SUMMARY AUDITED FINANCIAL STATEMENTS FDH BANK FDH Bank FOR THE YEAR ENDED 31 DECEMBER 2019. LIMITED

Main Highlights Net interest Income 7%

Total Income Non Interest income 23%

10 40 K34.3 K7.8 Billion Corporate Social Responsibility 21% Billion K29 8 Billion a a 2019 K5.9 30 ach Billion 2019 ach Total Assets 24% 6 2018 2018 20 4 Book Growth 40% 10 Amount in Billion Kw 2 32% Amount in Billion Kw 18% Increase Increase Return on Equity 35% 0 0 NPL Ratio down to 0.80%

K Customer Deposits Basic Earnings per Introduced WhatsApp Banking Share (Tambala) K137.1 Billion New Branch Goliati - Thyolo 150 2000 K112.5 1,696 Tambala a Billion 2019 1,289 Tambala ach 1500 Upgraded Branches Mulanje, Chiponde, Mzimba, 100 2019 and Agencies Chitipa, Jenda & Neno 2018 ambala 2018 1000 50 Amount in T 500 Amount in Billion Kw 22% 32% Increase Increase 0 0

FDH BANK LIMITED FINANCIAL RESULTS FOR GDP growth rate is projected to average between 5% and 6%, according to the Reserve Bank of Malawi. YEAR ENDED 31 DECEMBER 2019. Private sector credit annual growth in 2019 was 21.3% up from 11.5% in 2018. The The Directors present the audited summarised financial statements of FDH Bank stronger growth in private sector credit in 2019 is a reflection of reduced interest rates. Limited for the year ended 31 December 2019. We anticipate the low interest rates regime to continue and spur private sector credit growth in 2020. PERFORMANCE The Bank continues to consolidate and improve on the convenient delivery channels The Directors report a profit after tax of K7.846 billion for the year ended 31 through its digital products and providing innovative first class financial solutions. The December 2019 up from a profit after tax of K5.965 billion for the year ended 31 Bank also continues to upgrade its existing infrastructure network to bring it up to December 2018. Total Income grew by 18% from K29.066 billion to K34.39 billion. standard for an improved customer experience. In February 2020, the Bank introduced Net Interest Income grew by 7% on the back of the increase in the loan book, which Mastercard , becoming the first Bank in Malawi to issue Mastercard Platinum was partly offset by the changes in the Monetary Policy Rate and the introduction debit cards to customers. of the Reference Rate. These changes saw the policy rate move from 18% in 2018 down to 12.5% at the close of 2019. Interest expense went up by 15% reflecting the LISTING PLANS growth of the Bank’s deposits. Non-Interest Income grew by 23% owing to the increase in revenue from non-funded income. The preparations to list the Bank on the in 2020 are on track and progressing very well. FDH Bank’s listing will give a chance to the public and all Total assets grew by 24% year on year, mainly emanating from the increase in Malawians to invest in this homegrown and leading digital Bank in Malawi. and Advances by 40%, and Government securities by 19%. This growth is in line with the Bank’s strategy to grow the interest earning assets. Customer deposits We are indebted to our esteemed clients, shareholders, management, staff, the increased by 22% from K112.570 billion to K137.14 billion. Notwithstanding the Government of Malawi, the Reserve Bank of Malawi, and all other stakeholders for growth in the loan book, the NPL ratio dropped from 1.41% in 2018 to 0.80% by their continued and unwavering support. close of 2019, against an industry average of 6.1%. BASIS OF PREPARATION The Bank’s continued investment in the Digital Platforms, Delivery Channels, Human Capital and other Customer Centric Innovations resulted in the increase The Directors have prepared the summary financial statements to meet the in operating expenses by 14% from 2018. The focus for the Bank is to improve requirements of the Act, 2010. The Directors have considered customer experience as well as diversifying sources of non-interest income. The the requirements of the Financial Services Act, 2010 and believe that the summary Bank will continue to put more focus on effective cost management as we continue statements of financial position, comprehensive income, changes in equity and cash to bring down the cost to income ratio flows are sufficient to meet the requirements of the users of the summary financial . statements. The amounts in the summary financial statements are prepared in accordance with the framework concepts and the measurement and recognition ADOPTION OF NEW INTERNATIONAL FINANCIAL REPORTING requirements of International Financial Reporting Standards. The summary financial STANDARDS (IFRS) statements have been derived from the Financial Statements which were approved by the Board of Directors on 10 February 2019, and are available at the registered office New IFRSs have been adopted including IFRS 16 Leases (IFRS 16), which has of the Bank. impacted the Bank’s results. As permitted by IFRS 16, the requirements of the standard have been applied using the cumulative-catch up approach under which By order of the Board. comparative information is not restated. FDH Bank Limited

OUTLOOK Dr. E. Ngalande Mr. A. Oginga Dr. U. Katunga Managing Director Board Chairman Chairperson, Finance Going forward, inflation is expected to average around 8%. The Bank also anticipates and Audit the Kwacha/US Dollar exchange rate to remain relatively stable in 2020, while the 18 FEBRUARY 2020 www.fdh.co.mw SUMMARY AUDITED FINANCIAL STATEMENTS FDH BANK FDH Bank FOR THE YEAR ENDED 31 DECEMBER 2019. LIMITED

1. STATEMENT OF COMPREHENSIVE INCOME Deferred tax on transitional adjustment 7,999 1,575,815 31-Dec-19 31-Dec-18 K’000 K’000 REPORT OF THE INDEPENDENT 31-Dec-19 31-Dec-18 Total comprehensive income/(loss) for the year 7,846,364 5,965,442 AUDITOR ON THE SUMMARY Audited Audited Dividends paid (1,040,000) - Senior Management Officials FINANCIAL STATEMENTS K’000 K’000 At the end of the period 22,673,475 15,885,774 Balance at the beginning of 110,595 103,606 the year Opinion Interest income 16,343,445 14,781,015 The summary financial statements, which comprise 4. STATEMENT OF CASHFLOWS Loans granted during the 156,054 67,097 the summary statement of financial position as Interest expenses (7,766,556) (6,734,599) year Cash generated from operations 5,022,988 937,761 at 31 December 2019, the summary statement of Net interest income 8,576,889 8,046,416 Repayments (176,403) (60,108) Income tax claimed 532,529 347,736 comprehensive income, the summary statement of Non-interest income 25,812,682 21,019,785 Net cash flows generated from operating activities 5,555,517 1,285,497 Balance at the end of half 90,246 110,595 changes in equity and the summary statement of cash Total income 34,389,571 29,066,201 year flows for the year then ended and related notes, are Net cash used in investing activities (6,529,538) (2,055,407) derived from the audited financial statements of FDH Operating expenses (22,163,889) (19,473,475) Net cash generated from financing activities 719,153 7,665,020 Bank Limited for the year ended 31 December 2019. Profit before net impairment losses and tax 12,225,682 9,592,726 Net increase in cash and cash equivalents (254,868) 6,895,110 Net charge on impaired financial assets (482,634) (1,436,186) Cash and cash equivalents at the beginning of the period 64,254,574 57,359,464 In our opinion, the accompanying summary financial 8. BASE LENDING RATES Profit before tax 11,743,048 8,156,540 statements are consistent in all material respects, with Cash and cash equivalents at the end of the period 63,999,706 64,254,574 Taxation (3,896,684) (2,191,098) 31-Dec-19 31-Dec-18 the audited financial statements of FDH Bank Limited, and the basis described on the basis for preparation Profit after tax 7,846,364 5,965,442 Base Lending Rate 12.5% 25.0% paragraph. 5. IMPAIRMENT LOSSES/NON-PERFORMING CREDIT FACILITIES AND PROVISIONS FOR LOSSES Maximum Applicable Range 11.1% 10.0% Other comprehensive income BY INDUSTRY SECTOR (% points) Summary financial statements Revaluation Surplus - - 31 December 2019 31 December 2018 Base Lending Rate (Foreign) N/A N/A The summary financial statements do not contain all the disclosures required by International Financial Reporting Deferred tax on revaluation surplus - - Outstanding Expected Outstanding Expected RBM Bank Rate 12.5% 16.0% Standards and the requirements of Malawi Companies Total other income net of tax - - Amount Credit Amount Credit Losses Losses Act, 2013. Reading the summary financial statements K’000 K’000 K’000 K’000 and the auditor’s report thereon, therefore, is not a Total comprehensive income for the year 7,846,364 5,965,442 1. Agriculture, Forestry, Fishing and Hunting 2,689,058 88,229 852,751 90,566 substitute for reading the audited financial statements and the auditor’s report thereon. The summary financial 2. Mining and Quarying 468,333 379 538,448 16,436 9. DEPOSITS RATES statements and the audited financial statements do not 2. STATEMENT OF FINANCIAL POSITION 3. Manufacturing 9,768,554 132,660 10,144,744 3,552 31 December 31 December reflect the effects of events that occurred subsequent 2019 2018 Liabilities, Capital and Reserves 4. Electricity, Gas, Water and Energy 5,505,691 817 4,911,288 9 to the date of our report on the audited financial Liabilities 5. Construction 4,903,864 19,918 3,369,065 11,726 Current account 0.25% 0.25% statements. Shareholders' loan 2,606,543 2,729,144 6. Wholesale and Retail Trade 11,918,423 170,887 12,152,807 118,079 Premium savings 7% 7% The audited financial statements and our report Long term loan 5,760,919 5,454,618 7. Restaurants and Hotels 669,361 46,823 - - Ordinary savings 4% 4% thereon Liabilities to customers 137,140,830 112,570,264 8. Transport, Storage and Communications 2,969,928 13,640 2,274,225 42,646 Bonus savings 3% 3% We expressed an unmodified audit opinion on the Liabilities to other banks 10,301,285 4,504,286 9. Financial services 8,800,078 22,048 2,720,829 9,475 Student savings 3% 3% audited financial statements in our report dated Other liabilities 6,653,457 11,624,822 10. Community, Social and Personal services 9,921,905 305,899 4,273,113 255,440 account 18 February 2019. That report also includes the communication of key audit matters. Key audit matters Lease liabilities 1,719,042 - Total 57,615,195 801,300 41,237,270 547,929 First save 3% 3% are those matters that in our professional judgment, Income tax payable 1,550,102 - Civil servant 3% 3% were of most significance in our audit of the financial Deferred tax liabilities 294,753 - 7-day call 3% 3% statements of the current year. Total liabilities 166,026,931 136,883,134 30-day call 4% 4% 6. CREDIT CONCENTRATION Directors’ responsibility for the summary 1 month 7% 7% Capital and reserves 22,673,475 15,885,774 Total credit facilities (including guarantees, acceptances and other similar commitments) extended to any one customer or financial statements group of related customers where amounts exceed 25% of its core capital. The directors are responsible for the preparation of Total liabilities, capital and reserves 188,700,406 152,768,908 2 months 7% 7% 31 December 2019 31 December 2018 the summary financial statements in accordance with 3 months 6% 6% Sector of Borrower K’000 % of core capital K’000 % of core capital the basis described on note (1) “basis for preparation Assets 6 months Negotiable Negotiable paragraph”. Government Institution * 15,582,568 81.2% 4,433,918 40.0% Cash and balances with Reserve Bank of Malawi 7,062,293 14,885,769 9 months Negotiable Negotiable Placements with other banks 31,750,661 26,084,042 Retail - 0.0% 3,954,217 36.0% Auditor’s responsibility 12 months Negotiable Negotiable Our responsibility is to express an opinion on whether Short term investments - 5,496,484 Manufacturing - 0.0% 3,104,689 28.0% the summary financial statements are consistent, in all Malawi Government Treasury Bills 46,955,149 39,552,133 Agriculture - 0.0% 2,779,310 25.0% material respects, with the audited financial statements Loans and advances to customers 56,813,895 40,689,341 * Non funded letters of credit that have adequate cash cover based on our procedures, which were conducted in accordance with International Standard on Auditing ISA Other investments 31,032 26,032 10. DIRECTORS REMUNERATION, Other assets 33,412,868 13,354,358 BONUSES AND MANAGEMENT FEES 810 (Revised), Engagements to Report on Summary Financial Statements. Property plant and equipment 10,982,128 10,096,391 31 December 31 December Right of use assets 1,692,380 - 7. LOANS TO DIRECTORS, SENIOR MANAGEMENT AND OTHER RELATED PARTIES 2019 2018 Deferred tax asset - 2,009,226 Directors fees 152,100 136,052 31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18 Income tax - 575,132 K’000 K’000 K’000 K’000 Other directors 84,147 18,275 Chartered Accountants expenses Total assets 188,700,406 152,768,908 Directors Other related parties Madalo Mwenelupembe Bonuses to all staff 670,000 503,376 Partner Balance at end of year 906,247 657,703 18 February 2020 3. STATEMENT OF CHANGES IN EQUITY Balance at the beginning of 53,246 60,971 Balance at the beginning of the 4,845,087 390,471 the year year Loans granted during the year 130,336 25,480 Loans granted during the year 186,922 4,595,889 At the beginning of the period 15,885,774 13,597,230 Repayments (47,061) (33,205) Repayments (1,348,138) (141,273) Transition adjustment on adoption of IFRS 9 at 1 Jan 2018 - (5,252,713) Our Bank Our Future Grow With Us Transition adjustment on adoption of IFRS 16 at 1 Jan 2019 (26,662) - Balance at the end of year 136,521 53,246 Balance at the end of half year 3,683,871 4,845,087