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.