FDH Financial Holdings Limited has unveiled plans to list its subsidiary, FDH Bank, on the 14-counter Malawi Stock Exchange (MSE) by June 30 2020.
The listing could bring the number of commercial banks on the local bourse to five.
The firm’s group chief executive officer Thom Mpinganjira, addressing a news conference in Blantyre on Tuesday, urged Malawians to start saving in readiness for what he called “great investment opportunity” to own FDH Bank.
He said this will be a fulfilment of the agreement the bank made with the Malawi Government when it acquired 80 percent stake in the previously government wholly-owned Malawi Savings Bank (MSB).
The agreement entailed that within three years, FDH Bank should list on MSE.
But justifying why plans to list on MSE within three years have not materialised, Mpinganjira said the bank has struggled to clean bad loans estimated at K40 billion.
He said: “When we bought Malawi Savings Bank, we had done sufficient work on the little information we were given. The contract we signed with government was that we take the bank to the Malawi Stock Exchange.”
Mpinganjira explained that government has a residual stake and the intention by government was that when the bank is cleaned up, it should go to the market and have it publicly listed on the shares market.
The listing on MSE should have happened in 2018, but the cleaning up process slowed down the process, he said.
“We preserved 2019 to observe where we stand because when we were about to do that, we found worse things. We had to write off bad loans in our books after combining with FDH Bank.
“At that time, it was thought that the bad loans could be between K16 billion and K20 billion, but in the end, it ended up to be around K40 billion.
“To clean up the books and to end up at the state where we are, it has been a long process. December last year is when we returned to profitability,” explained Mpinganjira.
He said having finished that exercise, they gave themselves one year and they are poised to list in 2020.
In the year ended December 31 2018, FDH Bank posted an after-tax profit of K5.9 billion, a turnaround from a lost of K1 billion in the previous year.
Mpinganjira said MSE has requirements that have to be met for a company list, adding that is what FDH Bank has been working on.
“Malawians have been asking when the bank was coming on the market. This is the opportunity now,” he said.
Mpinganjira, who is also board chairperson of Electricity Supply Corporation of Malawi (Escom), said while other banks are closing branches due to cost, FDH Bank is expanding to enhance financial inclusion.
“We may not make profits in these areas where we are going, but our brothers and sisters deserve these banking service,” he said.
FDH Financial Holdings Limited is 40 percent owned by Old Mutual plc while M Development has 55 percent stake with five percent owned by employees.
MSE was inaugurated in March 1995 and opened for business for the first time on November 11 1996, under the guidance of the Reserve Bank of Malawi, with 2 300 Malawians buying shares in the first company to be listed—National Insurance Company now Nico Holdings plc.
![President Peter Mutharika has said in his New Year's message Malawi is set to make progress this year after his government erected economic building blocks over the past five years.
"In the past five years, we have collectively saved the economy from the ruins of 2014 to the stability and inspiring growth we are seeing,” he said. “By all international standards, Malawi has proven to be an economic performing star— a rising African star. This is what patriotic Malawians can do for their country."
The President pointed out that in the past five years, Malawi has started making progress which this country lost in 1979, adding Malawi’s economy was ahead of China and other countries in income per capita but due to state violence and oppression, people’s participation in the economy was inhibited.
Mutharika said with violence and oppression the country was creating poverty instead of ending it.
He, therefore, praised development partners and foreign governments for their support and endorsing the progress Malawi is making.
He mentioned Global Fund which has committed to supporting Malawi with $500 million and International Monetary Fund for resuming budget support for the first time since it was suspended in 2013, as some of the partners who have shown their confidence in his government.
"We also have serious investors who intend to start building a city in Mangochi, together with Mangochi Airport and a five star hotel. We are set to make progress,” he said,
However, the Malawi Confederation of Chambers of Commerce and Industry believes as much as Malawi is making progress serious challenges remain.
In its assessment of business in 2019, the chamber—which is the voice of the private sector—decried rampant corruption and persistent power cuts which it said impacted negatively on investment and business.
For instance, MCCCI said gross domestic product (GDP) growth rates in the past five years reflect lack of meaningful creation of wealth by the private sector owing to persistent insurmountable obstacles to doing business whose solutions are not forthcoming.
“While progress was made in increasing the electricity carrying capacity of the national grid, thanks to the United States Government’s grant assistance through the Millennium Challenge Corporation, there is need to generate adequate electricity for the expanded grid to carry.
“It was expected that Egenco [Electricity Generation Company] and other Independent Power Producers [IPPs] would measure up to the expectations but thus far, that has not happened. Issuance of licences to IPPs took inordinately long and therefore their start time was pegged back,” reads the 2019 Business Environment Assessment report signed by MCCCI chief executive officer Chancellor Kaferapanjira and its president Prince Kapondamgaga.
Due to this depressed scenario, MCCCI says the performance of the private sector—often referred as the engine of the economy—will likely continue to be negatively affected unless authorities appreciated the impact of these challenges on the private sector and ultimately on the economy and worked on them.
Despite the power and finance challenges, the Reserve Bank of Malawi (RBM) agrees with Mutharika that Malawi has turned a corner.
RBM Governor Dalitso Kabambe in earlier interviews also downplayed the fears of sluggish growth, saying the economy is on track as evidenced by stable inflation and exchange rates as well as stable fuel prices.
RBM also maintains the economy will still grow by five percent in 2020.
“Our projection is data intensive. Therefore, we cannot speculate based on what is happening out there, but we use available data,” he told Business News last month.](https://www.mwnation.com/wp-content/uploads/2018/06/Peter-Mutharika-350x250.jpg "FDH bank to list on MSE June 2020 3 | The Nation Online")
