First Capital Bank reported a 27% fall in full-year profit, but it managed to meet the minimum core capital requirement of US$30 million.
For the year ended 31 December 2022, the bank easily achieved a translated total capital of US$61 million, with core capital totaling US$46.2 million.
In the period, the bank’s profit stood at $8.4 billion, down from $11.5 billion in 2021.
The group’s overall revenue rose 42%, from $25.9 billion in 2021 to $36.7 billion in 2022.
“This was on the back of broad based performance improvement across all revenue lines,” the group’s managing director Ciaran McSharry said in a statement accompanying the results.
Following a 77% growth in interest-earning assets, net interest income rose by 37%.
The income from trading and foreign exchange climbed by 267%, increasing its share of overall income to 31% from 12% in 2021.
“This largely reflects the implications of the devaluation of the local currency at a level not fully captured in the inflation index. A fair value loss on investment property was posted at $0.4 billion, compared to a profit of $2.8 billion in 2021.”
From $0.2 billion in 2021 to $0.7 billion in 2022, the impairment charges due to credit risk on financial assets climbed by 174%.
“This is driven primarily by the growth in the loan book, with the non-performing loans ratio remaining low at 0.8% (2021 – 1%) which is well within the business’s appetite,” he said.
As expected due to inflationary pressures in the market, operating expenses were up 37% during the period under review.
“Against the backdrop of pricing models for supplies that track movements in the exchange rate, and the need for regular cost of living adjustments on staff expenses, operating expenses increased by 37% from $15 billion in 2021 to $20.6 billion in 2022. This yielded a cost to income ratio of 56%, an improvement from 58% in 2021.”
Earnings from a joint venture business were reduced by 43%, from $5.3 billion in 2021 to $3.1 billion in 2022.
“This relates to a 50% share in a hospitality and leisure asset. The Group is working on a product improvement plan which is expected to boost future earnings from this asset,” he said.
There was a 66% growth in deposits, which moved from $56.4 billion in 2021 to $93.5 billion at the end of 2022.
From $24.6 billion at the end of 2021 to $45.3 billion on December 31, 2022, loans to customers increased by 85%.
“This is reflective of an increase in credit appetite which, for many borrowers, was constrained by reduced absorption capacity when interest rates were reviewed upwards. The loans to deposit ratio increased marginally from 44% on 31 December 2021 to 48% as of 31 December 2022.”
Since last year, policymakers have maintained a tough monetary regime to bring some stability to the economy.
“For the banking sector local currency asset creation slowed down considerably as borrowers reassessed their operations in relation to the new cost model. At the same time an increase in the demand for US$ denominated products also became evident,” group chairman Patrick Devenish said.
It declared a dividend of $127 cents per share, which brings the total dividend for the year ended 31 December 2022 to $171 cents per share.
First Capital Bank Limited is currently the 11th most valuable stock on the ZSE with a market capitalization of $71.4 billion, which makes about 1.97% of the Zimbabwe Stock Exchange equity market – Harare