By Staff Writer
First Capital Bank Zimbabwe reported improved inflation adjusted half year operating results, as the formerly known as Barclays Bank of Zimbabwe remains confident of its ability to continue the digital transformation journey.
First half operating profit increased sixfold to ZWL$669 million from ZWL$97 million in the comparative period last year.
In the period, the Bank proposed to declare an interim dividend of ZWL5 cents per share, when it also reported a 61% decline in half year profit.
The Banking sector has not been spared from the effects of the Covid-19 pandemic which has prompted a sharp increase in bad debt charges, interest rate cuts and less fee income from transactional activity.
FCB’s total deposits have, in historic terms, grown to ZWL$9.8 billion, an 11% increase from ZWL$8.8 billion recorded in December 2020. Foreign currency loans surged to USD18.7 million in June 2021 from USD1 million in December 2020 due to the growth in foreign currency deposits.
A loan loss ratio of 0.6% demonstrates the quality of our loan book, which has a non-performing loan ratio of 0.14% against a market average of 0.3%, according to the bank. It said loans under watchlist 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.
“We are optimistic about the economic environment and look forward to a second half characterized by further growth in loans and deposits in both local and foreign currency whilst maintaining a quality loan book,” said Ciaran McSharry, FCB managing director.
The Bank closed the period under review on a strong capital position with a capital adequacy position of 24.7% compared to regulatory minimum of 12%. Core capital was US$36 million, exceeding the regulatory target of US$30 million.
It said a capital buffer above the US$30 million will be required to cushion against future exchange rate fluctuations given that the composition of capital is mixed between US$ and ZWL. Liquidity ratio was 49% compared to regulatory minimum of 30%.
“The strong performance was underpinned by loan book growth from the second half of last year to the current period coupled with transactional volumes and fee increases. Costs continue to be inflation driven,” said Patrick Devenish, FCB Chairman.
While the Bank stepped up efforts on its digital transformation, McSharry said: “This will not only focus on new innovations but also include enhancements of existing platforms to give a superior user experience and increased transactional security.” – Harare