In line with the Listing Rules of the Lusaka Securities Exchange (“LuSE”) and the Securities Act 2016, Madison Finance Company Limited announces audited results for the year ended 31 December 2022.
REVIEW OF FINANCIAL RESULTS
The Company recorded a profit of K9.195 million for the year ending 31 December 2022 compared to a profit of 8.948 million recorded as at 31 December 2021.
FINANCIAL HIGHLIGHTS
The key highlights of the financial performance for the period under review were;
1. A Profit of K 9.1 million against a profit of K8.9 million in 2021. The reported Profit is mainly driven by improved Other Operating Income and the cost containment strategies that were implemented in the year.
2. Interest Income of K74 million is lower than last year by 21% while the Interest Expense of K 41 million is lower than last years by 29%.
3. The Loans and Advances to customers increased by 4% from last year. The increase in the Loan Book was due to an increase in the Medium, Small and Micro Enterprises loan portfolio.
4. Customers’ Deposits declined by 10%.
5. The total Assets and Liabilities reduced by 15% during the period under review. The reduction in Assets is mainly arising from a reduced in the Cash and Cash Equivalents. The reduction in Liabilities is driven by the reduction in Borrowed
Funds and the Customer Deposits.
SIGNIFICANT RESTRICTIONS
During the year ended 2020, the Bank of Zambia (“BoZ”) conducted a review of the Company and highlighted a solvency deficiency in the Company in accordance with the Banking and Financial Services Act.2017(“BFSA”). The ratio of liquid assets to total deposits and short- term liabilities was at 7.3%, which was below the minimum requirement of 15%. In view of the findings, some notable significant restrictions which were made on the Company were as follows:
The Company was directed to suspend payment of bonuses or increments in salary, emoluments and other benefits to directors and senior officers in accordance with Section 66(1)(c) of the BFSA.
The Company was directed to obtain prior written approval from BoZ for all payments to Shareholders, Directors and the Chief Executive Officer.
The Company was directed to obtain the prior written approval of the BoZ for all payments above K50,000.
In 2022 the foregoing BoZ directives were still in operation. As at the financial year ended 2022, the Assets and liabilities of MFinance stood at K267 million and K243 million respectively.
As at the end of the year, the Capital Adequacy Ratio for Madison Finance Company
Limited stood at 16.9%.
OUTLOOK
The Company performance in 2023 is expected to be a growth in Assets and Liabilities with a constant profit position. This will be on the back of:
Increased disbursements performance following the opening of the economy and improved economic activity.
Operational Costs restructure to reflect the anticipated improvement in economic conditions.
Competitive pricing of liabilities to maintain the direct costs within acceptable cost to income ratios.
Quality underwriting, enhanced credit
appraisals and post performance reviews.
