First Capital Bank loan book rises to ZWL622mln in FY19

Harare- First Capital Bank’s RTGS loan book rose twofold to ZWL622 million last year, with the growth largely in the third and fourth quarters, covering the key productive sectors including agriculture, manufacturing and mining.

The bank, formerly known as Barclays Bank of Zimbabwe, has been operating under a dual brand since its acquisition by the Malawi-listed First Merchant Bank about two years ago.

Currently the bank is branded as First Capital Bank in association with Barclays.

The recorded growth on the back of financial position backed by deposits both in local and foreign currency.

RTGS deposits increased by 74 percent to ZWL879 million, which were fully deployed into loans.

“The Bank continues to maintain a quality loan book with a loan loss ratio of 2.78 percent from 1.27 percent in 2018, the increase reflecting the growth in the loan book,” acting managing director Ciaran McSharry said in a statement accompanying the results.

The Bank remains on a strong base in terms of liquidity and capital adequacy ratios. The liquidity ratio was 55 percent compared to the 30 percent regulatory minimum. Similarly capital adequacy at 26 percent was well above the minimum threshold of 12 percent reflecting the capacity of the bank to underwrite more loans.

“In the current environment the inherent credit risk continues to be high and the Bank continues to be focused on prudential lending practices, with our non-Performing Loan ratio (NPL) being closely managed at less than 1 percent” said FCB chairman Patrick Devenish.

FCB reported a loss after tax of ZWL163 million in hyperinflation adjusted terms and a profit of ZWL264 million in historical terms, which translates to inflation adjusted earnings per share of ZWL7.57 and historical ZWL12.26. This was attributed to fair valuation of investment properties on the back of rising operating costs, exchange loss on the net open position and subdued interest rates.

From a business perspective, Devenish said, interest rates remained subdued in the first half and well below inflation with increases starting to come in the second. He said most local operating costs were linked to the informal exchange rate.

“This together with rising IT costs also in US dollars resulted in significant cost increases,” he said.

The Bank is currently developing a plan to ensure that it meets the US$30 million capital requirement by year end.

In first half, the Bank completed the migration of systems including its core banking platform and ancillary systems. In the second half, it focused on system stabilization and maintenance together with building sustainable growth in its core business.

“Whilst overall performance was undoubtedly impacted by the migration process we did manage to register significant growth in our Commercial and Retail businesses, building momentum into 2020,” McSharry said.

The Bank did not declare a dividend.

In the outlook, the Bank would focus on increasing its market share for deposits, loans and revenue.

New Ziana