Source: First Capital Bank eyes growth in USD earnings | Herald (Business)
Business Reporter
First Capital Bank (FCB) says foreign currency earnings accounted for 20 percent of its total income in the first quarter of 2022 and that the bank is targeting an increased contribution from the foreign currency generating operations of the business.
During the quarter under review, the bank’s total income increased by 37 percent to $2,4 billion compared to $1,7 billion posted in the comparative period in 2021.
“The growth is on the back of strong performance in both net interest income and non-funded income, which increased by 37 percent and 36 percent, respectively, on the back of an increase in underlying business and customer transactions in the wake of reduced Covid-19 restrictive measures.
“About 20 percent of the bank’s income for the quarter was earned in foreign currency with the business outlook suggesting an increased contribution going forward,” the bank said in a statement.
Managing director Ciaran McSharry said the bank’s focus was to grow its US dollar balance sheet and income through increased loan offering and transactional volume under Nostro accounts, indicating that the multi-currency system had increased the trend towards a market-led dollarisation.
The bank noted that the Reserve Bank of Zimbabwe (RBZ) maintained a tight liquidity management framework, mopping up daily excesses into zero coupon non-negotiable certificates of deposits while keeping the overnight accommodation rate high at 60 percent, as part of measures to stem inflation.
FCB said these measures have had the effect of slowing down balance sheet expansion in the financial sector.
However, the bank noted that it would 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.
In the quarter under review, the bank’s operating expenses increased by 18 percent to $1,4 billion from $1,2 billion recorded in the first quarter of 2021.
“The bank recorded profit before taxation of $522,8 million for the quarter, a 349 percent increase from the $116,4 million recorded in the corresponding period in 2021.
The bank’s total assets increased in real terms by 29 percent year-to-year, however, on a year-to-date basis, the balance sheet remained largely flat between December 2021 and March 2022 with total assets increasing by two percent, deposits growing by 2 percent while equity reduced by five percent, following adjustment for the 2021 final dividend of $834 million.
“Gross advances however, increased by 15 percent, closing the quarter at $10 billion from $8,7 billion on December 31, 2021, reflecting increased appetite from both the productive and consumptive sectors.”
The bank indicated that asset quality remained strong with a non-performing loan ratio of 0,2 percent being recorded at the end of the first quarter of 2022 down from one percent recorded at the end of 2021.
The bank noted that its capital position remained strong with a satisfactory margin of safety above the US$30 million threshold.