- Total income grew by 82% to ZW$22 billion
- The growth was on the back of high interest income courtesy of growth in foreign currency loan book
- However, the Bank expects the outlook to remain dull
Harare- ZSE-financial services outfit, First Capital Zimbabwe Limited has recorded an 82% uptick in total income to ZW$26 billion during the third quarter ended 30 September 2022 according to the Bank’s latest trading update.
This was on the back of strong performance on interest income which was driven by growth in the foreign currency loan book and the repricing of the ZWL book in line with the extant interest rate policy framework.
This year, First Capital Bank (FCB) and the European Investment Bank (EIB) sealed a EUR12.5 million credit facility deal to develop eligible projects undertaken by Small to Medium Enterprises (SMEs) and Midcap companies in Zimbabwe, a deal that is already paying off for the Bank.
“Foreign denominated earnings at 40% of total income for the quarter show an increase from about 22% in the first quarter,” the Bank said in a trading update.
Total assets grew by 41% ahead of prior year during the same period driven by customers’ loans and deposits growth of 59% and 30% respectively while portfolio credit quality remained strong with a non-performing loan ratio of 0.1% being recorded at the end of Q3 2022 down from 1% recorded at the end of 2021.
However, operating expenses soared by 43% to ZWL13.9 billion from ZWL9.7 billion in the comparative period indicating cost expansion in response to the inflationary pressure.
“The inflation adjusted Total equity increased by 24% with the Bank’s capital position remaining strong with a satisfactory margin of safety above the US$30mn threshold and capital adequacy ratios well above the regulatory minimums,” added the Bank.
However, the Bank remains confident that the aggressive liquidity management policies and high interest rates monetary framework will continue being operational as government battles to tame inflation, measures that will present downside risk on credit performance as borrower capacity to carry related costs is strained.
Therefore, the Bank looks to remain cautious in its approach to asset creation, ensuring that a sufficient liquidity buffer is maintained to avert outages whilst borrower capacity is assessed rigorously, taking advantage of the apparent resurgence in key sectors of the economy.
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