First Capital Posts $669 Million Profit On Loan Book Growth

Financial services provider, First Capital Bank posted a ZWL$ 669 million operating profit for the six months to June 2021 from ZWL$ 97 million prior year on account of growth in lending, transactional volumes and fees increases.

Earnings per share reached ZWL7cents compared to prior year ZWL9cents in inflation adjusted terms.

A loan loss ratio of 0.6 percent demonstrated the quality of the bank’s loan book, which has a non-performing loan ratio of 0.14 percent against a market average of 0.3 percent.

“The strong performance was underpinned by loan book growth from the second half of last year to current period coupled with transactional volumes and fee increases. Costs continue to be inflation driven,” the bank said.

Foreign currency loans grew to USD18.7m in June 2021 from USD1m in December 2020, driven by the growth in foreign currency deposits.

During the period under review, the Bank’s total deposits have, in historic terms grown to ZWL9.8bn, an 11% increase from ZWL8.8bn recorded in December 2020.

Loans under watch list constitute 3.3 percent of the loan book.

However, 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 percent to 56 percent, 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,” the bank said.

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$36m, exceeding the regulatory target of US$30m.

The banks aims at creating a buffer above the US$30m that will be required to cushion against future exchange rate fluctuations given that the composition of capital is mixed between US$ and ZWL.

Liquidity ratio was 49% compared to regulatory minimum of 30%

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