FCB accelerates rationalisation drive as cost pressures mount
BUSINESS REPORTER
In response to fast rising costs, First Capital Bank (FCB), a financial services provider listed on the Victoria Falls Stock Exchange, has embarked on an accelerated cost cutting program to curtain cost expansion, Business Times can report.
The development was confirmed by Sarudzai Binha, the lender’s company secretary.
According to her, the cost cutting exercise comes as the lender braces for cost pressures, which remain elevated with operating expenses rising by 12% in the quarter to March 31, 2024 to US$10.4m compared to the same period last year.
“A rigorous rationalisation and optimisation exercise is currently underway to curtail cost expansion,” Binha said.
Despite these challenges, Binha said the lender’s total income grew by 40% in the period under review to close at US$20.5m from US$14.5m for the comparable period in 2023.
This growth was driven by strong performance in both net interest income and non-funded income.
Total deposits, in the period under review, marginally increased to US$13.2m.
Binha said the bank accelerated lines of credit and interest income were bolstered by a 15% increase in the loan book to US$91m in the period under review from U$79m reported in the prior comparative period.
The bank, according to Binha, mobilised US$15m from the African Development Bank to bring the total facilities to US$48.5m to support growth in key sectors of the economy.
The bank’s non-performing loans ratio continued to improve, closing the quarter at 7% 2024 from 8% in December 2023 and 13% in June 2023, following various interventions undertaken and underway such as sectoral redistribution to improve asset quality.
Bank’s core capital increased by 25% during the quarter under review with capital adequacy ratio at 35%, well above regulatory threshold of 12%.
“At US$58.2m core capital requirement remained comfortably above the minimum threshold at US$30m.
“Also liquidity ratios remained above the minimum regulatory requirement of 30% throughout the period under reporting,” Binha said.
She said the current operating environment presents risks and opportunities.
Looking ahead, the bank remains positive about the growth prospects in the medium term through diligently harnessing the opportunities while exercising risk and cost management.
