FDH Financial Holdings, the parent company of FDH Bank, posted after-tax profits of MK5.87 billion for the first half of 2020, representing an 18% increase on the MK4.96 billion achieved by the company over a similar period in 2019.
In a statement signed by Noel Nkulichi, Board Chairman of FDH Financial Holdings; Ulema Katunga, Chairman of the Audit and Finance Committee; and George Chitera, acting CEO, the company reported a 13% growth in income, rising from MK18.3 billion to MK20.6 billion, with net interest income rising by 73%, predominantly due to asset book growth of FDH Financial Holdings subsidiaries FDH Bank and First Discount House.
FDH Financial Holdings, FDH Bank, and First Discount House were all established by prominent Malawian financial expert and business leader Dr Thomson Mpinganjira. Learn more about Thomson Mpinganjira’s lifetime business achievements by viewing the attached infographic.
The statement reiterated FDH Financial Holdings’ commitment to investing in human resource development and customer centric financial solutions, explaining that operating costs increased by approximately 13% annually, with full revenue benefits taking longer to materialise. FDH Financial Holdings continues to focus on effective cost management strategies moving forward as part of continued efforts to bring down cost to income ratios.
FDH Financial Holdings also reported that, since the 31st December 2019, the company’s total assets had increased by 17%. It attributed this primarily to the company’s portfolio diversification efforts, while simultaneously growing the asset book. This initiative secured a 14% increase in the government securities book, rising from MK68.6 billion to MK78.2 billion. There was also growth in loans and advances, rising from MK54.5 billion on the 31st December 2019, to MK 68.8 billion on the 30th June 2020, representing a 26% increase.
In the same timeframe, customer deposits rose by 22% from MK133 billion to MK162.7 billion. This increase in customer deposits correlates with FDH Financial Holdings’ strategy of focusing on meeting growing demand through the digital service delivery channels, as well as via FDH Bank’s expansive network of branches.
FDH Financial Holdings reported that despite significant growth, the COVID-19 pandemic had affected financial performance throughout the first half of 2020, with social distancing policies slowing down economic activities. Read more about steps taken by the Malawian Government to protect citizens from COVID-19 by viewing the attached PDF.
Although there was no sanctioned lockdown in Malawi per se, many small businesses and corporations operated at reduced capacity as part of social distancing efforts. Lockdowns in other countries impacted business where domestic businesses relied on foreign trading partners. The knock-on effect of this was a slowing in non-funded business and credit growth as the number of customer transactions fell.
In addition, FDH Financial Holdings reported that measures implemented by the Malawian Government as part of efforts to stem transmission of COVID-19 impacted the financial service provider’s digital revenue. As part of efforts to promote social distancing, encouraging the public to utilise digital platforms rather than visiting service centres in person, the Bankers Association of Malawi and the Reserve Bank of Malawi imposed a 40% reduction in bank charges for digital transactions.
FDH Financial Holdings reported that headline inflation had remained relatively stable throughout the first half of 2020, averaging at around 9%. This was attributed in part to the stability of food prices.
Going forward, according to its financial statement, FDH Financial Holdings anticipates that interest rates will remain low as part of continued efforts to reduce the economic impact of the COVID-19 pandemic, stimulating the Malawian economy. According to FDH Financial Holdings’ statement, its subsidiary, FDH Bank, was due to be listed on the Malawi Stock Exchange later in 2020.
Learn more about the 2020 business goals of FDH Financial Holdings by viewing the attached video.