Listed FDH Bank has seen a rise in its profit-after-tax by 55% from K22.932 billion to K35.467 billion in the year ending December 31 2023.
According to the financial performance report which the Bank has released and signed by the its Board Chairperson, Charity Mseka, Managing Director Noel Mkulichi, Head of Finance Richard Chipezaani, and Chairperson of Finance and Audit Committee of the Board, Ulemu Katunga, several factors including digital transactions contributed to the immense growth.
“Net Interest Income has gone up by 60% on the back of the increase in the Loan book and other interest-bearing assets, while Interest expense has gone down by 2% despite the growth of the Bank’s deposits by 35% as a result of the Bank’s improved deposit mix.”
“Non-interest income increased by 33% mainly due to the picking up of business as more customers embrace transacting on digital platforms. International trade and local business transaction volumes also picked up in line with the Bank’s strategy. The increase in net interest income and non-interest income resulted in total income growth of 47%,” reads the report in part.
While celebrating the feat, the Bank however indicates that the operating expenses grew by 42% year on year as a result of substantial investment made on the Bank’s delivery channels and the high inflation which was also fueled by the depreciation of the Kwacha.
“The Bank continues to put more focus on effective cost management as we continue to bring down the cost to income ratio. There was a decrease in net impairment charges due to the decrease in Expected Credit losses (ECL) and the increased bad debt recoveries as the Bank is putting more effort in reducing Non-Performing Loans (NPLs) and bad debts recovery processes,” reads further the report.
FDH Bank’s total assets grew by 30% from December 2022 mainly emanating from the increase in Loan book by 23% and Government Securities by 32% in line with the Bank’s strategy to grow interest earning assets.
On dividends, the report states that the Board of Directors recommended a final dividend of K7.039 billion (K1.02 per share) in respect of 2023 profits to be approved at the Bank’s 17th Annual General Meeting.
“This will bring the total dividends to be paid from the 2023 profits to MK22.635bn (representing MK3.22 per share),” the report indicates.
The Malawi Stock Exchange listed Bank has however projected a mixed outlook for 2024 due to continued foreign exchange shortages from the widening trade deficit gap and slow GDP growth, while at the same time expects economic growth at 3.2% from 2.6% in the previous year due to large-scale mega-farm output and anticipated high growth in construction, manufacturing, information and communication, and accommodation and food services.
“However, it is yet to be determined what level of impact the drought caused by the El-nino weather will have on the country’s growth prospects. Annual inflation is anticipated to average 27.19% this year (2023: 27.75%), with the local currency continuing to depreciate against the major trading currencies as a result of a significant negative trade balance,” reads the statement.
The Bank however says it will continue to implement the strategic objectives running from 2024 to 2026, which focus on Customer experience, Operational efficiency, People development and Innovation, leveraging on the Bank’s market position, widest distribution network, effective digital platforms, brand equity, and strong financial performance.