FIRST Capital Bank’s (FCB) total income for the third quarter ending September rose to ZW$26 billion from ZW$9.6 billion reported during the preceding quarter as the financial institution registered strong growth in its foreign currency loan book.
Zimbabwe’s economy has been impacted by the effects of long-term instability in the monetary system, recording an average month-on-month inflation for the quarter at 13.8%, increasing from an average of 3.8% during the same quarter of 2021. The high inflation levels have resulted in most businesses charging in hard currency.
The Reserve Bank of Zimbabwe maintained a tight liquidity management framework, introducing gold coins in the quarter under review which are reported to have mopped up to more than ZW$9bn as at the end of September 2022.
This measure was coupled with the introduction of minimum lending rates of 200% and 100% for corporates and individuals respectively, a move that curtailed credit expansion and, consequently, growth in money supply. These and other measures saw the parallel market exchange rates showing some level of stability with the margin against the official rate having significantly reduced by the end of the period.
“The bank’s September 2022 year to date inflation-adjusted total income increased to ZW$26bn, being an increase of ZW$9.6bn from the second quarter of 2022. This year-to-date performance is 82% higher than ZW$14.3bn recorded for the comparative period ending September 202,” Sarudzai Binha, the acting company secretary, said in a statement accompanying the quarterly update.
“This performance is supported by strong performance on interest income which was driven by growth in the foreign currency loan book and the repricing of the ZWL book in line with the extant interest rate policy framework. Foreign-denominated earnings at 40% of total income for the quarter show an increase from about 22% in the first quarter.
“The year-to-date operating expenses of ZW$13.9bn in the third quarter is a 43% increase from ZW$9.7bn in the comparative period indicating cost expansion in response to the inflationary pressure.”
FCB’s inflation-adjusted total assets grew by 41% between December 2021 and September 2022 driven by customers’ loans and deposits growth of 59% and 30% respectively. Portfolio credit quality remained strong with a non-performing loan ratio of 0.1% being recorded at the end of Q3 [third quarter] 2022 down from 1% recorded at the end of 2021.
Total equity increased by 24% with the bank’s capital position remaining strong with a satisfactory margin of safety above the US$30 million threshold and capital adequacy ratios well above the regulatory minimums.