FBC draws down $60 million AfreximBank facility

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Tinashe Makichi

HARARE – FBC Holdings has started drawing down on the $60 million Afreximbank facility through a structured arrangement that will hedge the bank against interest expense and nostro funding risk.

Giving a trading at the company’s annual general meeting, FBC Holdings chief executive John Mushayavanhu said the business continued to embark on various cost saving initiatives, while aggressively pushing for growth in key revenue lines.

“The bank has renewed and drawn down the $60 million facility at an increased level from AfreximBank through a structured arrangement that will hedge the bank against interest expense and Nostro funding risk,” said Mushayavanhu.

He said the bank’s performance during the five months to May was commendable with all performance benchmarks being reported ahead of budgetary expectations.

Mushayavanhu said the group’s performance is ahead of both budget and prior year performance and barring any unforeseen disruptions. The bank is anticipating to exceed last year’s comparative interim period’s performance by a significant percentage.

This bullish performance has been recorded despite the fact that both the banking and insurance businesses are operating in extremely challenging circumstances, as is always the case in pre-election periods.

 During the period under review, the group’s market capitalization was reported at $147,8 million and for the greater part of last year the share traded at a discount mainly as a result of the pessimistic view on the economy.

He said the group has always focused on sustained performance and investment in the FBCH brand to promote a premium on the net asset value per share.

Mushayavanhu said the advent of financial technologies has continued to test the bank’s innovative capacity and adaptability calling for a strategic review of processes, systems and policies.

Subsequently, the bank under the group’s digitalization project continues to expand its presence through investment in e-commerce distribution channels. The introduction of e-distribution channels has enabled the bank to increase its customer base to over 250 000.

On the banking side, Mushayavanhu said the country has been grappling with foreign currency challenges, cash challenges and downward pressure on lending interest rates to the productive sectors, mortgage loans and reduction of transaction charges.

As a result, Mushayavanhu said the bank continues to deploy more point of sale machines in the market with 7 000 point of sale machines in various business outlets.

He said the insurance business started the year on a very low note but their positive contribution towards the group performance is improving.

‘The demand for traditional insurance business products is low on the back of a weak macro-economic environment and emphasis is now being placed on micro insurance to drive the gross premium written and to adapt to an environment that is significantly characterized by the informal sector.

‘The stock market is also expected to contribute significantly towards the performances of these insurance units as investment activities are a core and integral part of their trading positions,” said Mushayavanhu.

He said the building society’s performance to date has been satisfactory despite the emergence of multi-tier pricing mechanisms which have distorted the prices of building material and ultimately property prices.

The current stock of houses under development is 40 units split between Avondale West (16) and Greendale Alfred Road (24). A further (64) Units were completed at Greendale Kennedy and Mt Pleasant St Kilda with handovers to clients in progress.

An additional four units are still available for sale at Masotsha.   Meanwhile, the Building Society acquired land in Kuwadzana Phase 3 and this will be the first high density project in Harare.

 The land will consist of 858 high density stands with land servicing anticipated to commence within the second half of 2018 and outside Harare the Society identified land for high density projects in Zvishavane and Hwange and for a Cluster development in Victoria Falls.