First Capital Bank’s Balance Sheet Registers Zim-Dollar Loan Related Growth

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By Alois Vinga

LEADING financial services group, First Capital Bank’s (FCB) balance sheet registered significant growth prompted by increasing Zim dollar loans.

In a trading update covering the first quarter ended March 31, 2021, the bank’s Company Secretary, Violet Mutandwa attributed the developments to lending priorities.

“Balance sheet growth has been driven by Zim dollar loans which grew by 42% to $3.2 billion. Foreign Currency loans grew by 660 % to US$6.7 million whilst deposits increased by 14% to US$56.7 million.

“The Bank expects that the US$30 million capital requirement will be achieved by 30 June 2021, if the current level of performance together with exchange rate stability is sustained,” she said.

Market watchers believe that the inception of the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction which has gone a long way in stabilising exchange rates has aroused the banking public’s interest in taking up loans in local currency.

If sustained, banks may reduce banking fees and charges as they adopt internationally acceptable practices of generating income through long term loans.

Said Mutandwa, “Month on month inflation, currently at 2.3%, continued to decline at the end of March due to a stable interbank exchange rate.

“At the beginning of the year, there was surplus RTGS liquidity in the market. However, with tightening monetary policy, the market RTGS liquidity tightened towards the end of the quarter.”

During the period under review, the bank’s total income in the first quarter was $931 million in inflation adjusted terms, whilst the operating expenses were $663 million.

The operating profit before monetary loss and property fair value adjustment was $183 million.

However, after including property fair value adjustments, monetary loss, and tax the Bank had a loss after tax of $52 million largely due to lower transactional activity in the quarter due to Covid-19 pandemic.

FCB has been growing from strength to strength maintaining a sound capital, liquidity position and a quality loan book.

The bank’s capital adequacy and liquidity ratio closed the year 2020 at 29% and 70% respectively, up from 26% and 55% in prior year whilst core capital stood at US$26 million.