First Capital Bank commends inflation reducing measures; posts ZW$ 8, 4 billion profit

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By Alois Vinga

LEADING financial services provider, First Capital Bank (FCA) has commended policy measures employed for the better part of last year for significantly reducing inflation amid revelations that the bank recorded a profit of ZW$8, 4 billion.

Presenting the group’s performance for the financial year ended December 31 2022, the FCA board chairperson, Patrick Davenish said despite annual domestic inflation closing the year 2022 at 243,8%, compared to 60,7% in December 2021 on the back of the ZW$ depreciation, measures implemented during the year had a positive impact.

He said a tight monetary policy maintained throughout 2022 to curb the adverse effects of high inflation and to also achieve stability in the exchange rate which included excess liquidity mop up instruments, introduction of the foreign currency Willing Buyer Willing Seller market to augment the Foreign Exchange Auction Market and gold coins yielded some results.

“The combined impact of the above measures on the economy was a slowdown in inflation which, having peaked at 30.7% on a month-on month basis in June 2022, reduced to a low of 2.5% in December 2022.

“Additionally, a modicum of exchange rate stability during the last quarter of 2022 was also observed,” he said.

During the period, the bank posted an inflation adjusted profit of ZW$8,4bn on a total asset base of ZW$160,8 billion and comfortably met the minimum core capital requirement of US$30m, achieving a translated total capital of US$61 million with core capital amounting to US$46.2 million.

The Group posted a 42% increase in total income, growing from ZW$25.9bn in 2021 to ZW$36,7 billion in 2022. This was on the back of broad-based performance improvement across all revenue lines.

Net interest income increased by 37% following a 77% increase in interest earning assets but its contribution to total income however reduced to 34% from 36% in the prior year.

A 25% year-on-year increase in fees and commissions was posted, reflecting the impact of increased platform usage by clients and a 48% increase in the customer base. Fees and commissions contributed 33% to total income, a reduction from 38% recorded in 2021.

Trading and foreign exchange income increased by 267%, contributing 31% to total income, up from 12% in 2021. This largely reflects the implications of the devaluation of the local currency at a level not fully captured in the inflation index. A fair value loss on investment property was posted at ZW$0.4bn, compared to a profit of ZW$2.8bn in 2021.

“We promise to do more for you. Additionally, I extend my gratitude to the Board for its support and counsel and to our regulators for their guidance.

“Lastly to our staff I send my sincere appreciation for all your hard work, commitment, and belief in the brand. Without you we would not achieve the success we have,” FCA’s managing director Ciaran McSharry said.