After tax profits for Malawi Stock Exchange-listed FMB Capital Holdings (FMBCH) more than tripled in 2017 from $10.59 million (K7.8 billion) to $34.8 million (K25.5 billion), thanks to improved performance of the group’s banks, the firm has said.
FMBCH, which owns FMB Malawi, also has a controlling stake in Barclays Bank Zimbabwe Ltd (BBZ), Capital Bank of Botswana and Mozambique as well as First Capital Bank of Zambia.
During 2017, FMBCH also saw its total assets jumping 150 percent from $452 million [K331 billion] to $1.158 billion [K849 billion].
FMBCH Managing Director, Dheeraj Dikshit, said in an interview on Friday that besides improved performance of the banks in Malawi, Zambia and Botswana and the inclusion of proportionate profits from BBZ post the date of acquisition, the results for the year have been influenced to a significant extent by the financial implications of the strategic corporate actions undertaken, notably the acquisitions of Afcarme and OIBM.
“For the acquisitions the amounts by which the fair value of net assets acquired less non-controlling interests therein exceeded the considerations paid were recognised as gains on bargain purchases aggregating to $18million and included in profit for the year.
“The results also reflect the cost of $2.2million related to the acquisitions which has been included in other expenses deducted from profit for the year. However, the figures reported for these acquisitions should be regarded as provisional amounts subject to retrospective adjustment until October 15 2018, the end of the measurement period permitted under IFRS,” Dikshit said.
Looking ahead, Dikshit said the economic outlook for the region is, on balance, largely positive though structural reforms are still required in several territories.
He said FMBCH expects Mozambique’s growth to remain subdued in the short term but that the country looks set to enjoy an economic boom once the mega projects in the extractive industries go into production.
He added that Zimbabwe has the opportunity, in the near term, to win back the confidence and support of the international community and, through appropriate structural adjustment and policy reform, set itself on the path to major economic recovery.
Dikshit also projected stronger world economic growth should translate into benefits for both Botswana and Zambia in the form of firmer demand for their principal exports, diamonds and copper respectively.
“Finally, Malawi, despite continuing power shortages, we expect to see improved growth led mainly by a recovery of agricultural sector output. Hard won gains in terms of relative macroeconomic stability could, however, be at risk if fiscal discipline is not maintained on the run up to the May 2019 elections,” he said.
He said FMBCH has a well-defined strategy and business model in place and is strongly positioned to take advantage of both short and medium term opportunities in the Southern African Development Community region.
“Our intention remains to augment our capital base through a capital raise and dual listing on another regional stock exchange. We will, however, continue to conservatively manage our balance sheet until more certainty emerges over the likely future business environment in the territories in which we operate,” Dikshit said.