FBC profit dips amid market turbulence
LIVINGSTONE MARUFU
Listed financial services group FBC Holdings reported a 16% drop in profit to ZWL$12.5bn in 2022 from ZWL$14.9bn reported in the previous year, Business Times can report.
In a statement accompanying the financial results for the year to December 31, 2022, FBC chairman Hebert Nkala attributed the drop to a difficult operating environment that continued to weigh down the group’s operations.
“The group’s inflation-adjusted profit after tax for the period reduced by 16% as a result of a 427% increase in tax expenses mainly due to the surge in deferred income tax on unrealised non -funded income,” Nkala said.
Total income for the group increased by 93% to ZWL$119bn compared to the prior year, with the growth emanating from an increase in all major revenue streams.
FBC’s net interest income was up 69%, driven by an increase in weighted average interest rates and growth in lending portfolios.
The group’s banking subsidiaries also registered an increase in US$-denominated loans as the volume of foreign currency transactions became more prevalent in the economy.
Net fee and commission income was 49% up compared to the prior year as the group banking subsidiaries continued to register transaction volume growth in the payments space, leveraging on the group’s investment in digitalisation.
The insurance business registered a 33% increase in net earned insurance premiums as a result of the group’s improved market penetration compared to the prior year.
“Growth in the insurance business, however, remained subdued due to the challenging economic environment. Insurance spending generally decreases in weaker economic cycles, but the group is encouraged by the preliminary results arising out of the group’s regional diversification into Botswana.
“During the second half of 2022, the group opened FBC Reinsurance (Botswana) Pty Limited, a reinsurance company that is based in the Republic of Botswana. Its six months’ performance was ahead of expectations.
“The group will continue to monitor and support this investment as it emerges out of its incubation phase,” Nkala said.
He said the group’s investment in value-preserving assets yielded positive results with a 152% increase in other income which comprises mainly dealing income and fair value gains from investment properties.
The group’s cost-to-income ratio excluding monetary loss, increased to 67% compared with 58% reported in the prior year, primarily as a result of exchange rate-driven inflationary pressures, which resulted in a 125% and 86% increase in administrative expenses and insurance claims expenses respectively.
Credit impairment charges increased by 190% in line with the increased loan book.
Nkala also said that the group implemented various incentives to cushion staff against the increased cost of living.
The group, however, continues with process re-engineering, leveraging digitalisation initiatives to improve business efficiency and rein in costs.
Total assets for the group stood at ZWL$335bn at the end of December, reflecting an increase of 54% from ZWL$217.6bn in 2021.
The growth in the statement of financial position was mainly driven by growth in loans and advances which were up 85% at ZWL$149.6bn.
Total deposits and borrowings increased by 51% to ZWL$192bn as the group continued to consolidate its market space.
