FDH Financial Holdings Limited is well positioned for further growth and expects the group’s fortunes to turnaround, particularly its flagship banking subsidiary, chief executive officer Thom Mpinganjira has said.
The financial services group has subsidiaries such as FDH Bank, FDH Stockbrokers Limited, FDH Money Bureau and First Discount House.
Mpinganjira told journalists in Blantyre over the weekend that the turnaround is on the premise of the appointment of new managing director Phillip Madinga at FDH Bank and a cleanup of the bank’s balance sheet.
He said the additional K1.9 billion capital injection into the bank has not only made it to be Basel II compliant, but has also positioned the bank and group for further growth which will enable it to target other top customers.
First Discount House performed exceptionally well in 2013, registering a profit after tax of K501 million compared to K365 million the previous year.
But the group achieved a profit after tax of K502.8 million in the year ended December 2013, largely weighed down by non-performing loans. The group profit before bad debts at K2.47 billion in 2013 grew by six percent compared with K2.32 billion the year before, reflecting solid and sustainable growth.
“Profitability for the group was weighed down by huge non-performing loans in FDH Bank. The high rate of non-performing loans is a reflection of the tough and challenging economic environment the market experienced over the past two years,” said Mpinganjira.
On his part, Madinga said the bank decided against rolling over non-performing loans to clean up its books, adding that the bank is already underwriting quality loans, and expect it to perform better and turnaround in 2014 and going forward.
Over the past six months, the group and the bank, in particular, has gone through an extensive restructuring in terms of both management and internal structural make-up.
Some of the key management changes included the appointment of new heads for its business units—corporate banking and personal and business banking, in addition to appointments of other executives in operations and credit departments.
The group also appointed a chief risk officer to centralise all bank credit and wider risk control measures to tighten credit management within the bank to avoid a recurrence of the huge bad debt provisions raised in 2013.
Having chosen the Small and Medium Enterprises (SMEs) sector as one of the focus areas, the bank has supported the growing sector through access to financing but also through the provision of various transactional banking products and services.
The bank has plans to expand its network with additional branches and automated teller machines (ATMs) It will be opening a branch at Nchalo in Chikhwawa mid this year coupled with additional branches to be rolled out in the next five years in line with their five-year strategic plan.