Malawi’s fast-growing financial institution and revitalised forward-thinking commercial bankers, FDH Bank has set its eyes on extending its business clout by acquiring a controlling stake in one of the commercial banks in the African region as part of its growth.
The home-grown bank, FDH Bank, which listed on the Malawi Stock Exchange (MSE) is geared to spread its wings on the regional banking bloc and currently it is pursuing a formidable growth strategy as it seeks to expand beyond borders.
According to reports, FDH Bank, which is said to have has had conducted a thorough market research in the neighbouring countries, Zambia and Mozambique in the past 24 months years, has warned its shareholders and stakeholders about an imminent transaction that could potentially affect its share price.
The Bank has sounded a warning in a statement, signed by company secretary Juliano Kanyongolo, that the negotiations are at an advanced stage, suggesting that an agreement could be reached anytime soon.
“The board of directors of FDH Bank plc wishes to advise the general public that the company is prospecting to acquire a controlling stake in a bank within the African region.
“This is in line with the bank’s strategy to pursue regional growth,” reads in part the statement.
FDH Bank Managing Director Noel Mkulichi, during the 2024 Investors Forum in May last year, confirmed that the bank conducted market surveys in both Zambia and Mozambique.
Mkuluchi explained that this was done to ascertain the feasibility of penetrating the regional markets as part of its long-term strategic plan on expansion and growth.
Mkulichi said that FDH Bank wanted to tread carefully as it was conducting market research to minimise risks that could affect equity holders.
“The markets are different in terms of legal and business environment, so we need to analyse further before investing.
“We are currently assessing the Zambian market and we will see whether there will be an acquisition.
“Last year, [2023] we went to Mozambique for a similar mission, but for now we are still doing the study,” Mkulichi said.
If FDH Bank plc successfully penetrates the regional markets, it will be among the three MSE-listed banks that have subsidiaries across Malawi borders after FMB Capital Holdings plc, through First Capital Bank, entered Zambia, Mozambique, Zimbabwe and Botswana markets while National Bank of Malawi plc owns 51 percent stake in Akiba Commercial Bank of Tanzania.
Financial expert, Misheck Esau has described FDH Bank’s regional expansion as a positive development saying. “Trade in services just like exports of goods is the way to go for our companies.
“I really do not have any advice to give them except to encourage them to ride on their strengths on the Malawi market to become a strong player.”
Esau, however, stressed that when expanding outside, companies should always remember that Malawi remains under-serviced and there is a lot they can do locally to acquire more capacity.
MSE Chief Executive Officer (CEO) John Kamanga said the move is critical to the country’s economy as it signals maturity of Malawi’s financial sector stating that it guarantees foreign exchange generation through dividends.
“This is a good move as it means the said companies would be getting dividends in foreign exchange. Investing in various markets reduces the risks,” explained Kamanga.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa told The Nation in an interview that such expansion is helpful to FDH Bank, because it could enhance profitability by accessing new markets and a broader customer base.
Makwakwa said: “This expansion might also contribute to increased revenues, improved market share and ultimately better returns for shareholders. However, the success of such an initiative hinges on conducting thorough and comprehensive due diligence.”
Makwakwa added that proper due diligence is crucial to identifying and mitigating the diverse risks associated with international expansion, such as, political and economic instability as well as operational challenges.
With a staggering market capitalisation of about K1 trillion on MSE, FDH has had its share price trading at K148.23.
FDH Bank expects a profit to jump of K62 billion in the year that ended on December 31, 2024 from K35.6 billion at the same time last year.
“This is a good move.”
John Kamanga
MSE Chief Executive Officer
