Bad debts impact FDH Bank profitability

FDH Bank has posted a consolidated loss after-tax of K343 million for the year ended December 31 2017, which is an improvement from a restated loss after tax of K7.7 billion recorded the previous year.

In its published financial statement for the year ended December 31 2017 released yesterday, the bank has attributed the loss to net loan impairment charge of K6.03 billion and suspended interest on the impaired loans which led to a drop in gross interest income.

The bank’s chief executive officer Eric Ouattara said despite writing off a total of K26.7 billion in bad debts, a situation which affected its profitability, the bank is optimistic about business prospects in 2018.

“Since the acquisition of MSB Limited in July 2015 and subsequent merger with FDH Bank, the bank has been cleaning its statement of financial position which had very high non-performing loans. At the time of acquisition, MSB non-performing loan ratio was 87 percent,” he said.

The total bad debts the bank has written off since 2015 now stands at K26.7 billion, according to Ouattara.

“These substantial write-offs have significantly weighed down the bank’s profitability over the past three years,” he said in the statement.

In July 2015, FDH Financial Holdings Limited bought 80 percent stake in MSB, which included five percent for the bank’s employees.

The remaining 20 percent is held by government.