 2023 K’m K’m K’m K’m K’m
Cash and Cash Equivalent
Foreign - 55 540 278 313 - 333 853
Domestic - - 71 947 - 71 947
Balances with Foreign Banks - - - - -
Treasury Bills - - 29 534 29 534
Treasury Notes 324 209 - 1 290 964 - 1 615 173
Promissory Note - - 775 260 - 775 260
Foreign Bonds - - 10 085 - 10 085
Amount from financial
institutions 306 314 - - - 306 314

* Represents assets that are not pledged but that the Group believes it is restricted from using to secure funding for legal or other
reasons.

Page 91
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

4. Risk Management (Continued)

4.7 Operational risk

Disclosure
The Group is exposed to non-financial operational risks. Operational risk originates from inadequate or failed internal processes
people systems or external events. The Group is exposed to the following sub-categories of operational risks: legal information
technology human resources security (physical and information) project third-party business continuity and settlement risks.
Operational risks may generate financial loss damage to reputation or failure in achieving the bank’s business objectives. Hence, the
Group has developed a centralized risk management system in order to identify and mitigate the impact of operational risks and
strengthen its internal control system.

5. International Monetary Fund related assets and liabilities

The International Monetary Fund (IMF) is an international organization with 191 (2023:191) member countries as at 31 December
2024. It was established to promote international monetary cooperation; to facilitate the expansion and balanced growth of international
trade and thereby contribute to economic growth and high levels of employment; to promote exchange stability and orderly exchange
arrangements among members; to assist in the establishment of a multilateral system of payments; and to provide temporary financial
assistance to countries to help ease balance of payments requirements. The IMF receives its resources from its member countries and
quota subscriptions are a central source of IMF’s financial resources. Each country’s subscription or quota is determined broadly on
the basis of the economic size of the country and considering quotas of similar countries.

Accounting Policy
All rights in and commitments to the IMF are denominated in Special Drawing Rights (SDR), an international reserve asset created by
the IMF. The value of the SDR is calculated on the basis of a currency basket comprising the US dollar, Euro, Chinese
renminbi, Japanese yen and Pound sterling. The currency weights are adjusted each year in accordance with changes in bilateral foreign
exchange rates.

The Reserve Bank of Malawi’s holdings of SDRs are recognized as an asset in the statement of financial position under balances with
the IMF. SDR allocation by the IMF shows the Reserve Bank of Malawi’s total allocations of SDRs and is recognised as a liability
under Liabilities to the IMF. Reserve Bank of Malawi’s holdings of SDRs and allocation of SDRs are measured at amortised cost.

The outstanding loan balances with the IMF are recognized in the statement of financial position under Liabilities with the IMF. The
IMF quota is classified as a strategic equity investment measured at FVOCI and the local currency liability to the IMF are measured at
amortized cost. Exchange rate revaluation gains and losses arising on revaluation of IMF assets and liabilities are recognised in the
statement of profit or loss and other comprehensive income. All other charges and interest pertaining to the balances with the IMF are
recorded immediately in the statement of profit or loss and other comprehensive income.

In accordance with the Reserve Bank of Malawi Act, 2018, the Bank acts as fiscal agent of the Government in its dealings with
International Financial Institutions. The Bank transacts with the International Financial Institutions and undertakes financial agency
work for the Government. In compliance with the Act, the accounts with the IMF which record all transactions with the IMF have been
included in these financial statements.

Page 92
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

5. International Monetary Fund related assets and liabilities (Continued)

The various rights commitments claims and liabilities are described below.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Financial Assets
IMF Quota 317 174 317 174 191 942 191 942
Holding of Special drawing rights (SDR) 5.1 749 749 2 917 2 917
Total claim on the IMF 317 923 317 923 194 859 194 859

Financial liabilities
Borrowings
Extended Credit Facility (“ECF”) 5.2 214 774 214 774 267 228 267 228
Rapid Credit Facility (“RCF”) 5.2 268 317 268 317 268 001 268 001
483 091 483 091 535 229 535 229
IMF’s holdings of Malawi Kwacha Currency
IMF Deposit No. 1 Account 5.3 311 346 311 346 188 416 188 416
IMF Deposit No. 2 Account 5.3 11 11 7 7
Securities 5.4 250 250 151 151
Currency valuation adjustment 112 112 (2 084) (2 084)
311 719 311 719 186 490 186 490
Total local currency liabilities to the IMF 794 810 794 810 721 719 721 719

RCF accessed by Malawi Government 5.2 207 000 207 000 206 756 206 756
ECF accessed by Malawi Government 5.2 18 066 18 066 18 045 18 045
Total 1 019 876 1 019 876 946 520 946 520

Special Drawing Rights (SDR) Allocation 5.5

SDR Allocation 152 397 152 397 152 428 152 428
SDR Allocation accessed by Malawi Government 303 786 303 786 303 428 303 428
Total 456 183 456 183 455 856 455 856

Liabilities to the IMF 1 476 059 1 476 059 1 402 376 1 402 376
Net positions with IMF (1 158 136) (1 158 136) (1 207 517) (1 207 517)

Page 93
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

5. International Monetary Fund related assets and liabilities (Continued)

5.1 IMF Quota Subscription (Continued)

Each member country is assigned a quota expressed in SDR. A member’s subscription to IMF resources is equal to its quota and
determines the maximum amount of financial resources the member is obliged to provide to the IMF. A member must pay its
subscription in full. A country must pay 25% of its quota in widely accepted foreign currencies or SDRs and the remaining 75% in its
own currency.

The quota defines a member’s voting power in IMF decisions. Each IMF member has 250 basic votes plus one additional vote for each
SDR 0.1 million of quota. As at 31December 2024 the Republic of Malawi had 2,840 votes, representing 0.1% of total votes. The
amount of financing a member can obtain from the IMF (access limits) is also based on its quota. For example, under the Extended
Credit Facility (ECF) and Rapid Credit Facility (RCF), a member country can currently borrow up to 145% and 50% of its quota per
annum respectively. Cumulatively the access limits are 435% of quota and 100% of quota, respectively.

Malawi has been a member of the IMF since July 1965. The Bank acts as both fiscal agent and the depository for the IMF. As fiscal
agent, the Bank is authorized to carry out all operations and transactions with IMF. As depository, the Bank maintains IMF’s currency
holdings and ensures that the assets and liabilities of IMF membership are properly reflected in its accounts and presented in its financial
statements. The quota is its membership subscription which is granted mainly by the issue of promissory notes in favour of the IMF
and partly by foreign currency payments by the Government of Malawi.

5.2 SDR Holdings

Holding of SDRs is potentially a claim on freely usable currencies of IMF members in that holders of SDRs can exchange their
currencies for SDRs. The SDR’s value as a reserve asset derives from the commitments of members to hold and accept SDRs and to
honour various obligations connected with the operation of the SDR system. The IMF ensures that the SDR’s claim on freely usable
currencies is being honoured in two ways: by designating IMF members with a strong external position to purchase SDRs from
members with weak external positions and through the arrangement of voluntary exchanges between participating members in a
managed market. The amount included in the table above represents the total holdings of SDRs by the Authority as at the respective
reporting dates.

The SDR holdings bear interest which is determined on a weekly basis. The interest rate at 31 December 2024 is 4.10% (2023: 4.10%
per annum).

5.3 IMF No. 1 and No. 2 accounts

The No. 1 account is used for IMF transactions and operations including subscription payments, purchases and repurchases, repayment
of borrowing and sales in Malawi Local Currency. The No. 2 account is used for the IMF’s administrative expenditures and receipts
(for example receipts from sales of IMF publications) in the member’s currency and within its territory. Small out-of-pocket expenses
such as telecommunication charges may be debited to this account on a quarterly basis. The security held in custody in respect of the
IMF Quota and as collateral of the IMF granted facilities comprise K250 million (2023: K151 million) in respect of the IMF Quota.
The security was issued by the Malawi Government in settlement of the IMF Quota. The security used as collateral covers the total
nominal value of the IMF granted facilities to Malawi i.e. Bank and Government. The nominal value of the security is changed annually
according to the revaluation and at the time of facility receipt from the IMF General Resources Account by the facility amount. The
bank currently has no such a facility.

Page 94
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

5. International Monetary Fund related assets and liabilities (Continued)

5.4 Poverty Reduction Facility and Growth Trust (PRGT).

a. Rapid Credit Facility
On May 1, 2020, the Executive Board of the IMF approved a disbursement of SDR66.4 million (about US$91.0 million) under the
exogenous window of the Rapid Credit Facility (RCF) for balance of payment needs in IMF response to COVID-19 pandemic. An
additional SDR72.3 million (about US$102.0 million) was disbursed in October 2020 bringing total IMF RCF disbursement to Malawi
to SDR138.8 million (about US$193 million). Of the second disbursement, 30 percent was to finance the government budget. In this
regard a total sum of SDR21.2 million (about US$29.9 million) was a credit to Malawi Government. In November 2022, IMF disbursed
a total sum of SDR69.4 million (about US$88.3 million) under the Food Shock Window of the RCF. The whole amount was credited
to Malawi Government as budgetary support. .

b. Extended Credit Facility

The ECF is the Fund’s main tool for providing medium-term support to Low Income Countries (LICs) like Malawi. The ECF was
created under the Poverty Reduction and Growth Trust (PRGT) to provide financial assistance to countries with protracted balance of
payments problems. On 15 November 2023, the Executive Board of the IMF approved a new four-year ECF arrangement for Malawi
in an amount of SDR131.9 million (about US$175.0 million). Following the approval, a disbursement amounting to SDR26.4
million (about US$35.0 million) was made in November 2023. Financing under the ECF and RCF are concessional and currently
carries a zero-interest rate, has a grace period of 5½ years and a final maturity of 10 years.

5.5 IMF SDR allocation

The SDR allocation is an unsecured interest-bearing distribution of SDRs by the IMF through general and special allocations. The
general allocation is made by the IMF according to the Articles of Agreement to all participants in its SDR Department in proportion
to countries’ quotas in the IMF. In August 2021, the IMF allocated Special Drawing Right (SDR) worth SDR133.0 million (about
US$188.7 million) to Malawi Government with the aim of assisting Malawi to navigate through the Covid-19 pandemic.

Malawi as a member country of the IMF and recipient of the allocations is obliged to pay to the IMF an amount equal to its net
cumulative allocation and any other amounts that may be due and payable because of the membership termination or liquidation of the
IMF’s SDR Department.

6. Gold Reserves
Accounting policy
Monetary gold is gold to which the Bank as a monetary authority has title to and is held as a reserve asset. The management of the
Bank understands that IFRS does not provide a specific treatment for the accounting of monetary gold. Therefore, pursuant to the
requirements set by IAS 8 “Accounting Policies Changes in Accounting Estimates and Errors” the Bank determined that the policies
established for the accounting of financial instruments and for the disclosure of relevant information should also be applied to gold as
the Bank regards it as a monetary asset.

Gold was initially recognized at cost in United States Dollars (USD) and translated to Malawi kwacha. Subsequent to initial
recognition, it is re-measured at fair value. The asset’s gains and losses arising from changes in the USD market price are recognized
in OCI and allocated to this reserve until such time as the underlying position is liquidated.

The fair value of monetary gold is expressed in USD converted at the buying exchange rate as published by the Bank at the reporting
date and is measured at the last bid price for one ounce of gold (Oz) at the reporting date quoted on Reuters. Foreign exchange gains
and losses from conversion of prices of gold from USD to MWK are recognized in accordance with IAS 21 and are included in the
Statement of Profit or Loss. In accordance with the RBM Act, section 64(6), the exchange gains or losses are transferred from profit
or loss into the special account reserve.

The Bank holds monetary gold on deposit with the Federal Reserve Bank. Fair value of the monetary gold as at 31 December 2024
amounts to K57 848 million (2023: K44 139 million) representing 12 836.998 ounces of gold at K4.5 million per ounce (2023: K3.4
million). Movements in fair value of monetary gold can be analysed as follows:
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m

As at 1 January 44 139 44 139 23 804 23 804

Fair value movement
Changes in Prices of Gold (Note 21) 12 416 12 416 4 231 4 231
Foreign exchange gains from conversion USD/MWK 1 293 1 293 16 104 16 104

57 848 57 848 44 139 44 139

Page 95
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

7. Equity Investment
Accounting policy
The Group’s strategic investments in other entities are classified as equity investments at FVOCI with the fair value movement and
FX revaluations recognized in other comprehensive income.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Foreign
African Export Import Bank 12 334 12 334 11 998 11 998
Norsad Finance Limited 1 659 - 5 374 -
Swift 281 281 162 162
14 274 12 615 17 534 12 160
Domestic
National Integrated Technology Limited 6 6 107 107
Blantyre Hotels plc 4 701 - - -

18 981 12 621 17 641 12 267

Foreign equity investment

a)The African Export-Import Bank (Afrexim)

The African Export-Import Bank (Afrexim bank) is a supranational institution established on 27 October 1993. The Bank holds an
investment in the equity of Afrexim Bank. Afrexim bank is a grouping of regional central banks and financial institutions designed to
facilitate intra and extra African trade. The Bank holds a total number of 567 shares in Afrexim Bank with par value of USD 10 000 each
representing 0.250% shareholding. The fair value was determined using the net asset value adjusted by 30%.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Share capital plus premium 17 620 17 620 17 104 17 104
Excess payment account - - 5 5
Dividend Deposit - - 30 30
17 620 17 620 17 139 17 139
Fair value loss (5 286) (5 286) (5 141) (5 141)

12 334 12 334 11 998 11 998

b) Norsad Finance Limited

The K1 659 million (2023: K5 374 million) relates to an investment by the Export Development Fund (EDF) in Norsad Finance Limited
which was determined using the net asset value, adjusting it for liquidity and country risks. Norsad Finance Limited is a development
finance institution established to contribute to private sector development of Southern African countries by way of availing funding to
enterprises that are financially socially and environmentally sustainable and which will create jobs with decent working conditions adopt
good governance and overall assist economic growth and poverty alleviation in Southern African countries. EDF was allotted 40 Ordinary
shares in Norsad Finance Limited through the Malawi Government in 2012 representing 3.68 percent of the Ordinary shares in Norsad
Finance Limited, then. Subsequently, the effective shareholding increased following conversion ordinary shares to preference shares by
other investors giving rise to a shareholding of 4.43% in 2024.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Share capital plus premium 5 374 - 2 311 -
Fair value (loss)/gain (3 715) - 3 063 -

1 659 - 5 374 -

Page 96
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

7. Equity Investment (Continued)

c) Society for Worldwide Interbank Financial Telecommunications (Swift)
Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a company founded in Brussels in 1973 to provide a secured network that
enables financial institutions worldwide to send and receive information related to financial transactions in a secure standardised and reliable environment.
SWIFT members hold interest in the cooperatives through shares. The Company manages the shares through the reallocation principle defined in its By-
laws and general membership rules. The number of shares allocated to each member is determined at least after every three years according to the Bylaws
of the Company and is proportional to the annual contributions paid for the network-based services to the Company. The members have the obligation to
give up shares or take up additional shares which will result in the change in shareholding. The By-laws of the Company state that shares are only reimbursed
when a member resigns or when a member has to give up shares following reallocation. This investment is measured at fair value through other
comprehensive income using market rate for shares in SWIFT. During the year under review the Bank had a total of 19 shares representing 17.6%
shareholding (2023: 11 shares).

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Share capital plus premium 209 209 97 97
Fair value gain 72 72 65 65

281 281 162 162

Domestic equity investment

(a) National Integrated Technologies Limited (NITEL)

The Bank holds 5 percent of the shareholding in NITEL with the Nitel Trust being the majority shareholder with 94 % shareholding and
Malawi Government 1%. The fair value loss of K14 million for the year ended 31 December 2024 (2023: a gain of K87 million) was
determined using discounted future cash flows for next 5 years, adjusted for 1% year.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Share capital plus premium 20 20 20 20
Fair value (loss)/gain (14) (14) 87 87

6 6 107 107
(b) Blantyre Hotels Plc
Blantyre Hotels Plc is a company incorporated in Malawi and listed on Malawi Stock Exchange. The shares were acquired in 2024 by
EDF. The Fund’s shareholding in the company as at 31 December 2024 stood at 323,101,777 shares, representing 6 percent (2023: nil
percent). This investment is denominated in Kwacha and was acquired at K12.38 per share for K4 billion in 2024. The share price as at
31 December 2024 was K14.55 giving rise to the fair value of K4.7 billion as at 31 December 2024.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Share capital plus premium 4 000 - - -
Fair value gain 701 - - -

4 701 - - -

Page 97
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment

Material accounting policy information

Items of property and equipment are recognized as assets when it is probable that future economic benefits associated with the assets
will flow to the entity and the cost of the asset can be measured reliably.

Land and buildings held for use in the production or supply of goods or services for rental to others (excluding investment properties)
or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date
of revaluation less any accumulated depreciation and accumulated impairment losses. Revaluations are performed with sufficient
regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the reporting
date. Otherwise, the land and buildings are revalued every 3 years.

Any revaluation increase arising on the revaluation of such land and buildings is credited to the properties revaluation reserve except to
the extent that it reverses a revaluation decrease for the same asset previously capitalised as an expense in which case the increase is
credited to profit or loss to the extent of the decrease previously expensed. A decrease in carrying amount arising from the revaluation
of such land and buildings is charged as an expense to the extent that it exceeds the balance, if any, held in the properties revaluation
reserve relating to a previous revaluation of that asset.
Depreciation on revalued buildings is recognised in profit or loss. On the subsequent sale or retirement of a revalued property the
attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings.

Freehold land is not depreciated.

Fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment loss.

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction)
less their residual values over their useful lives using the straight-line method on the following bases:

Buildings 1 per cent - 3.23 percent per annum

Fixtures and fittings 10 per cent - 25 percent per annum
Furniture and Equipment 10 per cent - 25 percent per annum

The estimated useful lives residual values and depreciation method are reviewed at the end of each reporting period with the effect of
any changes in estimate accounted for on a prospective basis.

Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a lease transfers
ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the
related right-of-use asset is depreciated over the useful life of the underlying asset.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Page 98
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

Impairment of property and equipment and intangible assets excluding goodwill

At each reporting date, the Group reviews the carrying amounts of its property and equipment and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units
or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can
be identified.

Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the end
of a reporting period that the asset may be impaired.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss
unless the relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease and to the
extent that the impairment loss is greater than the related revaluation surplus the excess impairment loss is recognised in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which had been recognised for the
asset in prior years. Any increase in excess of this amount is treated as a revaluation increase.

Accounting judgements and estimates

Judgement is required when determining the following:

● the costs that are attributable to the asset;

● for assets where valuation is applied, the fair value of the properties;
● the appropriate useful life over which the assets should be depreciated or amortized;
● the depreciation method; and
● whether the existing assets are subject to impairment.

Page 99
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

Disclosure
Property and Equipment are considered as fixed/tangible assets of the Group if they are: Held by the Group for use in the supply of service or for administrative purposes; and are expected to be
used for more than three years. Where applicable figures for land and buildings reflect independent professional valuations performed in accordance with the Malawi Land Act (2002) legislation.

The Group’s investment in its property and equipment at year end were as follows:
Consolidated
Land and Computer Furniture & Office Plant & Motor Work in Right of
buildings hardware equipment Machines Machinery vehicles progress Use Total
K’m K’m K’m K’m K’m K’m K’m K’m K’m
2024
Cost or Valuation
At beginning of the year 126 916 10 258 12 293 15 616 4 648 9 902 753 99 180 485
Additions - 1 241 2 115 562 303 3 978 4 408 - 12 607
Transfers 3 027 7 383 185 102 145 - (3 827) - 7 015
Disposals - (207) (33) - - (1 081) - - (1 321)
Impairment - - - -- -- -- (22) - (22)
Other adjustment 19 290 61 1 011 113 230 - - 1 724
Revaluation increase 25 662 - - - - - - - 25 662
At end of the year 155 624 18 965 14 621 17 291 5 209 13 029 1 312 99 226 150
Accumulated depreciation and
impairment
At beginning of the year 172 5 250 5 224 5 144 2 003 4 631 - 99 22 523
Disposals - (179) (32) - - (872) - - (1 082)
Charge for the year 2 137 1 776 960 1 049 478 1 273 - - 7 673
Other adjustment 3 - - - - - - - 3
Eliminated on revaluation (2 097) - - - - - - - (2 097)
At end of the year 215 6 848 6 152 6 193 2 481 5 032 - 99 27 020
Carrying amount
At the end of the year 155 409 12 117 8 469 11 098 2 728 7 997 1 312 - 199 130

Page 100
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
8. Property and Equipment (Continued)
Separate
Land and Computer Furniture & Office Plant & Motor vehicles, Work in Right of
buildings hardware equipment, Machines, Machinery, progress Use Total
K’m K’m K’m K’m K’m K’m K’m K’m K’m
2024
Cost or Valuation
At beginning of the year 126 916 10 258 11 541 15 616 4 648 9 367 753 99 179 198
Additions - 1 241 2 030 562 303 3 559 4 408 - 12 103
Transfers 3 027 7 383 185 102 145 - (3 827) - 7 015
Disposals - (207) - - - (1 081) - - (1 288)
Impairment - - - - - (22) - (22)
Other adjustment 19 290 61 1 011 113 230 - - 1 724
Revaluation increase 25 662 - - - - - - - 25 662
At end of the year 155 624 18 965 13 817 17 291 5 209 12 075 1 312 99 224 392
Accumulated depreciation
and impairment
At beginning of the year 172 5 250 4 611 5 144 2 003 4 251 - 99 21 530
Disposals - (178) - - - (872) - - (1 050)
Charge for the year 2 137 1 776 867 1 049 478 1 172 - - 7 479
Other adjustment 3 - - - - - - - 3
Eliminated on revaluation (2 097) - - - - - - - (2 097)
At end of the year 215 6 848 5 478 6 193 2 481 4 551 - 99 25 865
Carrying amount
At the end of the year 155 409 12 117 8 339 11 098 2 728 7 524 1 312 - 198 527

As disclosed in note 9 to the financial statements, K7 015 million has been transferred from intangible assets to tangible assets. Other adjustments relate to supplementary costs incurred on already
capitalized assets to enhance the asset’s future economic benefits and restoring the assets to working condition.

Page 101
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

Consolidated
Furniture & Office Plant & Motor
Land and Computer equipment, Machines, Machinery, vehicles, Work in Right of
buildings hardware represented represented represented represented progress Use Total
K’m K’m K’m K’m K’m K’m K’m K’m K’m
2023
Cost or Valuation
At beginning of the year 103 695 5 178 8 750 18 025 2 255 8 464 3 252 475 150 094
Additions - 4 184 3 206 461 2 830 2 395 1 928 - 15 005
Transfers 3 797 755 - - 114 - (3 911) - 755
Disposals - (25) 54 - - (1 041) - (376) (1 389)
Other adjustment - 166 412 (2 870) (466) - - - (2 758)
Impairment - - (130) - - - (516) - (646)
Revaluation increase 19 424 - - - - - - - 19 424
At end of the year 126 916 10 258 12 292 15 616 4 733 9 818 753 99 180 485

Accumulated depreciation and

impairment
At beginning of the year 1 236 3 754 4 069 3 968 1 033 4 439 84 162 18 745
Disposals (22) (31) - - (830) - (63) (946)
Impairment - - (130) - - - (84) - (214)
Charge for the year 1 221 1 546 1 260 1 175 970 1 021 - - 7 193
Other adjustment - (28) 58 - - - - - 30
Eliminated on revaluation (2 285) - - - - - - - (2 285)
At end of the year 172 5 250 5 226 5 143 2 003 4 630 - 99 22 523
Carrying amount
At the end of the year 126 744 5 008 7 066 10 473 2 730 5 188 753 - 157 962

*Represented- refer to note 1.2 of these financial statements for details of representation.

Page 102
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

Separate
Furniture & Office Plant & Motor
Land and Computer equipment, Machines, Machinery, vehicles, Work in Right of
buildings hardware represented represented represented represented progress Use Total
K’m K’m K’m K’m K’m K’m K’m K’m K’m
2023
Cost or Valuation
At beginning of the year 103 695 5 178 8 025 18 025 2 255 7 876 3 252 99 148 405
Additions - 4 184 3 149 461 2 830 2 395 1 928 - 14 947
Transfers 3 797 755 - - 114 - (3 911) - 755
Disposals - (25) 84 - - (988) - - (929)
Impairment - - (130) - - - (516) - (646)
Other adjustment - 166 412 (2 870) (466) - - - (2 758)
Revaluation increase 19 424 - - - - - - - 19 424
At end of the year 126 916 10 258 11 540 15 616 4 733 9 283 753 99 179 198
Accumulated depreciation and
impairment
At beginning of the year 1 236 3 754 3 508 3 968 1 033 4 108 84 99 17 790
Disposals - (22) - - - (782) - - (804)
Charge for the year 1 221 1 546 1 177 1 175 970 924 - - 7 013
Other adjustment - (28) 58 - - - - - 30
Impairment - - (130) - - - (84) - (214)
Eliminated on revaluation (2 285) - - - - - - - (2 285)
At end of the year 172 5 250 4 613 5 143 2 003 4 250 - 99 21 530
Carrying amount
At the end of the year 126 744 5 008 6 927 10 473 2 730 5 033 753 - 157 668

*Represented- refer to note 1.2 of these financial statements for details of representation.

Page 103
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

Fair value measurement of the group’s freehold land and buildings (Continued)

Fair value measurement of the group’s freehold land and buildings

The group’s land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses. The fair value measurements of the group’s land and
buildings as at 31 December 2024 were performed by independent valuers not related to the group as follows:

a) Reserve Bank Head Office, Mzuzu Branch, New and Old Blantyre Branch, Silver Stadium and office block, Clubhouse and
Wellness centre were valued by George Kalino, MRICS, MSIM, MBA Const. & Real Estate; Bsc (Hons) Real Estate management;
Dip. (Land Admin.), Chartered Valuation Surveyor; reviewed by Rhemont Ngwira, MSIM, Bsc (Hons) Property management; Dip
(Real Estate), registered Valuation Surveyor; and vetted by Eliot K. Jambo Msc: Real Estate; MBA; BA; MSI of MPICO Plc.
b) Staff Guesthouses and Official Residences in Lilongwe, Blantyre and Mzuzu as well as cottages in Salima and Mangochi were
valued by J. J. Kantema BSc. (Hons) Land Admin. Bsoc. MSIM Registered Valuation Surveyor of Real Property and Development
Consultants.
c) Work Area Recovery site was valued by Samuel Nhlane; BSc (Hons) Land Administration of SMN Property Professionals,
Registered Valuation Surveyor.

They have appropriate qualifications and recent experience in the fair value measurement of properties in the relevant locations. The
valuation conforms to International Valuation Standards and was based on the following assumptions and methods:
1. Open market values are the estimated amounts for which a property should be exchanged on the date of valuation between a willing
buyer and a willing seller dealing at arm’s length.
2. Land values were determined by analyzing comparable land values within the vicinity, and average values were adopted.
3. Similarly, a comparative analysis was conducted on improvement values through market research of comparable properties and
yields.
4. However, necessary adjustments for condition, age and time factor were applied to align with each structure being valued.
5. The RBM headquarters in Lilongwe, the branches in Blantyre (old and new), Mzuzu, the Clubhouse and Silver Stadium in Lilongwe
have all been valued using Comparative, Investment, cost and residual Method. The houses have been valued by using the
Comparative approach (where there was sales evidence) except for the Lakeshore properties where the Depreciated Cost method has
been used. The Work Recovery Area Site property of 1,869.52sq.m was valued using the comparative blended with income approach
methods and has been based on the information gathered from comparison with other similar available property transactions within
the vicinity and elsewhere.
6. Capital growth calculations were also carried out to test if the initial analysis was in line with market movements. The Valuer noted
that the initial calculations and calculations on capital growth were in the same ranges, hence adopting the values.
7. The valuation did not consider equipment and other items such as furniture and fittings.
8. The leases will be renewed by the Malawi Government’s ministry responsible upon expiry.
9. The properties and their values are not affected by any matters that would be revealed by local search or by any statutory notice and
properties are free from encumbrances restrictions or charges.
10. There is no restriction on title and property and equipment pledged as collateral for the group’s liabilities.
11. The increase in the fair value of land and buildings was primarily driven by the impact rising inflation which has contributed to
higher market values for comparable property sales. Additionally, there has been an observable increase in rental rates, capitalization
rates and other relevant market-based inputs. These factors collectively influenced the fair value assessment resulting in an upward
adjustment to the revalued amounts of land and buildings.

Consolidated and separate – Land and buildings

Level 1 Level 2 Level 3 Total
31 December 2024 K’m K’m K’m K’m
Net carrying amount - 154 709 700 155 409

Level 1 Level 2 Level 3 Total

31 December 2023 K’m K’m K’m K’m

Net carrying amount - 121 981 4 763 126 744

Page 104
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

The table below sets out information about significant unobservable inputs used at year end in measuring land and buildings categorised in International Accounting Standards (IAS) 16:

Type of property Valuation approach Key unobservable inputs Inter-relationship between unobservable inputs and key fair
value measurement
* Owner-occupied Comparison/Market, * Rental income/sq.m * Ranging from 10,600/sq.m to 18,000/sq.m.
commercial (office) Income, Depreciated
property portfolio Replacement Cost and
Residual methods.
* Rent escalation rates * Ranging from 15% to 25%.
* Occupancy levels * Ranging from 85% to 90%
* Market Yields (Office) * Ranging from 5.11% to 15%.
* Inflation rates * Average of 32.3%
* Capital gain levels * Land @ 14.25% to 16.13%, Improvements@ 13.31% to 23.05%
and Fair/Market @ 13.65% to 22.75%.

* Land values/ha * Lilongwe City Centre at 600 to 800 million/ha,

Lilongwe Area 47 in a range of 450 to 550 million/ha, Blantyre CBD
in a range of 3.2 billion to 3.6 billion and Mzuzu in a range of 300 to
350 million/ha.

* Improvements values/sq.m * Main structures ranging from 1,600,000 to above 2,150,000/sq.m,

Secondary structures category 1 ranging from 1,060,000 to below
1,600,000/sq.m, Secondary structures category 2 ranging from
530,000 to below 1,060,000/sq.m, Other structures category 1
ranging from 106,000 to 530,000/sq.m and Other structures category
2 below 106,000/s.qm.

* Depreciated Replacement Cost * An average of 44.27%.

* Residual values * Ranging from 15% to 20%.

Page 105
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

8. Property and Equipment (Continued)

Original Valuation - Adjusted Value Actual Sensitivity Level
Variable Description 31/12/2024 (K’m) (K’m) (K’m)

An increase of 1% in inflation rate would increase the fair value by: 0.63% 142 391 143 291 900
A decrease of 1% in inflation rate would decrease the fair value by: 0.80% 142 391 141 259 (1 132)

An increase of 10% in market rent/sq.m would increase the fair value by: 6.36% 142 391 151 452 9 061
A decrease of 10% in market rent/sq.m would decrease the fair value by: 6.43% 142 391 133 235 (9 156)

An increase of 10% in land value per hectare would increase the fair value by: 1.11% 142 391 142 550 159
A decrease of 10% in land value per hectare would decrease the fair value by: 0.13% 142 391 142 201 (190)

Narrative description of the sensitivity to changes in unobservable inputs. Market rent is the most sensitive input followed by land and lastly inflation. However, land would become sensitive
especially when a property has larger plot size than standard size.

The related costs of the revalued assets have not been disclosed as it is impractical to determine the cost of such properties.

A register of the Bank’s land and buildings is maintained at its principal place of business where it may be inspected by shareholders and other authorized persons.

Page 106
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

9 Intangible assets (computer software)

Material accounting policy information

The Group’s intangible assets include the value of computer software acquired in the business. An intangible asset is recognised only
when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow
to the Group.

Amortisation
Intangible assets acquired separately
Intangible assets with a finite useful life that are acquired separately are carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight-line basis over the asset’s estimated useful life. The estimated useful life and
amortisation method are reviewed at the end of each reporting period. The estimated useful lives are between 3 and 6 years.

Internally generated intangible assets

Development expenditure on an internally generated intangible asset is capitalised only if the expenditure can be measured reliably the
product or process is technically and commercially feasible future economic benefits are probable and the Group intends to and has
sufficient resources to complete the development and to use or sell the asset. Otherwise expenditure is recognised in profit or loss as it
is incurred.

Internally generated intangible assets are subsequently measured at cost less accumulated amortisation and accumulated impairment
losses.

Amortisation of computer software is calculated using the straight–line method to write down the cost of intangible assets to their
residual values over a three year period except for the Oracle core banking system and general ledger, Automated Transfer System
(ATS) and Central Securities Depository (CSD) software which are amortised over a period of six years.

Disclosure
Intangible assets are identifiable non-monetary assets without physical substance that present future economic benefits and are controlled
by the Bank. The Bank’s intangible assets consist of computer software that has been internally developed or externally acquired. Costs
that are directly associated with the internal development of identifiable software are recognized as intangible assets if in management’s
best estimate the asset can technically be completed and will provide future economic benefit to the Bank. Subsequent expenditure is
capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

An intangible asset shall be derecognised: (a) on disposal; or (b) when no future economic benefits are expected from its use or disposal.
The gain or loss arising from the derecognition of an intangible asset shall be determined as the difference between the net disposal
proceeds if any and the carrying amount of the asset. It shall be recognised in profit or loss when the asset is derecognized.

Consolidated and separate

Software Work in progress Total
K'm K'm K'm
Year 2024

Cost

At beginning of the year 5 909 5 375 11 284

Additions during the year 322 12 677 12999
Transfers 8 114 (15 129) (7 015)
Cost Adjustment (96) - (96)
Impairment adjustment - (1 731) (1 731)

At end of the year 14 249 1 192 15 441

Accumulated amortisation and impairment
At beginning of the year 5 317 - 5 317
Charge for the year 1 789 - 1 789

At end of the year 7 106 - 7 106

Carrying Amount
At end of the year 7 143 1 192 8 335

Page 107
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

9 Intangible assets (Continued)

Consolidated and separate (Continued)

Software Work in progress Total
K'm K'm K'm
Year 2023

Cost

At beginning of the year 4 893 5 216 10 109

Additions during the year 490 2 477 2 697
Transfers 526 (1 281) (755)
Impairment adjustment - (1 037) (1 037)

At end of the year 5 909 5 375 11 284

Accumulated amortisation and impairment
At beginning of the year
Impairment adjustment 4 640 - 4 640
Charge for the year 677 - 677

At end of the year 5 317 - 5 317

Carrying Amount
At end of the year 592 5 375 5 967

In the current year, K7 015 million has been transferred to property, plant and equipment in note 8. The transfers relate to hardware
components from ICT projects upon completion of the project. All completed projects at the reporting date were duly unbundled and
capitalised to the appropriate asset categories.

10. Notes and Coins in Circulation

Accounting policy
Notes and coins in circulation are recognised at fair value when they are put into circulation and derecognised when they are
withdrawn from circulation. Notes and coins are put into circulation at the time they are removed from the Bank’s vaults and
transferred to commercial banks.

Disclosure
The currency in circulation represents the balance of banknotes and coins in circulation held by the general public and financial
institutions recorded at the face value. The following banknotes and coins were in circulation as at 31 December 2024 and 2023.

2024 2023
Notes Quantity Value Quantity Value
K’m K’m
5000 105 305 942 526 530 64 309 783 321 549
2000 127 077 781 254 156 91 844 500 183 689
1000 38 298 818 38 299 27 656 775 27 657
500 25 891 736 12 946 18 148 464 9 074
200 27 612 299 5 524 30 676 383 6 135
100 50 337 926 5 034 54 660 721 5 466
50 105 154 867 5 254 67 925 119 3 396
20 110 039 446 2 201 89 202 955 1 784
Total 849 944 558 750
Coins 1 205 1 194
Total 851 149 559 944

Page 108
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

11. Other assets and liabilities

Accounting policy
Other assets and liabilities are measured and classified at amortized cost except for inventories refer below. For loans to employees
the Bank assesses ECLs based on historic loss ratios adjusted for forward-looking macroeconomic information.

Inventories
Accounting policy
The cost of inventory includes cost of the production of notes by printers/minters freight and clearing charges. These are recognised at
initial costs in the financial statements. At the point of issuing the new currency the first-in first-out (FIFO) basis is used to determine
the value that is to be charged to the profit or loss. Coins are expensed in the profit or loss account.
Accounting Judgement and estimates
Judgement is required when determining which costs are to form part of the cost of purchased inventories or cost of conversion of
inventories.
Disclosure
Other assets and liabilities include items presented in the following table:
a) other assets
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Prepayments 16 618 16 618 10 979 10 979
Staff loans and advances 17 430 17 577 15 019 14 735
Less Expected Credit Loss (226) (226) (6) (6)
Recoverable expenditure 2 635 2 635 2 534 2 534
Other receivables 2 044 - 2 301 3
Inventory: currency notes 54 204 54 204 39 342 39 342
Stocks 891 891 599 599
Clearing accounts 16 394 16 394 16 209 16 209
Inventory: Gold Alluvial and precious metals 38 041 38 041 18 428 18 428

Total other assets 148 029 146 134 105 405 102 823
Staff loans are issued to members of staff at concessionary rates. The recoverable amount of the loan balances is determined using the
effective interest rate method and the difference between the carrying value and the recoverable amount is first recognised as a liability
before an impairment loss is recognised in profit or loss.
Disclosure
Other assets and liabilities include items presented in the following table:
In 2021, the Group initiated a program for purchasing gold and other precious metals through EDF. In 2023, alongside the existing
gold-buying effort, the Group extended its activities to include the purchasing of gemstones. The total weight of smelted gold in
existence as at 31 December 2024 was 296.28 Kgs (2023: 166.22 Kgs), with a purchase cost of K37 097 million (2023: K16 711
million).

Quantity Consolidated Separate Consolidated Separate

2024 2024 2024 2023 2023
K’m K’m K’m K’m

Gemstones

Ruby - 34 34 34 34
Saphire 2.89 980 980 1 018 1 018
Rhodelite 13.03 380 380 386 386
Aquamarine 0.13 23 23 23 23
Tourmarine 0.04 3 3 4 4

296.28 1 420 1 420 1 465 1 465

Gold
Cost 37 097 37 097 13 157 13 157
Changes in Gold (476) (476) 3 806 3 806

Total 38 041 38 041 18 428 18 428

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

11. Other assets and liabilities (Continued)

Disclosure
Other liabilities include items presented in the following table:

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m

(b) Other liabilities (domestic)

Payables 2 466 11 465 11 543 14 828

Appropriation to Government* 344 080 344 080 154 550 154 550
Payroll accruals 1 440 1 440 1 237 1 237
Other payables 13 244 13 244 6 661 6 661
Tevet levy 323 323 272 272
PAYE 2 484 2 484 2 335 2 335
Audit fees 469 384 147 67
Payable to Provident Fund 9 476 9 476 - -

Total other liabilities 373 982 382 897 176 745 179 950

*In line with Section 64 (3) of the Reserve Bank of Malawi Act, (CAP. 44:02 of Laws of Malawi, in an event of outstanding advances
as provided for in section 39, or promissory notes issued by the Government to cover losses from currency revaluations, the net
profit shall be used to repay such outstanding advances or redeem the amounts of the promissory notes. Subsequent to the year end,
when the net profit will be declared and be made available for distribution to the government, the Bank will first offset net profit
with outstanding advances to government or promissory notes or both at that time and thereafter any remaining profit amount will
be declared dividend to the government.

Included in other payable is a total sum of K9.5 million payable to the provident fund to cover the deficit for the defined benefit scheme.

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

12. Subsidiary- Export Development Fund

Accounting Policy
Subsidiaries are fully consolidated from the date on which control is transferred to the Reserve Bank of Malawi. The acquisition method
of accounting is used to account for subsidiaries by the Group. Investments in subsidiary are stated at cost less allowance for impairment
losses where appropriate and include loans to subsidiaries with no repayment terms where these are considered part of the investment
in subsidiaries. Intercompany transactions balances and unrealised gains on transactions between the Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Bank.

Disclosure
The Export Development Fund Limited (EDF) was set up by the Malawi Government through the Reserve Bank of Malawi with its
major objective being to ensure that Malawi’s vast export potential and business opportunities are exploited in order to generate the
much-needed foreign exchange for the Country. The authorized share capital of the company is K1 billion (2023: K1 billion) divided
into 1,000,000,000 ordinary Shares of 1 kwacha each (2023: 1,000,000,000 ordinary shares of 1 kwacha each). No new shares were
issued in the year (2024: 630 million ordinary shares of 1 kwacha each).

The Fund received K10 billion in December 2024 from Reserve Bank of Malawi as part of capital injection giving rise to total capital
of K28 700 (2023: K18 700) and the funds have been employed by EDF but are awaiting capitalisation as shares will be issued in the
year ending 31 December 2025.

The EDF is yet to meet the capital adequacy requirement of USD 50 million paid up share capital. Reserve Bank of Malawi has granted
extension of time up to 31 December 2027 or pending the review of the Directive for Export Development Fund Limited to comply
with the minimum paid up capital requirement as stipulated under the Financial Services (Capital Adequacy for Development Finance
Institutions) Directive, 2018.

13. Capital, general reserves fund and other reserves

Accounting policy
The property revaluation reserve represents accumulated net gains on properties that have been revalued. Deficits are offset against
previous gains arising on the same property. Where properties that have been revalued subsequent to acquisition are later liquidated
the amounts contained in the revaluation reserve relating to the property sold are transferred to general reserves. Unrealized foreign
currency exchange rate revaluation gains and losses recorded in the Bank’s profit or loss are transferred to the foreign exchange
revaluation reserve. Gains (losses) that subsequently realized are added to (deducted from) amounts to be distributed. The Bank’s
annual profits are transferred to the General Reserve Account as set out in the Reserve Bank of Malawi’s Act the balance is transferred
to Government as dividends. There has been no charges from prior year.

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

13. Capital, general reserves fund and other reserves (Continued)

Disclosure 2024 2023

K’m K’m

13.1 Capital 19 484 19 484

The capital account is maintained in accordance with section 6 of the Reserve Bank of Malawi
Act (Cap. 44:02 of the Laws of Malawi) which stipulates that from time to time the capital of
the Bank shall be increased by such an amount as the Board may approve with consent of the
Minister of Finance and the Government shall subscribe and pay up at par the amount of such
increase and shall ensure that the Bank is kept solvent at all times. There has been no changes
from prior year.

13.2 General reserve fund- Separate 159 122 111 501

The general reserve fund is maintained in accordance with the terms of Section 64(2) and (3) of
the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of Malawi) whereby the Bank shall
ensure that the fund has a minimum balance of not less than 10% of the Bank’s monetary
liabilities (Bankers’ deposits. Notes and coins in circulation and open market operations). The
profit shall be credited to the general reserves fund until it reaches 10% of the monetary
liabilities and thereafter any profit shall be distributed to Government. With the approval of the
Minister of Finance further allocations may be made to the general reserve fund. In the event of
a loss being incurred by the Bank such a loss is deducted from the general reserve.

The Group has a general reserve fund of K160 752 million (2023: K111 501 million). The 160 752 111 501
subsidiary general reserves represent a mandatory reserve as stipulated by section 6 of the
Capital Adequacy Directive of 2018 which states that an institution shall have a policy on
general reserve which requires transfer of at most 25% of the institution’s annual profits. In
2024, the company has set a policy of having a minimum 10% of its annual profits appropriated
to the general reserve in order to comply with the set directive.

13.3 Special account - -

The special account is maintained in accordance with the terms of Section 64(6), (7) & (8) of
the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of Malawi). The Act stipulates that
the results from any currency revaluation or fluctuation of the Malawi currency shall firstly be
recognised in the Bank’s profit and loss account and at the end of each financial year be posted
directly into a special account. Unrealised gains from currency fluctuation or revaluation shall
not be distributed whilst realized gains may only be distributed under special circumstances
specifically approved by the Board. Any losses arising from revaluations shall be deducted from
the special account and if the special account balance is exhausted shall be covered by
promissory notes of the Government on such terms and conditions as shall be agreed upon
between the Minister of Finance and the Bank.

Included in the special account reserve is an amount relating to foreign exchanges differences
on the translation of gold holdings.

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

13. Capital, general reserve fund and other reserves (Continued)

Disclosure 2024 2023

K’m K’m

13.4 Revaluation reserve 133 665 105 906

The revaluation reserve is maintained to cater for net surpluses or deficits arising from the
revaluation of land and property. The net surpluses are recognised in other comprehensive
income before being transferred to the revaluation reserve whilst deficits on revaluation are
charged to profit or loss except to the extent that the deficit relates to a prior surplus transferred
to the revaluation reserve. This is non distributable to shareholders.

13.5 Fair value reserve on FVOCI financial assets (93 820) (109 891)
The fair value reserve is maintained for gains and losses arising from a change in the fair value
of available-for-sale financial assets which are recognised in other comprehensive income. When
these financial assets are sold or otherwise disposed of the cumulative gain or loss previously
recognised in other comprehensive income is reclassified to profit or loss. This is non
distributable to shareholders.

13.6 Capital reserve 2 360 5 374

In 2012 the subsidiary (the Export Development Fund Limited) was allotted 400 ordinary shares
in Norsad Finance Limited through the Malawi Government which is denominated in US dollars.
The capital reserve is maintained for the investment made in Norsad Finance Limited and any
foreign translation differences are recognised in profit or loss before being transferred to the
capital reserve. The movement is due to the decrease in net assets of Norsad Finance Limited as
at 31 December 2024 from prior year.

Deposit Insurance Corporation - -

The Deposit Insurance Corporation (DIC) was established through an Act of Parliament, with
its shareholders being the Government of Malawi and the Reserve Bank of Malawi. The initial
share capital for the DIC was set at K7.5 billion, with contributions allocated as 40% from the
Ministry of Finance and 60% from the Reserve Bank of Malawi. As of 31 December 2024, the
Bank had contributed K4 billion, while the Malawi Government had provided K1 651 billion.
Deposit insurance serves as an explicit guarantee that, in the event of a financial institution's
failure, all or part of depositors' funds will be reimbursed. It is a key mechanism used by
Governments to enhance financial sector stability and safeguard small depositors. As part of a
broader financial safety net, deposit insurance complements financial sector laws and
regulations, lender of last resort facilities, and supervisory frameworks.

Although the Bank is a major shareholder, an assessment was done under IFRS 10 Consolidated
Financial Statements to determine whether it exercises control over the DIC. The evaluation
concluded that, despite its significant shareholding, the Bank does not have control over the DIC
as follows:

• The Bank does not have power over the DIC’s relevant activities. The DIC operates
autonomously with its own governing body and the DIC Act and the DIC board is
responsible for establishment of both strategic and operation policies and the board
has full control over business activities.
• The Bank is not entitled to variable returns from the DIC such as dividends, interest
other income from DIC.
• The Bank does not have the ability to affect the DIC’s returns. The DIC is currently
managed by staff on secondment from the Bank who are offering operational support
in a number of areas. However, the Bank does not unilaterally change the DIC’s
operating policies or strategic direction. The DIC Board is responsible for the
appointment and removal of key management personnel.

Based on the assessment, IFRS 10 does not apply due to the nature of the Bank’s relationship with the
DIC. The Bank's capital contribution of K4 500 million (2023: Zero) has been recorded as equity under
the capital reserve and the payment has been recovered from the profit.

Page 113
 RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL
STATEMENTS (Continued)
For the year ended 31 December 2024

13.6 Deposit Insurance Corporation (Continued)

Further, in accordance with Section 53 of the DIC Act that states that: The Reserve Bank may
guarantee the redemption and repayment of any debt raised by the Corporation in a manner
upon terms as the Bank may consider appropriate, the Bank bears financial risks or obligations
related to the entity’s performance. Considering that the DIC is still in its initial stages and has
not yet disbursed any payout, the Bank is currently not obligated to provide support for DIC’s
financial commitments and there are currently no signs of insolvency among commercial banks
that would require the DIC to intervene. Consequently, there is no immediate need for the DIC
to secure external funding that would necessitate a guarantee from the Bank. Given this, no
present obligation exists for the Bank to settle any debt on behalf of the DIC as at 31 December
2024.

DIC’s Statement of Financial Position as at 31 December 2024

2024 2023
Assets K’m K’m
Current assets 4 652 -
Fixed assets 549 -
Deposit insurance fund 8 867 -
Total Assets 14 068 -

Liabilities and Equity

Liabilities
Current liabilities 403 -
Deposit insurance fund-banks 7 239 -

Total liabilities 7 642 -

-
Equity
Share capital 5 651 -
Retained earnings 775 -
6 426 -
Total Liabilities and Equity 14 068 -

13.7 Loan Loss Reserve

In line with Development Financial Institutions (DFI) directive, the Group has transferred excess of expected credit losses under
the directive of K5.5 billion (2023: K nil), when compared to IFRS 9 losses to loan loss reserve account in line with section 15(4)
of Credit Risk Management Directive, 2018.

14. Interest income and expense

Accounting policy
a) Interest and similar income and expense
For all financial instruments that are measured at amortized cost or fair value through other comprehensive income interest
income or expense is recorded at the effective interest rate which is the rate that exactly discounts the estimated future cash
receipts or payments through the expected life of the financial instrument or a shorter period where appropriate to net carrying
amount of the financial asset or financial liability. The calculation considers all contractual terms of the financial instrument
and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the
effective interest rate but not future credit losses. The carrying amount of the financial asset or financial liability is adjusted
if the Group revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original
effective interest rate and the change in carrying amount is recorded as interest income or expense.

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

14. Interest income and expense (Continued)

b) Interest income recognition base

The original effective interest rate is applied to the gross carrying amount (carrying amount without reduction by expected
credit loss allowance) of a financial asset for which:

• credit risk has not increased significantly since initial recognition (stage 1);
• credit risk has increased significantly since initial recognition but which are not credit-impaired (stage 2).
For financial assets which are credit-impaired the original effective interest rate is applied to the net carrying amount (carrying
amount after reduction by expected credit loss allowance).

Expense arising on financial assets because of a negative effective interest rate is not presented as interest revenue but
included with interest as an expense.

Disclosure
Net interest income is comprised of net interest income from money market banking and foreign reserve management operations.

Consolidated
Net Interest Income for the
year ended 31 December 2024 Amortised
Cost FVOCI Total
K’m K’m K’m
Interest income 323 694 413 662 737 356
Interest expense (174 344) - (174 344)
Net interest income 149 350 413 662 563 012
Separate

Net Interest Income for the year

ended
431 December 202 Amortised
Cost FVOCI Total
K’m K’m K’m
Interest income 307 001 413 662 720 663
Interest expense (170 999) - (170 999)
Net interest income 136 002 413 662 549 664

Consolidated
Net Interest Income for the
year ended 31 December 2023 Amortised
Cost FVOCI Total
K’m K’m K’m
Interest income 122 468 272 293 394 761
Interest expense (118 619) - (118 619)
Net interest income 3 849 272 293 276 142
Separate

Net Interest Income for the year

ended 31 December 2023 Amortised
Cost FVOCI Total
K’m K’m K’m
Interest income 108 501 272 293 380 794
Interest expense (113 454) - (113 454)
Net interest income (4 953) 272 293 267 340

Page 115
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

15. Fee and Commission income and expense

Disclosure
Accounting policy
The Group earns fee and commission income from a diverse range of services it provides to its counterparties. Fee and commission
income includes supervisory licensing cash operations fees and fund transfer fees which are recognised as the services are provided.
Fee and commission expense consists of cash operation settlement fees and fees paid to the various financial institutions and are
recognised as expense as the services are rendered.

Disclosure
Fees and commission income from contracts with customers in the scope of IFRS 15 is disaggregated by major types of services. The
table also includes a reconciliation of the disaggregated fee and commission income within the Group’s reportable segments.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m

Supervisory and subscription 1 346 1 346 513 513

Licensing and registration 111 111 82 82
Currency Processing charges 170 170 138 138
ATS fees 251 251 262 262
Other 18 18 47 47
1 896 1 896 1 042 1 042
Total fee and commission income

The fees and commission income are transacted on cash basis once the service has been rendered as such they were no contract balances
outstanding as 31 December 2024. Fee and commission income from contracts with customers is measured based on the consideration
specified in a contract with a customer. The Group recognises revenue when it transfers control over a service to a customer. The following
table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers
including significant payment terms and the related revenue recognition policies

Type of service Nature and timing of satisfaction of Revenue recognition under IFRS 15
performance obligations, including
significant payment terms
Supervisory
Fees for supervisory services are based on The revenue related to these transactions
Non-performing loans ratio. is recognised at the point in time when the
transaction takes place.

Licensing and registration Fees for annual licenses and registration Revenue related to transactions is
of new financial services operators at the recognised at the point in time when the
end of the year. transaction takes place.

Currency processing charges These are penalties for non-compliance This is recognised at the point transactions
with currency processing guidelines. take place.

Fees charged to commercial banks for This is recognised at the point transactions
Automated Transfer System (ATS) fees using the system. take place.

Other This covers penalties and fines to various Revenue related to transactions is
financial services providers recognised at the point in time when the
transaction takes place.

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

16. Other income

Material accounting policy information
All other income not separately classified are accommodated in the other income category such income includes receipts from rental
income, commodity revenue, arrangement fees and deferred income among others that vary on a year-on-year basis. The Group recognises
grant income in its books using the Income approach as per IAS 20: Accounting for Government Grant and Disclosure of Government
Assistance. Net income of K45 million (2023: nil) was realized from sale of precious metals (PMM).

Disclosure

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Rental income 55 55 12 12
Smelted Gold value adjustment (see note 11(a)) - - 3 806 3 806
Profit on disposal on property, plant and equipment 6 6 - 2
PMM net trading income (Refer below) 45 45 - -
Sundry income 2 070 2 070 2 376 2 372
Other income 211 - 3 738 2
2 387 2 176 9 932 6 194

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
PMM trading expense 90 90 - -
PMM trading expense (45) (45) - -
45 45 - -

Sundry income relates to income from a variety of sources such as proceeds from public auction sales, insurance claims and staff
cost recoveries for staff seconded to Export Development Fund Limited and sale of bid documents when a request for proposal has
been made.
17. Employee benefits

17.1 Short-term and other long-term employee benefits

Material accounting policy information

Short-term and other long-term employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries annual and sick leave in the period the
related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected
to be paid in exchange for the related service.

Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash
outflows expected to be made by the Group in respect of services provided by employees up to the reporting date.

Disclosure
Short term employee benefits comprise salaries wages and allowances. Staff access staff loans at a concessionary rate. The Group
recognises the amount of short-term employee benefits expected to be paid as an expense or as a liability (accrued expense) after
deducting any amount already paid. The number of employees employed by the Bank at December 31 2024 was 893 (2023:837)

Page 117
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

17. Employee benefits (Continued)

17.1 Short-term and other long-term employee benefits (continued)

Personnel expenses
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Salaries 50 666 47 664 40 375 37 389
Retirement Benefits 15 833 15 833 5 666 5 666
Staff Benefits 3 493 3 493 7 001 7 001
Insurance 421 421 240 240
Training 2 975 2 975 2 569 2 569
Bereavement 124 124 113 113
Other Staff Cost 3 186 3 186 2 426 2 426
76 698 73 696 58 390 55 404

17.2 Post-Employment Benefits

These are benefits payable to employees after the completion or termination of employment. These benefits comprise of the following
• The pension plan; and
• The staff provident fund.

a) Pension plan
In line with the Pensions Act (2023) the Bank operates a Pension Scheme for all members of staff. The Fund is administered by the
RBM Pension Fund which is a separate entity established solely for the administration of the Bank’s employees Fund.
The Bank operates a hybrid pension scheme with elements for both defined contribution and defined benefit fund for its employees
through an internally managed Fund. The Bank contributes 15% of the eligible employee’s basic salary whilst the eligible employee
contributes 3.5% of the basic salary. The contributions due and paid to the Fund by the Bank for the year ended 31 December 2024
amounted to K5 674 million (2023: K4 750 million). The contributions are charged to profit or loss in the year they arise.

The Fund operates on defined contribution principles with some elements of defined benefit making the Fund hybrid. Whilst both the
Bank and employees contribute into the Fund, monthly pension of a retiring member is derived by adding amount calculated based
on residual pension to an amount equivalent to 2.5% of member’s final salary. Employees contribute a rate of 3.50% of their salaries
whilst the Bank contributes 15%. Out of the 15% contributed by the Bank 10% is credited to members as employer contribution,
3.5% is credited to Reserve Guarantee Account/Top Up Fund and 1.5% tops up the employee’s contribution of 3.5% in order to meet
the minimum mandatory member contribution rate of 5%. The Guarantee Reserve account is used to cover obligations arising from
defined benefit elements of the scheme.

Statutory actuarial valuations are performed biennially in line with IAS 19 (Employee Benefits) and Pension Act 2023. The valuation
among other things determines the adequacy of funding for the Fund. The latest valuation was carried out as at 31 December, 2023.
The 2023 valuation found the fund to be in a sound financial position with a funding level of 113.9%.

Page 118
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

17. Employee benefits (Continued)

17.2 Post-Employment Benefits (Continued)

b) Staff provident fund

The Bank created the Reserve Bank of Malawi Provident Fund under a signed Trust Deed. The Fund started its operations on 1
December 2019. The objectives of the Fund are to provide supplementary employment benefits for the employees of the Reserve
Bank of Malawi and to foster and promote a saving culture by the bank’s employees. Employees become eligible under the
provisions of the rules governing it.

The Fund is principally a hybrid in nature and all employees of the Reserve Bank of Malawi are eligible to join the Fund. The
benefits granted to a retiring member are determined by a formula defined in the Fund’s rules. Members are required to contribute
a minimum of 1% of each member’s basic pensionable salary. Due to benefits structure changes introduced in 2024, a K9.5
billion funding deficit arose and was recognised as a payable by the Bank as at 31 December 2024 (2023: nil) as the Bank is
expected to inject this additional contribution into the Fund to cover the deficit. The number of employees currently benefiting
from this Fund is 897 (2023:837).

c) Group life Insurance

Members of staff are entitled to Group Life insurance payable upon death as per the requirements of the Pension Act 2010.
The statutory requirement is that an equivalent of one-year emoluments should be paid upon death of an employee. However,
the Bank opted to be paying two times annual salary and the other half is payable from the provident fund through self-
insurance mechanism (refer to b above).
2024 2023
K’m K’m

Bank’s Contributions 345 218

18. Operating expenses

Material accounting policy information

Operating expenses are expensed as services are rendered to the Group:

Disclosure
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Administration 30 730 29 384 23 229 22 691
Maintenance Cost for Premises 5 340 5 340 4 012 4 012
Sports and Social Activities 2 874 2 874 1 977 1 977
Indirect Taxes 4 026 4 026 2 787 2 787
Financial Sector Development
1 052 1 052 761 761
Expenses
Currency Management 29 418 29 418 23 148 23 148
Gold written down value - - - -
Other 1 355 1 355 1 261 1 261
74 795 73 449 57 175 56 637
Indirect rates include fringe benefits tax, tevet levy, non-resident tax and public procurement and disposal tax levy. Included in
the administration costs are expenses for audit and non-audit fees as follows:-

Page 119
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

18. Operating expenses (Continued)

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Audit fees 590 484 441 359
Non- Audit Services fees
Prudential Standards Guidelines Rating
System Scores 13 - 9 -
Net International Reserves- Agreed
Upon Procedures 138 138 106 106
Tip Offs Anonymous Services 5 5 5 5

746 627 561 469

The Audit Committee is responsible for determining that the external audit firm has the necessary independence, experience,
qualifications, and skill and that the audit fees and non-audit fees are reviewed and approved.

The Audit Committee is satisfied that Deloitte is independent, the considerations include the extent of non-audit services undertaken by
Deloitte for the year ended 31 December 2024 and 31 December 2023, against the relevant regulatory requirements pertaining to
independence and conflicts of interest.

19. Taxation
The Bank is exempt from payment of income tax under Section 67 of the Reserve Bank of Malawi Act (Cap. 44:02 of the Laws of
Malawi). In this regard the Bank distributes its excess profit to the Government of Malawi. The Group income tax charge for the year
was as follows:
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Income tax (charge)/credit
Income tax charge (1 513) - 3 166 -
Deferred tax credit 184 - (22) -
Indirect Taxes - - - -
(1 329) - 3 144 -
This relates to tax charge for Export Development Fund Limited, a subsidiary of Reserve Bank of Malawi.

20. Realized and unrealized revaluation gains and losses

Material accounting policy information

Transactions in foreign currencies are translated into the functional currency of the Group at the exchange rates ruling at the reporting
date.
In preparing the financial statements of the Group entities, transactions in currencies other than the entity’s functional currency
(foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date,
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-
monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for:
• Exchange differences on foreign currency borrowings relating to assets under construction for future productive
use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on
those foreign currency borrowings;
• Exchange differences on transactions entered into to hedge certain foreign currency risks; and
• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign operation),
which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or
partial disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that
period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if
any, are recognised in other comprehensive income and accumulated in a foreign exchange translation reserve
(attributed to non-controlling interests as appropriate).
Page 120
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

20. Realized and unrealized revaluation gains and losses (Continued)

Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the end of each reporting period. Specifically:
• For financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange
differences are recognised in profit or loss in the ‘Other gains and losses’ line item;
• For debt instruments measured at FVTOCI that are not part of a designated hedging relationship, exchange differences
on the amortised cost of the debt instrument are recognised in profit or loss in the ‘Other gains and losses’ line item. As
the foreign currency element recognised in profit or loss is the same as if it was measured at amortised cost, the
residual foreign currency element based on the translation of the carrying amount (at fair value) is recognised in other
comprehensive income in the investments revaluation reserve;
• For financial assets measured at FVTPL that are not part of a designated hedging relationship, exchange differences are
recognised in profit or loss in the ‘Other gains and losses’ line item as part of the fair value gain or loss; and
• For equity instruments measured at FVTOCI, exchange differences are recognised in other comprehensive income in
the investments revaluation reserve.

Statement of Judgements and Estimates

Monetary assets and liabilities in foreign currencies are translated to Malawi Kwacha at rates of exchange ruling at the reporting
date. In compliance with Section 64 of the Reserve Bank of Malawi Act and IAS 21 the results from any currency revaluation
or fluctuation of the Malawi currency are recognized in the Bank’s profit and loss account and at the end of each financial year
are posted directly into a special account.

Unrealised gains from currency fluctuation or revaluation are not to be distributed whilst realized gains may only be distributed
under special circumstances specifically approved by the Board. Any losses arising from these revaluations are deducted from
the special account and if the special account balance is exhausted then are covered by promissory notes of the Government
on such terms and conditions as agreed upon between the Minister of Finance and the Bank. Foreign currency differences on
translation for monetary items are generally recognised in profit or loss. Whereas a gain or loss on a non-monetary item
measured at FVOCI are recognised directly in other comprehensive income.
Disclosure
As per section 64(7) of the Reserve Bank of Malawi Act (Cap. 44:02) of the Laws of Malawi the Bank upon Board’s approval
is mandated to distribute realized foreign exchange revaluation gains. During the year the Bank recorded a total net foreign
exchange revaluation loss amounting to K48 598 million (2023: K708 663 million).

Analysis of foreign exchange valuation Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K’m K’m K’m K’m
Net realized foreign exchange revaluation gains 6 898 6 898 13 596 13 596
Net unrealized foreign exchange revaluation losses (55 496) (55 496) (722 259) (722 259)

(48 598) (48 598) (708 663) (708 663)

Net loss on revaluation of IMF facilities (726) (726) 252 817 252 817
Net loss/(gain) on other foreign currencies (47 872) (47 872) 455 846 455 846

(48 598) (48 598) 708 663 708 663

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

21. Profit distribution

Disclosure
The Bank’s profit distribution is determined in accordance with section 64 of the Reserve Bank of Malawi Act (Cap. 44:02).
Distributable profit is based on profit or loss as determined in accordance with IFRS Accounting Standards as issued by the
International Accounting Standards Boards (before other comprehensive income) with the following adjustments.
• Section 64 (6) of the RBM Act stipulates that the results from any currency revaluation or fluctuation of the Malawi
currency shall firstly be recognized in the Bank’s profit or loss account and at the end of each financial year to be
posted directly into a special account.
• Section 64 (7) states that “unrealized gains from currency fluctuation or revaluation shall not be distributed whilst
realized gains may only be distributed under special circumstances specifically approved by the Board.
• Sections 64 (2) of RBM Act states that the Bank shall ensure that the General Reserve Fund has a minimum balance
of not less than ten percent of the Bank’s monetary liabilities. The Bank considers the following as monetary liabilities;
Notes and Coins in Circulation; Bankers Deposits; and Open Market Operations liabilities.
Consolidated Separate Consolidated Separate

2024 2024 2023 2023

K’m K’m K’m K’m
Total other comprehensive income 409 565 403 849 (543 251) (557 567)
Add: Statutory transfer of net forex revaluations; (as
20 48 598 48 598 708 663 708 663
per section 64 (6) of the RBM Act 1989)
Less: Gold revaluations transferred to revaluation 6
(12 416) (12 416) (4 231) (4 231)
reserve account
Less: Net gain on revaluation of property (27 759) (27 759) (21 709) (21 709)
Less: Net gain on revaluation of investment 8 241 5 227 (3 063) -
Add: Net change in fair value of treasury notes and bills (21 298) (21 298) 32 934 32 934
Distributable profit for the year before other
404 931 396 201 169 343 158 090
comprehensive income
Distribution
General Reserve Fund: 49 251 47 621 3 540 3 540
Retained Earnings 8 730 - 11 253 -
Contribution to DIC 4 500 4 500 - -
Regulatory reserves - EDF (1 630) - - -
Dividend to Malawi Government* 11 (a) 344 080 344 080 154 550 154 550

Total 404 931 396 201 169 343 158 090

*As at 31 December 2024, the Bank had outstanding promissory notes of K660 904 million (2023: K775 260) that were issued by
Malawi Government to cover 2024 and 2023 net foreign exchange revaluation losses. According to Section 64(3) of the Reserve
Bank of Malawi Act, in an event of outstanding advances as provided for in section 39, or promissory notes issued by the
Government to cover losses from currency revaluations, the net profit shall be used to repay such outstanding advances or redeem
the amounts of the promissory notes. In the fiscal year ending 31 March 2025, the net profit will be used to settle any outstanding
balances from Advances to Malawi Government or the promissory notes.

The subsidiary does retain the profit as retained earnings. To meet the minimum capital adequacy of USD 50 million, the EDF
has been retaining the profit for years.

Page 122
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

22. Investment in Associate

2024 2023
K’m K’m

Cost of share acquired in the year 1 276 -

Share of losses in associate (209) -

At 31 December 1 067 -

Statement of financial position and performance of

Associate
Current assets 4 629 872
Non-current assets 1 236 271
Total 5 865 1 143

Equity
Share capital 3 536 1 463
Accumulated losses (1 939) (390)
1 597 1 073

Non-current liabilities 3 785 -

Current liabilities 483 70

Total 5 865 1 143

Revenue 79 31
Operating gains /(losses) 691 (17)
Operating expenses (2 126) (371)
Finance costs (192) (24)
Total comprehensive loss for the year 1 548 381

Dividend received from associate - -

MMC Limited is a company incorporated in Malawi. MMC Laboratories Limited was incorporated in Malawi with interests in the EU-
GMP pharmaceutical API manufacturing. The shares were acquired in February 2024 at a cost of K1 275 500 000 by EDF. The
Group’s shareholding in the company as at 31 December 2024 stood at 202 shares, representing 20.2 percent (2023: nil). This
investment denominated in Kwacha and has been accounted for using equity method as an investment in associate in EDF as at 31
December 2024. No dividend was received from the associate.

Principal activity is manufactures of bulk cannabis-derived APIs for B2B and place of business is Mbabzi Estate, Off Kasiya road,
Lilongwe, Malawi.

The Financial year end of MMC Limited is 30 September. This was the reporting date established when the company was
incorporated. For the purposes of applying equity method of accounting, the financial statements of MMC limited for the year ended
30 September 2024 have been used and appropriate assessment has been made for the effects of significant transactions between 1
October to 31 December 2024 with no adjustment made.

The directors consider that the carrying amounts of the investments approximates to their fair values. A 10% change upward or
downward in valuation basis would result in a fair value gain or loss of K249 million (2023: K537 million) for quoted and unquoted
investments respectively.

Page 123
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

23. Fair value of financial assets and financial liabilities

Disclosure
IFRS defines fair value as the price that would be received on a sell of an asset or paid to transfer a liability in orderly transactions
between market participants at the measurement date.
The carrying amounts of loans and advances liquid assets deposits and short-term balances with foreign banks approximate their fair
value. Where there is an absence of an active market discounted cash flow techniques are used to determine the fair value of the
financial assets and financial liabilities.
Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting year. The
following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value grouped
into fair value hierarchy levels 1 to 3 based on the degree to which the fair value is observable (see note below).
• Quoted prices in an active market (Level 1) – Level 1 comprises assets that are valued based on unadjusted quoted prices
in active markets. An active market is a market in which transactions take place with sufficient frequency and volume to
provide pricing information on an ongoing basis;
• Valuation techniques using observable inputs (Level 2) – Assets and liabilities classified as Level 2 are valued using
models with inputs that are either directly or indirectly observable. Inputs are considered observable when they are
developed using market data reflecting actual events or transactions; and
• Valuation techniques incorporating information other than observable market data (Level 3) – Assets classified as Level
3 are valued using models with significant use of unobservable inputs. Unobservable inputs are inputs for which market
data are not available and that are developed using the best information available about the assumptions that market
participants would use when pricing the asset.
The table below provides an analysis of the financial instruments measured at fair value at 31 December 2024 by the level in the fair
value hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the
statement of financial position. There were no transfers between Level 1 2 and 3 during the year ended 31 December 2024.

Consolidated Level 1 Level 2 Level 3 Total

31 December 2024 K’m K’m K’m K’m
Financial liabilities at fair value through profit or loss
Derivative Liabilities - 1 140 - 1 140
Fair Value through other Comprehensive Income:
Treasury Notes - 1 966 861 - 1 966 861
Promissory Notes - 664 934 - 664 934
Foreign Bonds-US Government Treasury Notes 10 528 - - 10 528
Investment in NITEL - - 6 6
Investment in Blantyre Hotels plc 4 701 - - 4 701
Investment in MMC Limited - - 1 067 1 067
Investment in Afrexim Bank - - 12 334 12 334
Investment in Swift - - 281 281
Investment in Norsad Finance Limited - - 1 659 1 659
15 229 2 631 795 15 347 2 662 371
Separate
Level 1 Level 2 Level 3 Total
31 December 2024 K’m K’m K’m K’m
Financial Liability at fair value through profit or loss
Derivative Liabilities - 1 140 - 1 140
Fair Value through other Comprehensive Income:
Treasury Notes - 1 966 861 - 1 966 861
Promissory Notes - 660 904 - 660 904
Foreign Bonds-US Government Treasury Notes 10 528 - - 10 528
Investment in NITEL - - 6 6
Investment in Afrexim Bank - - 12 334 12 334
Investment in Swift - - 281 281
10 528 2 627 765 12 621 2 650 914

Page 124
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

23. Fair value of financial assets and financial liabilities (Continued)

Disclosure (Continued)

Consolidated Level 1 Level 2 Level 3 Total

31 December 2023 K’m K’m K’m K’m

Financial liabilities at fair value through profit or loss

Derivative Liabilities - 23 798 - 23 798
Fair Value through other Comprehensive Income:
Treasury Bills 29 534 - - 29 534
Treasury Notes - 1 615 173 - 1 615 173
Promissory Notes - 793 359 - 793 359
Foreign Bonds-US Government Treasury Notes 10 085 - - 10 085
Investment in NITEL - - 107 107
Investment in Afrexim Bank - - 11 998 11 998
Investment in Swift - - 162 162
Investment in Norsad Finance Limited - - 5 374 5 374
39 619 2 408 532 17 641 2 465 792
Separate
Level 1 Level 2 Level 3 Total
31 December 2023 K’m K’m K’m K’m

Financial Liability at fair value through profit or loss

Derivative Liabilities - 23 798 - 23 798
Fair Value through other Comprehensive Income:
Treasury Bills 29 534 - - 29 534
Treasury Notes - 1 615 173 - 1 615 173
Promissory Notes - 775 260 - 775 260
Foreign Bonds-US Government Treasury Notes 10 085 - - 10 085
Investment in NITEL - - 107 107
Investment in Afrexim Bank - - 11 998 11 998
Investment in Swift - - 162 162
39 619 2 390 433 12 267 2 442 319

Page 125
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

23. Fair value of financial assets and financial liabilities (Continued)

For fixed rate interest bearing financial assets and liabilities that have a short-term maturity it is assumed that the carrying amounts
approximates to their fair value. This assumption is also applied to demand deposits and savings accounts without a maturity. For
borrowing and other payables it is assumed that the carrying amounts approximate to their fair value including IMF liabilities.
Moreover, management of the Group believes that due to their specific nature borrowings from the IMF represent a separate segment
of borrowings from international financial organizations to support developing countries. As a result, these borrowings were
considered received in an “arm’s length” transactions.

Valuation Relationship
techniques(s) Significant unobservable
Fair Value as at Fair value and key unobservable inputs to fair
Financial Assets 31 December 2024 hierarchy inputs(s) input(s) Value

1 Fair value through Investment by Fund N/A N/A

Level 1 Quoted bid prices
profit or loss Managers–Treasury
in an active
Notes and Bond-
Zero. market

Fair value through Derivative Liability Level 2 Market risk free Fair value was Although the Group
profit or loss – K1 140 million. yields rates were based on believes that
used to calculate expected future estimates of the fair
the fair value of cash flows using value are appropriate
derivative the market yield the use of different
2 liability rates as at 31 methodologies or
December 2024 assumptions could
as the discount lead to different
rate. measurement of fair
value.
3 Fair value through Treasury Bills – Level 1 Quoted bid prices N/A N/A
other zero. in an active
Comprehensive market
Income
4 Fair value through Treasury notes- Level 2 Market yields Although the Group
other K1 966 861 million. were used to believes that
Fair value was
comprehensive calculate the fair estimates of the fair
based on
income value of these value are appropriate
expected future
securities. the use of different
cash flows using
methodologies or
the market yield
assumptions could
rates as at 31
lead to different
December 2024
measurement of fair
as the discount
value.
rate.
5 Fair value through Foreign Bonds Level 1 Quoted bid prices N/A N/A
other Treasury notes- in an active
comprehensive K10 528 million market
income
6 Equity Investments Nitel-K6 million Level 3 Discounted Discounted Although the Group
Blantyre Hotel Ltd - cashflow (20%) valuation model believes that
K4 701 million and adjusted net was used by estimates of the fair
MMC-K1 276 asset methods projecting the value are appropriate
million were used to cashflows for a the use of different
Norsad Finance Ltd calculate the fair period of five methodologies or
K1 659 million value for the years. Risk assumptions could
Afrexim-K12 334 equity adjusted discount lead to different
million investments. rate of 20% was measurement of fair
Swift-K281 million applied on net value.
assets.

Page 126
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

24. Related party transactions

Accounting Policy
The Group is owned by Malawi Government and under IAS 24.25 is exempt from the disclosure requirements pertaining to related
party transactions and outstanding balances including commitments with the Utopian government. This includes transactions with
other entities that are related parties because the Government of Malawi has joint control of or significant influence over both the
Group Bank and the other entities.

Disclosure
For the purpose of these financial statements, parties are considered to be related if the parties are under common control or one party
has the ability to control the other party or can exercise significant influence over the other party in making financial or operational
decisions as defined by IAS 24 – Related Party Disclosures. In considering each possible related party relationship attention is directed
to the substance of the relationship and not merely to the legal form.

Persons or entities are related parties to the Group if they are:

• under common ownership of the Government of Malawi;
• a post-employment benefit plan for the benefit of Group employees; or
• a member of key management personnel which include members of the Council or the Board of Directors and their families.

In the context of the Bank related party balances include transactions made by any of the following persons: -

• The Government of Malawi (refer to note 3.4 and 24);

• Government bodies (refer to note 3.2.1 (b) and 24);
• The Governor and his Deputies;
• Senior Government Officers;
• Members of the Board of Directors;
• Cabinet Ministers and Head of State;
• Immediate family of the above categories;
• The Reserve Bank of Malawi Pension Fund and Provident Fund (refer to note 17);
• Key management personnel;
• Export Development Fund (refer to note 12)
• NITEL (refer to note 7)

The Bank undertakes to disclose the nature of related party relationship types of transactions and the elements of the transactions
necessary for the understanding of the consolidated and separate annual financial statements. The details of the balances are shown
in the consolidated and separate statement of financial position under appropriate notes.

24.1 Transaction with Export Development Fund Limited

The following transaction took place between the Bank and its subsidiary.
Number of
shares %held 2024 2023
K’m K’m K’m
Investment in Export Development Fund (Carrying Value) 630 100 (2023: 100) 28 700 18 700
Amounts due to EDF 9 563 4 144
Staff secondment cost 952 917

Amount due from related party institution-loan 8 568 8 568

Interest Income on intercompany loan - -

Special projects fund 5 371 12 329

Amounts due from EDF-payables 952 917

Unutilised funds-Gemstones 461 729

Capital injection 10 000 -
Gold purchase commission 1 067 384
Staff secondment cost 207 155

Page 127
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

24. Related party transactions (Continued)

24.2 Transactions with NITEL
Number of
shares %held 2024 2023
K’m K’m K’m
Holding (Carrying Value) 3.5 5 6 107
Rental Income 40 40

24.3 Transactions with Government

Note Consolidated Separate Consolidated Separate
Interest Received 2024 2024 2023 2023
K’m K’m K’m K’m
Interest Income on advances to Malawi
Government 37 503 37 503 23 441 23 441
Interest income on treasury bills 2 612 2 612 3 889 3 889
Interest income on treasury notes 410 788 410 788 268 240 268 240
Interest income on promissory notes 167 295 167 295 8 127 8 127
Dividend payable 344 080 344 080 154 550 154 550

Advance to Malawi Government 3.4 186 440 186 440 115 419 115 419
Investment in Malawi Government
Treasury bills 3.4 - - 29 534 29 534
Treasury notes 3.4 1 966 861 1966 861 1 615 173 1615 173
Promissory notes 3.4 664 934 660 904 793 959 775 260
Government Deposits 3.4 479 016 479 016 616 604 616 604
Fair value loss on Treasury notes 3.4 88 578 88 578 105 126 105 126
Fair value gain/(loss) on promissory notes 3.4 3 217 3 565 (6 234) (3 565)

The details of the above balances are shown in the statement of financial position under appropriate notes. Certain transactions entered
on behalf of the Government of Malawi are not reflected in the annual financial statements since the Group only acts as an agent as per
Section 41 of the Reserve Bank of Malawi Act (Cap 44.02 of the Laws of Malawi) in such transactions.

These transactions include the debt management Afrexim loan facility of USD 350 million and government securities.

24.4 Directors’ Remuneration

Consolidated Separate Consolidated Separate
2024 2024 2023 2023
K’m K’m K’m K’m
Key management personnel remuneration 1 790 1 448 1 237 974
Key management personnel loan and advances 170 145 115 101
Directors Remuneration 902 853 876 835

25. Provisions, contingencies and commitments

Accounting Policy
a) Provisions
A provision is recognized if as a result of a past events the Group has a present legal or constructive obligation that can be estimated
reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognized as a
provision is measured as the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
Where the effect of the time value of money is material the amount of a provision is the present value of the expenditures expected to
be required to settle the obligation.

Page 128
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

25. Provisions, contingencies and commitments (Continued)

Accounting Policy (Continued)
b) Contingencies
Contingent liabilities are possible obligations that could result from uncertain future events outside of the Bank’s control or present
obligations not recognised because the amount cannot be adequately measured or payment is not probable. Contingent liabilities are not
recognized in the financial statements but are disclosed if significant.
c) Commitments
A commitment is an enforceable legally binding agreement to make a payment in the future for the purchase of goods or services. These
amounts are not recorded in the statement of financial position since the Bank has not yet received the goods or services from the
supplier.
Disclosure
a) Provisions
As at 31 December 2024, the Group recognised K600 million provision amount related to legal cases that the Bank is handling. A total
number of 20 cases were registered for the year ended 31 December 2024 (2023: K600 million for 19 cases) in respect of various issues
including labour claims and cases under the regulatory function of the Bank.

b) Letters of undertaking and letters of credits

The following letters of credit, comfort and undertakings were still active as at 31 December 2024: -
Consolidated Separate Consolidated Separate
2024 2024 2023 2023
Letters of undertaking K’m K’m K’m K’m

Malawi Leaf 156 344 156 344 144 500 144 500
CDH Investment 8 755 8 755 - -
Ecobank Limited 17 510 17 510 108 500 108 500
FDH Bank plc 26 265 26 265 - -
NBS Bank plc 8 755 8 755 - -
FCB Bank plc 17 510 17 510 - -
Letter of Credit
Malawi Government - - - 2 084
Trade Development Bank (Undrawn on $307m facility) - - - -
Letter of Comfort
Ecobank Limited - - 102 000 102 000

Malawi Leaf and TDB

The Bank was appointed an agent on the Malawi leaf loan contracted from TDB amounting of US$18.405 million (2023: US$85 million)
and issued a letter of irrevocable undertaking to make all payments owing by to TDB. The AHL as guarantor undertook to deliver to
Bank prior to every payment date the Malawi kwacha equivalent of the United States dollar-denominated amounts due to TDB on such
payment date. Malawi Leaf is yet to deposit the funds with the Bank.
CDH Investment Bank
A letter of undertaking was issued to CDH Bank to provide US$5 million upon maturity of the S$10 million letter of credit in favour
of SFFRFM for the importation of fertiliser.
Ecobank Limited
A letter of undertaking was issued to Ecobank Limited to facilitate the sale of foreign currency for the settlement of letters of credit
opened on behalf of Petroleum Importer Limited (PIL) and the National Oil Company of Malawi (NOCMA). This arrangement is
to support a $10 million facility established between the parties for the importation of fuel.
FDH Bank plc
A letter of undertaking to CDH Bank was issued to provide US$5 million upon maturity of the S$10 million letter of credit in favour
of SFFRFM for the importation of fertiliser. Additionally, another letter of understanding was issued to provide S$10 million upon
maturity of S$10 million letter of credit in favour of NOCMA for the importation of fuel.

Page 129
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

25. Provisions, contingencies and commitments (Continued)

Accounting Policy (Continued)

Disclosures (Continued)
b) Letters of undertaking and letters of credits (Continued)

NBS Bank plc

A letter of undertaking was issued to provide S$5 million upon maturity of S$5 million letter of credit in favour of an emergency
fuel procurement.
First Capital Bank Limited
Two letters of undertaking, each valued at US$5 million, were issued to FCB Bank to support the settlement of existing letters of
credit totalling US$5 million and US$10 million, respectively. These letters of credit were established in favour of the National Oil
Company of Malawi (NOCMA) to facilitate the importation of fuel.

c) Contingencies
As the 31 December 2024, the Group disclosed a contingent liabilities amount of K59 billion (2023: K2 349 million) in
respect of various legal cases. Management considers the possibility of these cases materializing to be remote. Most of
the cases are in relation to cases where the Bank, in line with regulatory functions, sanctioned certain parties for breaching
financial regulations and the parties are seeking damages from the Bank. The disclosure of further details regarding the
nature of the disputes especially parties involved could seriously prejudice the Bank’s position in ongoing legal
proceedings. Accordingly, the Bank has not disclosed detailed information for these contingent liabilities.

However, the general nature of these disputes involves legal claims brought against the Bank by various parties in relation
to cases the alleged breach of Banking Act and Exchange Control Regulations. The Bank believes it has a strong defence
in these matters and is vigorously contesting the claims.

Malawi Government contracted a note facility from Afrexim Bank where it was represented by the Reserve Bank of Malawi to Finance
various trade and trade enabling initiatives of the Government for an amount up US$350 million and as at 31 December 2024 the balance
stood at K5.8 billion (2023: K61 063 million).

In 2019 the Bank issued unconditional counter guarantee in favour of Afrexim Bank totaling $45 million guaranteeing up to 100%
of EDF’s obligations under the facility (Refer to note.3.5 to the consolidated and separate financial statememts).

d) Commitments
Capital commitments for the Group are funded from internal resources.

Consolidated Separate Consolidated Separate

2024 2024 2023 2023
K'm K'm K'm K'm

Capital expenditure contracted for at the end of the reporting

period but not yet incurred
Buildings 265 265 316 316
Plant Vehicles Furniture and Equipment 1 757 1 757 4 842 4 842
Intangible assets 14 14 33 33

Total capital commitments 2 036 2 036 5 191 5 191

26. Bank accounts held on behalf of third parties

The Bank opens and holds external bank accounts on behalf of third parties mainly consisting of Donor funded projects and the
Government of Malawi. The Bank has no ownership of the funds in these accounts and accordingly they are not accounted for in the
accounting records of the Bank. They are not reconciled or controlled by the Bank and are not included as assets or liabilities in these
annual financial statements.

Page 130
RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

27. Adoption of new and revised International Financial Reporting Standards

27.1 Standards and Interpretations affecting amounts reported and/or disclosed in the financial statements
In the current year the entity has adopted those new and revised Standards and Interpretations issued by the International
Accounting Standards Board and the International Financial Reporting Interpretations Committee of the International Accounting
Standards Board that are relevant to its operations and are effective for annual reporting periods beginning on 1 January 2024. The
adoption of these new and revised Standards and Interpretations did not have a significant impact on the financial statements of the
entity.

Effective date Standard, Amendment or Interpretation

Annual reporting Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
periods beginning on
or after 1 January The amendments aim to promote consistency in applying the requirements by helping
2024 companies determine whether, in the statement of financial position, debt and other liabilities
with an uncertain settlement date should be classified as current (due or potentially due to be
settled within one year) or non-current.

Annual reporting Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
periods beginning on
or after 1 January The amendment clarifies how a seller-lessee subsequently measures sale and leaseback
2024 transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.
Annual reporting Non-current Liabilities with Covenants (Amendments to IAS 1)
periods beginning on
or after 1 January The amendment clarifies how conditions with which an entity must comply within twelve
2024 months after the reporting period affect the classification of a liability.
Annual reporting Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
periods beginning on
or after 1 January The amendments add disclosure requirements, and ‘signposts’ within existing disclosure
2024 requirements, that ask entities to provide qualitative and quantitative information about
supplier finance arrangements.
Annual reporting IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
periods beginning on
or after 1 January IFRS S1 sets out overall requirements for sustainability-related financial disclosures with the
2024 objective to require an entity to disclose information about its sustainability-related risks and
opportunities that is useful to primary users of general-purpose financial reports in making
decisions relating to providing resources to the entity.

Annual reporting IFRS S2 Climate-related Disclosures

periods beginning on
or after 1 January IFRS S2 sets out the requirements for identifying, measuring and disclosing information about
2024 climate-related risks and opportunities that is useful to primary users of general-purpose
financial reports in making decisions relating to providing resources to the entity.

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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024

27. Adoption of new revised International Financial Reporting Standards (Continued)

27.1 Standards and Interpretations affecting amounts reported and/or disclosed in the financial statements (Continued)

The adoption of these new and revised Standards and Interpretations did not have a significant impact on the financial statements of
the Goup.

27.2 Standard and Interpretations in issue, not yet effective.

A number of new standards, amendments to standards and interpretations are issued and effective for annual periods beginning on
or after 1 January 2025 and have not been applied in preparing these financial statements. Those which may be relevant to the Group
are set out below. The entity does not plan to adopt these standards early. These will be adopted in the period that they become
mandatory unless otherwise indicated:

Effective date Standard, Amendment or Interpretation

Annual reporting Lack of Exchangeability (Amendments to IAS 21)
periods beginning
on or after 1 The amendments contain guidance to specify when a currency is exchangeable and how to determine the
January 2025 exchange rate when it is not.
Annual reporting Amendments to the SASB standards to enhance their international applicability.
periods beginning
on or after 1 The amendments remove and replace jurisdiction-specific references and definitions in the SASB
January 2025 standards, without substantially altering industries, topics or metrics.

Annual reporting Amendments IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments
periods beginning
on or after 1 The amendments address matters identified during the post-implementation review of the classification
January 2026 and measurement requirements of IFRS 9 Financial Instruments.

Annual reporting Annual Improvements to IFRS Accounting Standards — Volume 11

periods beginning The pronouncement comprises the following amendments:
on or after 1
January 2026 ➢ IFRS 1: Hedge accounting by a first-time adopter
➢ IFRS 7: Gain or loss on derecognition
➢ IFRS 7: Disclosure of deferred difference between fair value and transaction price
➢ IFRS 7: Introduction and credit risk disclosures
➢ IFRS 9: Lessee derecognition of lease liabilities
➢ IFRS 9: Transaction price
➢ IFRS 10: Determination of a ‘de facto agent’
➢ IAS 7: Cost method

Annual reporting IFRS 18 Presentation and Disclosures in Financial Statements

periods beginning
on or after 1 IFRS 18 includes requirements for all entities applying IFRS for the presentation and disclosure of
January 2027 information in financial statements.

Annual reporting IFRS 19 Subsidiaries without Public Accountability: Disclosures

periods beginning
on or after 1 IFRS 19 specifies the disclosure requirements an eligible subsidiary is permitted to apply instead of the
January 2027 disclosure requirements in other IFRS Accounting Standards.

The directors anticipate that other than IFRS 18 Presentation and Disclosures in Financial Statements, these Standards and Interpretations in future
periods will have no significant impact on the financial statements of the company. IFRS 18 introduces new requirements to:
• present specified categories and defined subtotals in the statement of profit or loss;
• provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements; and
• improve aggregation and disaggregation.

The directors are unable to quantify the impact that adoption of these Standards and Interpretations in future periods will have on the financial
statements.
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RESERVE BANK OF MALAWI
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (Continued)
For the year ended 31 December 2024
27. Adoption of new revised International Financial Reporting Standards (Continued)

Adoption of IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-
related Disclosures

The Bank acknowledges the critical role of Environmental, Social, and Governance (ESG) principles in fostering financial
stability, sustainability, and responsible governance. In line with its commitment to integrating ESG considerations into its
operations and policies, the Bank has not implemented the IFRS S1 and IFRS S2 standards as still in preliminary stages towards
the adoption of the standards. The Bank developed an ESG framework in 2024 to guide its sustainability initiatives as follows;

ESG Framework Development

The Bank has established an ESG framework aligned with international best practices, including the Task Force on Climate-related
Financial Disclosures (TCFD) and the Network for Greening the Financial System (NGFS). The framework focuses on three core
areas:
• Environmental: Assessing climate-related financial risks and promoting sustainable business practices.
• Social: Advancing financial inclusion, workforce diversity, and community engagement.
• Governance: Enhancing transparency, ethical conduct, and ESG risk management.

Initial ESG Actions and Commitments

The Bank has formed a dedicated ESG committee to oversee implementation efforts, which are currently in the preliminary stages.
Key ongoing initiatives include:
• Environmental:
i. Conducting an internal assessment of the Bank’s environmental footprint and identifying areas for
improvement.
ii. Evaluating and management of climate and environmental risks in the financial sector.
iii. Supporting green finance through strategies and initiatives aimed at promoting environmentally sustainable
projects and investments.
• Social:
i. Promoting financial inclusion through digital financial services and financial literacy programs.
ii. Strengthening employee well-being initiatives, including diversity and training programs.
iii. Engaging in dialogue with stakeholders, including the Government and financial institutions, to support
sustainable economic development.
• Governance:
iv. Establishing an ESG governance structure within the Bank to enhance oversight and accountability.

Future ESG Initiatives

Looking ahead, the Bank is committed to:

• Developing policies to integrate ESG considerations into risk management and regulatory oversight.
• Implementing the ESG framework through phased initiatives over the next (1–3) years.
• Conducting climate risk assessments in collaboration with financial institutions.
• Establishing key performance indicators (KPIs) to monitor ESG progress.
• Strengthening stakeholder engagement to refine and enhance ESG integration.

The Bank remains dedicated to aligning its ESG initiatives with evolving regulatory standards and global best practices to drive
sustainable growth and resilience in the financial sector.

28. Events after the balance sheet date

There were no further subsequent events that required disclosure in or adjustments to these consolidated and separate financial
statements.

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