FDH Bank more than doubles H1 profit
FDH Bank, which is on a path to list on the 14-counter Malawi Stock Exchange (MSE) by June 2020, has posted a K3.35 billion after-tax profit in the half year ended June 30 2019.
This is a 153 percent jump from K1.34 billion achieved during the same period last year, according to summarised audited financial statements.
The bank, which is a subsidiary of FDH Financial Holdings Limited, has grown its income by 13 percent to K14.75 billion from K11.28 billion despite its net interest income declining by nine percent.
The drop in interest income is a result of the decrease in net income by 12 percent due to the drop in the policy rate, the rate at which commercial banks borrow from the central bank, currently pegged at 13.5 percent.
“Cost of funding has improved with interest expenses going down by 15 percent as the bank continues to focus on demand deposits.
“The bank has continued to invest in digital products, infrastructure, human capacity development and innovative customer-centric solutions as the focus is to improve customer experience as well as diversifying sources of non-interest income,” reads the statement co-signed by board chairperson Arthur Oginga, managing director Eric Ouattara, chief finance officer George Chitera and Ulemu Katunga, chairperson of the finance audit.
It said the investments pushed up operating expenses by 13 percent compared to the same period last year.
However, the bank says it will continue to focus on “effective cost management as we continue to bring down the cost to income ratio”.
FDH Bank’s total assets increased by 34 percent year-on-year to K182.7 billion largely due to the increase in government securities by 62 percent and loans and advances by 14 percent, which is part of the bank’s strategy to grow the interest earning assets.
At the same time, customer deposits grew by 21 percent from K115 billion to K140 billion.
“The increase in customer deposits is in line with the bank’s strategy focusing on growing demand deposits through its wide branch network and digital service delivery channels,” reads the statement.
Notwithstanding the post-elections standoff, the bank expects the stable economic environment to continue with inflation rate expected to average nine percent, according to the Reserve Bank of Malawi (RBM). Having cleaned up the balance sheet achieving sustainability, the bank is poised to fulfill one of the conditions set when FDH Financial Holdings acquired Malawi Savings Bank (MSB)in 2015 to list on MSE next year.
