LISTED financial concern, FBC Holdings, says it has cashed in on foreign currency on its Graniteside small and medium enterprise (SMEs) bank which now has a currency exchange licence as the group moves to mop up greenback for its units.
The outlawing of the multicurrency system on June 24 this year paved way for the return of the Zimbabwean dollar. This has seen the growth in a number of bureaux de change firms which trade in forex. There has been intense competition between bureau de change and the parallel market for the greenback.
Interbank rate stands at 14.9 against parallel market rates which are at 14. FBC group CEO John Mushayavanhu told Business Times that the SME Bank has become one of the group’s main forex trader and helping it getting foreign currency for its requirements.
“We have chosen our Graniteside SME branch to be our main bureau de change to cater for those people in Mbare Siyaso and the surrounding areas to come with their United States dollars to our bank and it’s already paying dividends,” Mushayavanhu said.
Since we got the bureau de change licence a lot of money has been coming from that side and we are banking on that branch for our forex requirements.”
He said the bank wants to get the forex from the informal sector to meet the foreign currency requirements for the formal sector. Meanwhile, FBC Holdings recorded an increase in profit to ZWL$54.3 million in the first half of 2019 from US$14.8 million realised in the same period last year due to the increasing inflation since the reintroduction of the local currency.
Presenting the financial results recently, Mushayavanhu said the periods are difficult to compare due to different landscapes that the group operated in.
“Following the change in the functional currency, FBC achieved a profit after income tax of ZWL$54.3 million mainly underpinned by the group’s diversified business model and that the group benefitted from its hedging strategy by recording notable exchange gains and fair value gains following the introduction of the local currency,” Mushayavanhu said.
Total net income for the group was ZWL$198.4 million for the period under review mainly driven by the banking subsidiaries. Net interest income was at ZWL$27.4million for the first half of 2019 while the group realised a net fees and commission income of ZWL$32.3 million thanks to its digitalisation strategy. Net income from property sales was ZWL$1.05million for the period reflecting a slowdown in property sales as the market readjusts to determine pricing equilibrium in response to policy changes on the transacting currency.
With the help of the new user based insurance product, MyDrive, the insurance sector recorded positive growth in net earned insurance premium of ZWL$18.5million. Net trading income for 2019 Half Year was ZWL$73.3 million with the major position being foreign exchange gains. Other operating income comprises of fair value adjustment to financial assets and investment properties which totalled ZWL$45.8million.
Administrative expenses were at ZWL$87.7 million for the period due to an increase in operating expenses arising from general price increases in the economy. As at 30 June 2019, FBC’s financial position was ZWL$2.36 billion with loans and advances of ZWL$1.2billion contributing 52 percent of the total assets.
Total equity attributable to shareholders of the parent company was at ZWL$269.9 million translating to a net asset value of ZWL43.53 cents per share. FBC borrowed a sum of US$5million from a regional financial institution for the purposes of providing mortgage financing; an amount of US$2.38 million is outstanding at reporting date.
In line with Exchange Control Directive RU28 dated February 22 2019 and Exchange Control Circular 08 dated July 24 2019 the group registered the amount outstanding as legacy debt and an amount of US$2.38 was paid to the central bank in line with the directive. FBC has accordingly classified the payment as a receivable in US dollars.