FCB anticipates harsh operating environment to remain
RYAN CHIGOCHE
Financial services provider, First Capital Bank expects significant risks to remain in the short to medium term despite posting a ZWL$471.9m profit in the six months to June 30, 2022.
The lender also reported an income of ZWL$10.4bn in the reviewed period, reflecting a 57% from the ZWL$6.6bn achieved in the prior comparative period.
Net interest income and fees and commissions increased by 12% and 18% respectively.
“The board expects the operating environment to remain tight in the short to medium term. Consequently, a fine balance will be maintained between the quest for short term profitability and the long-term sustainability of the business,” board chairman, Patrick Devenish said.
Total deposits closed the reviewed period at ZWL$40.8bn, reflecting a 14% increase from ZWL$35.9bn reported in December 2021, while the loan book grew 37% to ZW$21.4bn, from ZWL$15.6bn in December 2021.
About 68% of business was underwritten in foreign currency.
Operating expenses were up 34% to ZWL$6.1bn from ZW$4.5bn.
Capital buffer for FCB remained strong enough to absorb shocks in the reviewed period.
Devenish said the lender has the capacity to underwrite more business this second half of the year owing to strong capital adequacy ratio.
The capital adequacy ration closed the first six months of the year at 34%, well above the Reserve Bank of Zimbabwe required minimum threshold of 12%.
Although FCB’s United States denominated core capital deteriorated to US$44.4m at the end of June from US$74,8m in December 2021, the level was still above the regulatory minimum of US$30m.
“A comfortable margin of safety (was) maintained. The bank’s capital adequacy ratio remained strong closing the period at 34%, which is well above the regulatory minimum of 12%. The bank also operated with a comfortable buffer above the regulatory minimum liquid assets ratio of 30% throughout the period, representing capacity to underwrite more business,” Devenish said.
The Reserve Bank of Zimbabwe (RBZ) implemented various initiatives in the reviewed reported to mop up excess liquidity in the market, which the central bank believed was driving up inflation.
These measures included absorbing banks’ daily excess liquidity through the issuance of 0% non-negotiable certificates of deposit and raising policy interest rates in tandem with projected inflation levels. This was meant to reduce speculative borrowing.
FCB’s managing director, Ciaran McSharry said the bank’s performance in the period under review reflected resilience.
“With ZWL$ liquidity on the market having been largely constrained throughout the period, the bank has experienced a notable shift in its operations with foreign denominated business becoming increasingly prominent,’’ McSharry said.
