• Total income grew by 57% to ZWL 10 billion
  • Non-interest income soared by 88%
  • Profit for the year was positive at ZWL 471.9 million

The graph below shows FCB’s total assets trajectory over 4 years in ZW$ millions

Harare- Zimbabwe Stock Exchange (ZSE)- listed financial services outfit, First Capital Bank has registered a total income growth of 57% to ZWL 10.4 billion during the six months to 30 June 2022 from ZWL 6.6 billion in 2021 according to the Group’s latest half-year financial results.

A more than half growth was anchored by an improvement from underlying business, with net interest income and net fees and commissions having increased by 12% and 18% respectively. 

The significant growth coincided with the Central Bank’s record hiking of interest rates, a situation that affected productive sectors of the economy with an ultimate impact on Banks’ interest incomes. Besides that, the period was clouded by a record Zimbabwe dollar fall of 33% on a single day and 70% over six months causing greater risks on monetary gain margins.

“A 290% increase in foreign exchange trading income also contributed significantly to income growth, underlining the effects of exchange rate movements and growth in foreign currency denominated business during the period,” the Group’s managing director Ciaran McSharry said in a statement accompanying the half-year financials. 

Net interest income recorded a 12% uptick to ZWL 3.1 million during the period under review while non-interest income almost doubled after a significant 88% growth to ZWL 7.2 million from ZWL 3.8 in 2021 during the same period. 

The Group’s net interest income’s performance coincided with the Central Bank’s global record high of hiking interest rates by 120 basis points to 200%. Such an aggressive policy was adopted by the Central Bank to deal with speculative borrowing and deter inflation acting as a barrier to huge borrowings from productive sectors. 

The Group declared an interim dividend of ZWL44.23 cents per share with a separate dividend notice to be issued with respect to the dividend declaration.

Resultantly, the Group posted a profit after tax of ZWL 471.9 million during the period. However, this was 2% down from ZWL 483.8 recorded during the same period in 2021. The profit was eaten up by monetary loss which sky rocked by 701% and a higher tax charge increase of 116% computed for 2022 played a significant role in narrowing the profit. 

During the period from January 2022 to June 2022, the Zimbabwe dollar depreciated by 70% on the overvalued Reserve Bank-governed auction market while by over 200% on the parallel market. The local currency has succumbed to a busload of factors, chiefly a lack of confidence both in policy promulgators and the currency itself. The ailing Zimbabwe dollar also suffered a huge setback due to a lack of adequate foreign currency reserves as a backup against inflation. 

However, total comprehensive income for the period, after incorporating revaluation credits on assets and the investment portfolio amounted to ZW$5.3bn for the 6 months to June 2022, 598% higher than the ZW$754.4m reported for the corresponding period in 2021.

The Bank procured a EUR12.5m open line of credit from the European Investment Bank (EIB) during the period under review, a medium-term facility running up to 7 years and is expected to provide capital funding for mid-cap customers.

“This is a critical intervention coming at a time when the economy is showing signs of a rebound,” McSharry said. 

About innovation through product development, The Bank launched a series of innovative enhancements on its Mobile App, creating a 360-degree banking experience with multiple functionalities while a Gold Card with improved security features for those who travel or make payments online was successfully launched during the period.

“The Bank is committed to providing its customers with relevant products and services that support their individual needs.”

"This is being achieved on the back of strong relationships with like-minded technical and business partners. Recent partnerships with Money Transfer Agencies, RIA and HelloPaisa were followed by the successful launch of Western Union resulting in increased options for customers,” McSharry added. 

During the reporting period, the Bank partnered with Junior Achievement Zimbabwe (JAZ) during the Global Money Week and provided financial literacy training to 4664 students in and around Harare.

In the outlook, the Bank expects the volatility to continue in short to medium term. Therefore, the Bank said a fine balance will be maintained between the quest for short term profitability and the long-term sustainability of the business.

“The Board remains optimistic about the growth prospects of the business notwithstanding the requirement for caution in navigating expected short-term disruptions that may still emerge at a macro-level as policies adopted by regulatory authorities to stabilise the markets take root,” McSharry said.

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