First Capital Bank buoyant on loan book growth

September 16, 2021



First Capital Bank sees growth in lending in both local and foreign currency in the second half of the year owing to an expected improvement in economic condition in the six months to June 30, 2021.

The loan book rocketed by 1 770% to US$18.7m from US$1m in December 2020 due to relative stability in the economy.

And the bank’s managing director, Ciaran McSharry, expects the book to pick up further in the second half of this year.

“We are optimistic about the economic environment and look forward to a second-half characterised by further growth in loans and deposits in both local and foreign currency whilst maintaining a quality loan book,” McSharry said.

He said the loan loss ratio of 0.6% demonstrates the quality of the loan book, which has a non-performing loan ratio of 0.14% against a market average of 0.3%.

“Loans under watch list constitute 3.3% of the loan book. Operating costs were largely driven by inflation between June last year and June this year, with the cost to income ratio showing an improvement from 66% to 56%, a combination of the growth in loans and transactional income,” McSharry said.

He said the bank would continue to focus on sectors driving future economic growth while at the same time supporting areas that are recovering from the impact of Covid-19.

The bank closed the period under review on a strong capital position with a capital adequacy position of 24.7% compared to a regulatory minimum of 12%.

Its core capital was US$36m, exceeding the regulatory target of US$30m.

A capital buffer above the US$30m will be required to cushion against future exchange rate fluctuations, given that the composition of capital is mixed between US$ and ZWL, the bank said.

The liquidity ratio was 49% compared to a regulatory minimum of 30%.

In its financial results, the bank’s profit for the half-year dropped 61% to ZWL$165.9m from ZWL$423.1m due to Covid-19 effects.

In the outlook, the lender said it would continue with its digital transformation journey which will include enhancements of existing platforms to give a superior user experience and increased transactional security in addition to new innovations.

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