First Capital loan book grow 83% in Q3

LIVINGSTONE MARUFU

Listed financial institution, First Capital Bank’s loan book grew 83% to ZWL$1.43 in the third quarter (Q3) to September 30,2020, due to the Covid-19 constraints which forced firms to borrow especially the tourism industry players.

In the prior comparative period, First Capital’s balance sheet stood at ZWL$779m.

The lender’s balance sheet grew significantly, driven by local currency deposits which grew 73% to ZWL$2.6bn from ZWL$1.5bn, resulting in the loan book soaring 83%.

“Loans increased by 83% to ZWL$1.43bn from ZWL$779m while foreign currency deposits slightly increased by 3% to US$63m from US$61m,” company secretary Violet Mutandwa said.

Mutandwa said First Capital Bank’s negotiated loans due to COVID-19 constraints constituted 6% of the loan book being the same level as last quarter, with the tourism sector constituting the largest proportion.

The bank did not experience deterioration in the quality of credit of these renegotiated loans in the third quarter, with the non -performing loans ratio remaining stable at 0.2%, well below market average. Bank deposits continue to be well diversified.

Total income in inflation adjusted terms excluding property revaluation increased 58% to ZWL$1.9bn during the reviewed period from ZWL$1.2bn achieved in the prior comparative period.

Operating costs increased 69% in inflation adjusted terms to ZWL$1.3bn from ZWL$766m due to the increase in remunerations of workers and high cost of doing business in the country.

Inflation adjusted after tax operating profit increased by 100% to ZWL376m from ZWL188m.

Mutandwa said the third quarter was characterised by exchange rate and price stability resulting in inflation starting to show a downward trend with year-on-year inflation closing the quarter at 659% from a peak in July of 837%.

According to the Reserve Bank of Zimbabwe month on month inflation as at the end of September closed at 3.8% owing to foreign currency action system.

Mutandwa said the opening up of the economy due to the easing of lockdown towards the end of the second quarter enabled the company to start operating normally, resulting in increased transaction volumes.

The lender’s total capital adequacy ratio was 28%, while liquidity ratio was 70%.

Going forward, the bank is expecting to surpass third quarter performance due to the growth in deposits.

First Capital Bank is optimistic of a continuous operation across the full spectrum of retail and business banking and corporate and investment banking with 38 branches nationwide.

In addition to mainstream financial products, First Capital has ventured into motor, home, travel, business, and personal insurance services.