• First Capital Bank achieved robust profitability and experienced significant growth in loans and advances during the fiscal year 2023, highlighting its strong performance
  • While deposits show a marginal decrease of 9%, First Capital Bank witnessed a surge in loan portfolio, which remains a core driver of its operations and success in the banking sector
  • First Capital Bank edged closer to a notable milestone as its loan base approaches the $100 million mark in FY23, reflecting the bank's continued expansion and lending activity

Harare- First Capital Bank has concluded its fiscal year 2023 on a positive note, achieving remarkable profitability and a substantial increase in loans and advances, which are integral to the banking industry. However, deposits experienced a slight decline of 9%, serving as another important aspect of the bank's operations.Considering the prevailing sentiment, it is likely that the Bank's loans will exceed 100 million in the future. Nonetheless, given the uncertainty in the economic outlook, it is difficult to predict with certainty. However, at present, the loan portfolio has demonstrated strong performance, steadily approaching the significant milestone of 100 million, which marks a noteworthy achievement in the bank's history.

Established in 1912 and renowned in the local banking sector, First Capital Bank Limited (formerly Barclays Bank of Zimbabwe) operates across various segments, including retail banking, business banking, corporate and investment banking, and offers a range of financial products. It has 38 branches nationwide and provides additional services such as motor, home, travel, business, and personal insurance. The bank was listed on the Victoria Falls Stock Exchange, a US dollar-denominated platform a spin off from Zimbabwe Stock Exchange, on May 23, 2023. Its fiscal year ends on December 31, 2023.

During the reviewed fiscal year, the bank reported an adjusted after-tax profit of US$15.4 million. This was supported by a surge in loans and advances to customers, amounting to US$86 million, while loans and receivables from banks increased to US$6 million from 328,000 in 2022. However, customer deposits decreased to US$123 million from US$136 million due to the rapid devaluation of the local currency and high interest rates. These factors were compounded by a tightening of monetary policy in the latter half of 2023.

Consequently, net interest income remained subdued at US$22.97 million compared to US$18.39 million in 2022. However, non-interest income, primarily driven by net fee and commission income and net trading foreign exchange income, played a dominant role, reaching US$48.26 million. This contributed to a total income increase from US$53 million to US$71 million.

It is worth noting that loans experienced a significant 30% increase, with 92% of them being denominated in US dollars due to the rapid devaluation of the local currency. The bank secured a EUR12.5 million line of credit from the European Investment Bank (EIB) in June 2022, with 81% of it fully utilized during the reviewed period. Additionally, the bank mobilized a US$20 million line of credit with the African Export-Import Bank (Afreximbank), of which US$6 million was drawn down by December 31, 2023. First Capital Bank's CEO, Tapera Mushoriwa, mentioned ongoing discussions with various financiers, including the African Development Bank and Trade Development Bank, for additional lines of credit.

Operating expenses increased by 55% from US$30 million in 2022 to US$46.7 million in the reviewed year. Consequently, the cost-to-income ratio rose from 56% in 2022 to 66% in 2023. The bank is actively pursuing cost optimization strategies to manage its overall cost base. Furthermore, the loan loss ratio increased from 2% in 2022 to 5% in 2023, primarily driven by heightened credit risk within the agriculture portfolio. However, the overall default risk remained within the bank's risk tolerance.

The bank's core capital increased by 3%, rising from USD 50.9 million as of December 31, 2022, to USD 52.5 million as of December 31, 2023, surpassing the regulatory minimum of US$30 million and maintaining a comfortable safety margin. The bank's capital adequacy ratio remained strong, closing the period at 28%, well above the regulatory minimum of 12%. With a liquid assets ratio of 52%, the bank maintained a comfortable buffer above the regulatory minimum of 30%, indicating its capacity to undertake additional business activities.

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