Loan book growth spurs FCB’s income

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  • Total income increased by 86% in inflation adjusted terms to ZWL253m from ZWL136m
  • Operating expenses expanded 20% to ZWL166m
  • “Due to the lockdown non funded income for quarter two is expected to decline by c15%, whilst costs are also expected to increase…”

Harare – First Capital Bank’s total income increased by 86% in inflation adjusted terms to ZWL253 million during the first quarter ended 31 March 2020 from ZWL136 million recorded in the same period last year.

In historical cost terms total income increased by 85% from ZWL115m to ZWL213m including one off foreign exchange gains of ZWL20m.

“The increase is largely due to increase in loan book in prior year quarter four, while the loan book remained stable in quarter one of 2020,” the Bank said in a statement accompanying the trading update for the period under review.

“Additionally, interest rates and price increases effected towards end of quarter four of 2019 contributed significantly to the increase”.

Profit after tax grew by 100% from a loss of ZWL58 million to a profit of ZWL59 million in inflation adjusted terms, while in historical cost terms the increase was 510% from a loss of ZWL10 million to a profit of ZWL51 million.

Balance sheet growth was driven by ZWL loans which grew by 9% from 620 million to ZWL673 million whilst ZWL deposits grew by 21% from ZWL886 million to ZWL1,073 million.

“Foreign currency loans remained flat at USD6.8m whilst foreign currency deposits declined by 10% from USD55m to USD50m,” the Bank said.

Operating expenses expanded 20% in inflation adjusted terms from ZWL138 million to ZWL166 million during the period under review and in historical cost terms by 14% from ZWL120m to ZWL137m.

Total capital adequacy ratio at end of quarter remained flat at 25%, whilst liquidity ratio was 58% compared to previous quarter of 55%.

On the impact of coronavirus (COVID-19) global pandemic, the Bank said, “COVID -19 will impact the business directly and indirectly.”

“Due to the lockdown non funded income for quarter two is expected to decline by c15%, whilst costs are also expected to increase from quarter two on the back of the costs necessary for COVID-19 preventative measures.

“There will inevitably be an impact on impairment, which is expected to materialise in quarter two onwards, with the full impact to be assessed,” the Bank said.

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