First Capital Q1 income up 37%
RYAN CHIGOCHE
First Capital Bank reported a 37% jump in its income for the first quarter of this year to ZWL$2.4bn from ZWL$1.7bn achieved in the prior comparative period on the back of a rise in both net interest and non-funded incomes.
The interest income increased by 37% while non-funded income increased by 36%.
“…This was on the back of an increase in underlying business and customer transactions in the wake of reduced Covid-19 restrictive measures. About 20% of the bank’s income for the quarter was earned in foreign currency with the business outlook suggesting an increased contribution going forward,” the lender’s acting secretary, Sarudzai Binha said.
Profit for First Capital Bank increased 349% to ZWL$522.8m in the period under review from ZWL$116.4m reported in the prior comparative period.
Total assets for the group increased 29% in real terms on year-to-year.
However, Binha said on a year-to-date basis, the balance sheet has remained largely flat between December 2021 and March 2022 with total assets increasing by 2%, deposits increasing by 2% whilst equity reduced by 5%, following adjustment for the 2021 final dividend of ZW$834m.
Gross advances, she said, increased by 15%, closing the quarter at ZW$10bn from ZW$8.7bn on 31 December 2021, reflecting increased appetite from both the productive and consumptive sectors.
Binha said asset quality remained strong with a non-performing loan ratio of 0.2% being recorded at the end of Q1, 2022 down from 1% recorded at the end of 2021.
She said the flat balance sheet was a result of the central bank’s tight liquidity management framework.
“The Reserve Bank of Zimbabwe maintained a tight liquidity management framework, mopping up daily excesses into zero coupon non-negotiable certificates of deposits, whilst keeping the overnight accommodation rate high at 60%, as measures to stem inflation. These measures have had the effect of slowing down balance sheet expansion in the financial sector,” Binha said.
The bank’s capital position remained strong with a satisfactory margin of safety above the US$30m threshold.
In the outlook, the bank expect government to intensify liquidity mop up measures and even higher interest rates heading into Q2, as measures to tame inflation which has been on the rise.
“The bank expects the aggressive liquidity mop-up and high interest regime to subsist up to the end of the year as a way of neutralising inflation pressure from an otherwise expansionary fiscal posture arising from the need to restore basic infrastructure and to support social funding against projected food shortages following a below par agriculture season. The bank will remain cautious in its approach to ensure that liquidity outages are minimised whilst taking advantage of the expected resurgence in growth sectors which include mining, industrial, farming and tourism,” Binha said.
