First Capital Bank targets USD earnings growth

the herald

business journalist

First Capital Bank (FCB) says foreign exchange revenue accounted for 20% of its total revenue in the first quarter of 2022 and that the bank is aiming for an increased contribution from the firm’s foreign exchange-generating operations.

During the quarter under review, the bank’s total revenue increased by 37% to $2.4 billion, compared to $1.7 billion recorded during the comparative period in 2021.

“The growth was driven by a strong performance in net interest income and unfunded income, which increased 37% and 36%, respectively, driven by an increase in underlying commercial and customer transactions following the reduction of Covid -19 restrictive measures.

“About 20% of the bank’s revenue for the quarter was in foreign currencies, with business prospects suggesting an increased contribution going forward,” the bank said in a statement.

Chief Executive Ciaran McSharry said the bank’s goal was to grow its US dollar balance sheet and revenue through increased loan supply and trading volume under Nostro accounts, indicating that the multi-currency system had increased the tendency towards market-led dollarization.

The bank noted that the Reserve Bank of Zimbabwe (RBZ) was maintaining a strict liquidity management framework, mopping up daily surpluses in non-negotiable zero-coupon certificates of deposit while keeping the hosting rate high at 60%. , as part of measures to curb inflation. .

FCB said these measures had the effect of slowing balance sheet expansion in the financial sector.

However, the bank noted that it would remain cautious in its approach to ensure that liquidity cuts are minimized while benefiting from the expected resurgence of growth sectors such as mining, manufacturing, agriculture and tourism.

In the quarter under review, the bank’s operating expenses rose 18% to $1.4 billion from $1.2 billion in the first quarter of 2021.

“The bank recorded a pre-tax profit of $522.8 million for the quarter, an increase of 349% compared to the $116.4 million recorded during the corresponding period in 2021.

The bank’s total assets increased in real terms by 29% year-on-year, however, on an annual basis, the balance sheet remained largely stable between December 2021 and March 2022, with total assets increasing by 2%, with deposits increasing 2% while equity decreased 5%, after adjusting for the final 2021 dividend of $834 million.

“Gross advances, however, increased by 15%, closing the quarter at $10 billion from $8.7 billion at December 31, 2021, reflecting increased appetite from the productive and consumer sectors.”

The bank said asset quality remained strong with a non-performing loan ratio of 0.2% recorded at the end of the first quarter of 2022, compared to 1% 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.