- PAT declined to ZWL529.1m
- Group’s total income decreased by 34% to ZWL4.75bn
- Net profit from property sales surged 350%
- Revenue increased to ZWL3,13bn from ZWL1.98bn
Harare – FBC Holdings saw its profit more than halve in the six months to June 30, 2021. The Group whose flagship asset is FBC Bank post-tax profit fell by 84% in inflation-adjusted terms from ZWL3.3 billion recorded in the first half of 2020 to ZWL529.1 million, according to its financial statements published today.
The Group gave no exact explanation for the subdued performance but they stated the drawback effect the COVID-19 induced lockdowns has had on their operations.
The income statement also shows a net monetary loss of ZWL678.61 million from ZWL316.64 million recorded in the same period last year which the group owed to an increased net holding of monetary assets in line with its inherent business model.
“The 2021 interim period was characterised by a challenging macroeconomic environment brought about by the Covid-19 pandemic, which had a significant impact on business operations,” Group chairperson Herbert Nkala said in a statement accompanying the financial results.
“Successive episodes of lockdown measures have culminated in the adoption of remote working arrangements, with reduced business operating hours, militating against the Group’s capacity to aggressively grow revenue lines across business segments.”
However, despite the negative impact posed by C0VID-19, the Group showed some resilience with revenue for the period increasing by 58% to ZWL3.13 billion from ZWL1.98 billion.
Total income of ZWL4.75 billion for the period was 34% below the prior year’s corresponding period performance largely influenced by a 76% reduction in net trading and dealing income, following the stabilisation of the ZWL interbank exchange rate against all the major currencies, bolstered by the foreign exchange auction system.
“The significant reduction in this revenue was counter balanced by a strong growth in other core business revenue streams,” Nkala said.
Net interest and related income was 43% ahead of the comparative same period last year at ZWL1.33 billion, leveraging on the Group’s 12% growth in loans and advances.
Loans and advances rose to ZWL18.06 billion from ZWL16.10 recorded in the prior year during the same period while total assets grew to ZWL46.67 billion from ZWL39.10 billion recorded last year.
Fees and commission income improved by 89% to ZWL1.12 billion in the half year partly supported by the Group’s digitalisation thrust which enhanced retail and service fee performance.
Transactional volumes were however, subdued within the financial services sector with most institutions implementing digital solutions to augment business growth.
Net insurance premium earned increased by 40% to ZWL635.16 million with the insurance portfolio remaining susceptible to the subdued economic activity and general reduction of consumer disposable income.
Net profit from property sales was 350% higher at ZWL50.97 million, than the same period last year buoyed by an improvement in pricing and an increased number of units sold.
Other income largely relating to the Group’s net trading and dealing activities declined by 70% to ZWL1.62 billion compared to the previous year following the stabilisation of the ZWL interbank exchange rate, which has depreciated by less than 5% against the USD from the end of December 2020.
The group recorded a cost to income ratio of 76% on the back of an 18.6% decline in administrative expenses.
“This ratio however, is significantly higher than the 39% achieved last year, mainly due to the 34% decline in total income caused by the dip in trading and exchange income. The Group will continue to implement prudent cost containment measures against declining revenue growth and relative inflationary pressures,” added Nkala.
On the group’s building segment, FBC Building Society’s construction activities are currently in progress at the 858 units Kuwadzana project in Harare with 150 units under phase 1 having already been commissioned.
Going forward, the Group is optimistic of the economic outlook for the near term, anchored on the growth prospects of key economic sectors, a stable inflationary environment and increased foreign currency availability supported by the International Monetary Fund Special Drawing Rights (SDR) allocation.
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