FDH Financial Holdings, the Malawian banking group founded by business leader Dr Thomson Mpinganjira, posted MK5.87 billion in profits for the financial year to 30th June 2020, representing an 18% increase on profits in the same period in 2019.
Statements signed by Noel Nkulichi, FDH Financial Holdings Board Chairman; Ulemu Katunga, Chairman of the Board’s Audit and Finance Committee; and George Chitera, Acting CEO, revealed that the company’s total income had grown by 13%. In addition, net interest income increased by a reported 73%.
The statement highlighted the group’s continued investment in its human resources department and customer-centric financial resources. Operating costs increased by 13%, although the group anticipated reaping revenue benefits in the long-term. The group has continued to focus on effective cost management, driving down the cost to income ratio.
The statement revealed a 17% total asset increase from 31st December 2019, which was mainly attributable to the group’s objective of prudently growing its asset book while simultaneously diversifying its portfolio. The initiative has seen a 14% book increase in government securities. In addition, loans and advances grew by 26% between 31st December 2019 and 30th June 2020.
Customer deposits also increased, rising by 22% during the same period. The statement indicated that this growth was in line with the group’s strategy, focusing on growing demand deposits via FDH Bank’s extensive network of branches and digital delivery channels.
FDH Financial Holdings revealed that the COVID-19 pandemic had impacted half yearly financial performance to 30th June 2020, with the disease slowing down economic activities. Although no government sanctioned shutdown was enforced in Malawi as it was in numerous other countries, many small businesses and corporates were forced to operate at reduced capacity as a result of nationwide social distancing practices, slowing down business to some extent.
Lockdowns in countries hosting Malawian trading partners also slowed credit growth as the number of customer transactions fell. Measures implemented by the Malawian government, such as the 40% reduction on digital transaction fees, also affected digital revenue.
FDH Financial Holdings is the parent company of several subsidiaries, including FDH Money Bureau, First Discount House and FDH Bank. Established by finance industry expert Dr Thomson Mpinganjira, this leading financial institution is the first to be owned by an indigenous Malawian.
Going forward, it is predicted that interest rates will remain low in order to mitigate the economic impact of the pandemic, as well as stimulating other sectors of the economy. Experts predict that the COVID-19 pandemic will reduce international credit growth.
In response, the Group has implemented strategies allocating capital to other high-yield investments to ensure that performance throughout 2020 is not affected significantly. The Group’s focus remains consolidation and improvement of its innovative customer-centric solutions and digital offerings. FDH Financial Holdings will continue to prudently manage credit risk, while at the same time helping businesses to grow through the provision of credit facilities.