Pandemic headwinds hit FBC

LIVINGSTONE MARUFU

 

Listed financial services provider, FBC Holdings Limited, has reported an 84% plunge in profit to ZWL$529.14m in the first six months of the year from ZWL$3.33bn reported in the prior comparative period, due to Covid-19 pandemic related headwinds, Business Times can report.

The Covid-19 challenges have conspired with other market factors to significantly hit FBC Holdings’ top line.

Total income for the group declined 34% to 4.8bn in the reviewed period from ZWL$7.3bn reported in the same period last year. The subdued income outturn was largely influenced by a 76% reduction in net trading and dealing income.

Volumes were also subdued.

“.…The period was characterised by a challenging macroeconomic environment brought about by the Covid-19 pandemic, which had a significant impact on business operations. Successive episodes of lockdown measures have culminated in the adoption of remote working arrangements, with reduced business operating hours, militating against the group’s capacity to aggressively grow revenue lines across business segments,” board chairman Herbert Nkala said.

“Despite the tough operating environment, the Group is making good progress in its various strategies. We continue to grow our key focus areas, leveraging on emergent opportunities from the relatively stable macro-economic environment. We are in the process of simplifying our business processes through digital value chains in order to improve customer experience.”

He said the group was now implementing digital solutions to help grow the business.

The group’s net insurance premium earned was 40% ahead of the same period last year, at ZWL$635.16m.

He said the insurance portfolio has remained susceptible to the subdued economic activity and general reduction of consumer disposable income.

However, net profit from property sales surged 350% in the reviewed period to ZWL$50.97m, compared to the same period last year.

This was achieved as a result of an improvement in pricing and an increased number of units sold.

The group is set to improve this revenue line following significant progress achieved on the Fontaine Ridge project in Harare’s Kuwadzana high-density suburb.

FBC cost to income ratio of 76% was achieved on the back of an 18.6% decline in administrative expenses.

This ratio, however, is significantly higher than the 39% achieved last year, mainly due to the 34% decline in total income caused by the dip in trading and exchange income.

Nkala said the group will continue to implement prudent cost containment measures against declining revenue growth and relative inflationary pressures.

FBC made a net monetary loss of ZWL$678.61m compared to ZWL$316.64m gain achieved in the corresponding period last year, mainly as a result of the increased net holding of monetary assets in line with the group’s inherent business model.

The slowing down of inflation helped to contain the net monetary loss. Total assets for the group stood at ZWL$41,67bn, a 7% increase from ZWL$39.11bn reported in December 2020.

The growth was mainly driven by a 5% growth in deposits billion to ZWL$ 25.92bn from ZWL$24.71bn.

Nkala said the group was optimistic about the economic outlook, anchored on the growth prospects of key economic sectors, a stable inflationary environment, and increased foreign currency availability supported by the International Monetary Fund (IMF)’s cash injection to world economies through its reserve asset known as the special drawing rights, two weeks ago.

IMF injected US$650bn into the world economy to help countries restore liquidity and gain fiscal space to mitigate the devastating impact of the Covid-19 pandemic, which continue to ravage economies across the world.

Zimbabwe received US$961m in SDR, a part of the US$650bn the IMF is distributing to its members.

The funding is expected to shore up Zimbabwe’s fragile economy.

Government is projecting the economy to grow by 7.8% this year, anchored on a good 2020/21 rainfall season, higher international mineral commodity prices, and a stable macroeconomic environment.

Higher growth rates are projected in agriculture, electricity generation, and manufacturing.

The government’s efforts to stabilise prices through prudent fiscal policy and rules-based monetary and exchange rate policies, have been effective and must be continued in order to enhance confidence and improve macroeconomic conditions, Nkala said.

He said stringent fiscal policies are required to reduce unbudgeted spending and redirect resources where they are most needed, including social service delivery and re-establishment of human capital in addition to measures improving revenue collection.

 

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