First Capital faces choppy waters as transition progresses

  • Liquidity ratio was 55%
  • Non-performing loans ratio below 1%
  • Profit growth of 96%
  • RTGS deposits grew more than 74%

Harare – First Capital Bank formerly known as Barclays Bank of Zimbabwe registered a buoyant 2019 performance despite a volatile macro-economic environment characterized with the floating and consequent devaluation of the exchange rate, multiple statutory instruments, and consequent hyper inflationary pressure.

The Bank’s liquidity ratio was 55% compared to the 30% regulatory minimum. Similarly capital adequacy at 26% was well above the minimum threshold of 12% showing the Bank’s capacity to underwrite more loans.

During the period under review, the Bank said it maintained a quality loan book with a loan loss of ration of 2.78% compared to 1.27% of the prior year. The increase reflects the growth in the loan book.

Non-Performing loans ratio (NPL) remained below 1% compared to prior year.

The Bank also added that it continues to focus on prudential lending practices due to an environment with high inherent credit risks.

The bank registered an inflation adjusted profit of ZWL$163 million which, according to First Capital translates to inflation adjusted earnings per share of ZWL$7.57.

The profit is a 96% growth from ZWL$83 million recorded in 2018 and is attributed to significant contribution coming from fair valuation of investment properties on the back of rising operating costs, exchange loss on the net open position and subdued interest rates.

In 2019, the Bank registered growth on the statement of financial position mainly driven by deposits both in local and foreign currency.

RTGS deposits grew by more than 74% to ZWL879 million and the RTGS loan book grew by 200% to ZWL622 million, with the growth in loans largely in quarter three and quarter four, covering the key productive sectors including agriculture, manufacturing and mining.

FCB highlighted that, in order to strengthen the Banking sector’s capacity to do more business in the new currency environment and absorb any economic shocks, the Reserve Bank of Zimbabwe increased the minimum capital to US$30 million by December 2020. The Bank is currently developing a plan to ensure that it meets the capital requirements as prescribed.

On the outlook, the Bank said it will continue to focus on shareholder value and capital preservation strategies to meet the US30 million minimum capital requirement while maintaining prudential lending practices, and at the same time focusing on increasing market share for deposits, loans and revenue.

First Capital alluded that the above focus takes cognisant of the impact of corona virus on the Bank, customers and colleagues and it is taking various measures to minimise the impact on customers, colleagues and the earnings of the Bank.

According to the acting Managing Director of the Bank Ciaran McSharry, the year can be split in two halves, with the first half of the year being marked by the successful migration of systems including their core banking platform and ancillary systems. Having completed this in the first half, the second half was focused on system stabilization and maintenance together with building sustainable growth in the Bank’s core business.

Commenting on the new banking system, McSharry said, “Our new core banking system has enabled the Bank to enhance existing products such as the introduction of ZIPIT send, whilst at the same time introducing new products like Ecocash. The transactional volumes were stable during the migration period as well as post migration. The growth in non-funded income has largely been driven by new products and transactional price increases.”

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