CDH Investment Bank expresses optimism of further growth; As it posts K11.140 billion profit after tax

* The performance represents a 48% jump in profit when compared to the K7.53 billion which the bank reported in 2022

* Customer deposits grew by 42% year on year while the bank’s loans and advances grew by 34%

* With investment funds and financial assets growing by 42% and 40% respectively

By Duncan Mlanjira

CDH Investment Bank (CDHIB) has expressed its optimism of further growth in both the investment banking and commercial banking activities, “albeit, in a challenging business environment” — as the financial institution announces it has posted K11.140 billion profit after tax for the financial year ending December 31, 2023.

In its published summary of audited results, the performance represents a 48%  jump in profit when compared to the K7.53 billion which the bank reported in 2022.

The summary says among other things, customer deposits grew by 42% year on year while the bank’s loans and advances grew by 34% — with investment funds and financial assets growing by 42% and 40% respectively.

“These results were largely driven by growth in customer deposits and investment funds by 42% over prior year,” says the summary from auditors. “Consequently, net interest and net trading income grew by 39% and 35%, respectively.”

The summary of the auditors, which was endorsed by the bank’s Board chairperson, Franklin Kennedy; chairperson of the Board audit committee, Elias Malion; Chief Executive Officer & Managing Director, Thoko Mkavea and Chief Finance Officer, Kelvin Mkulichi, further says in addition, there was a 76% increase in non-interest revenue from K6.6 billion to K11.6 billion with overall net revenue growing it by 50%.

“During the period under review, the bank’s total assets grew by 42 percent from K219 billion to K311 billion.”

Thus the leading investment bank in Malawi pledges to continue “to successfully leverage on its unique ability to integrate corporate finance and investment banking services with traditional commercial banking activities to deliver impressive value to its stakeholders in generating an impressive return on shareholder’s equity of 40%”.

“Notwithstanding the increase in expenses, the cost to income ratio went down to 43% from 45% in the prior year. The bank continues to run an efficient operation with focus on effective cost management as we continue to bring down the cost to income ratio.”

Looking ahead, CDHIB — which opened for business on April 2, 2012 following the successful conversion from Continental Discount House Limited — says “the local economic environment is expected to remain challenging in 2024 mainly fuelled by the continued foreign currency shortages from the widening trade deficit gap and a slow GDP growth”. “The Government is projecting an increase in the real economic growth rate to 3.2% in 2024 and 4.0% in 2025, supported by an increase in public investment and recovery in various sectors of the economy.”

These are mainly to be driven by large-scale mega-farm output and anticipated high growth in construction, manufacturing, information & communication, and accommodation & food services.

“The IMF Extended Credit Facility programme which was approved in November 2023, is anticipated to play a key role in improving foreign exchange inflows, supporting structural reforms, investor confidence and helping to stabilise economic conditions.

“However, the positive outlook is clouded by the El Niño-induced weather conditions and a highly uncertain global economic and geopolitical environment.

“Annual inflation is anticipated to average 27.19% this year (2023: 27.75%), with the local currency continuing to depreciate against the major trading currencies as a result of a significant negative trade balance.

“Nevertheless, the Bank remains fully committed to identifying opportunities to help our stakeholders to grow with our continued offering of specialized and innovative financial services.”

Thus CDHIB pledges its continued implementation of strategic objectives “which focuses on people development, customer centricity and sustainable performance in its core revenue areas, while leveraging on its unique service proposition, corporate financial advisory and investment banking, investments in effective digital platforms and brand equity”.

As Continental Discount House Limited, which operated in the financial sector for 14 years since August 1998, CDH revolutionised trading of financial securities in Malawi, a legacy it continues to carry as it leads in the development of the capital market in Malawi.

CDHIB’s unique service proposition is investment banking and corporate financial advisory service to its clients. It is a deposit-taking investment bank out of which it makes loans and advances.