Board of Directors of Malawi Stock Exchange (MSE) – listed FMB Capital Holdings (FMBCH) on Thursday justified the firm’s decision not to pay dividends to shareholders despite registering a solid performance in 2017.
In the year ended December 31 2017, FMBCH saw its after-tax profits more than tripling, from $10.59 million (about K7.8 billion) in 2016 to $34.8 million (about K25.5 billion), thanks to improved performance of the group’s banks.
However, the firm did not declare dividends to shareholders, a development that surprised minority investors.
But addressing the firm’s annual general meeting (AGM) in Blantyre, FMBCH Chairman, Terence Davidson, said the group has opted to reinvest the money towards the growth of the business.
Davidson said, after acquiring controlling stake in Barclays Bank Zimbabwe Ltd (BBZ) as well as Opportunity Bank last year, FMBCH wanted to stabilise the business.
He could, however, not indicate how soon the firm could resume giving dividends to shareholders.
Despite the deferred dividend, FMBCH shareholders found solace in the fact that the price of their stocks has jumped near 10 times since last year on the MSE.
FMB shares were seen at K160 per share on the MSE at the close of business on Friday.
During the AGM, shareholders authorised directors to issue for cash, in accordance with rules 5.84 to 5.92 of the listings requirements of MSE, new ordinary shares up to a maximum of 10 percent of the issued ordinary shares of the company.
The authority is valid until the date of the next AGM provided that it will not extend beyond 15 months from the date of the resolution.
Before passing the resolution, minority shareholders questioned whether the move would not weigh down the price of their stocks. They also wanted to find out who would buy the new shares.
Davidson said they have not identified the buyer of the shares, adding that the move would not have a significant impact on share price.
He could, however, not indicate what the firm plans to do with the money, saying FMBCH would take advantage of opportunities that would arise in the market.
FMBCH is the Mauritius- based holding company for FMB capital Group, which has banking and finance operations in Botswana, Malawi, Mozambique, Zambia and Zimbabwe.
FMBCH is listed on the MSE and, through its operating subsidiaries, offers a full range of business and personal banking services.