FDH profit jumps 95%
Stock market experts have predicted a continued upward trajectory in share prices for one of the listed commercial banks, FDH Bank, following a 95 percent jump in its profits-for-the year ended December 31 2022.
An audited consolidated financial statement for the company published on Monday indicates that its profit after tax jumped to K22.9 billion in the year under review from K11.7 billion in 2021.
The development has resulted in a 6.3 percentage points increase in the bank’s gross profit margin to 32.8 percent from the 26.5 percent profit margin recorded in 2021.
The profitability ratio suggests that the company remains profitable and is not spending too much of its revenues on production expenses.
Minority Shareholders Association of Listed Companies (Misalico) General Secretary Frank Harawa said the news was exciting and will enhance the excitement that was brought about by its trading statement issued earlier this year.
“In the beginning of the year, the bank issued a trading statement which indicated that profits of the company will be 50 percent higher than the previous year. This triggered activity on the counter and moved its share price from K14 per share to K35 per share now. So, this development may induce a further rise in the share price for the counter,” Harawa said.
Stock market analyst Bond Mtembezeka said there is a correlation between share price and profitability as profitability signals significance of the investment.
He said profitability entails that the investment is sound and worthwhile and a 95 percent increase for FDH profit means the bank is a sound investment which will mean increased dividends payout and a low price to earnings ratio for now.
“FDH [Bank] is signaling that despite the harsh uncertain economic environment we are in, they are able to not only survive but grow, which is a sound investment for its shareholders.
“However, the profit jump can signal that it is now taking that sharp upward trajectory and that can have an impact on demand for its shares,” Mtembezeka said.