FBC core revenue remains subdued

Zimbabwe Stock Exchange listed FBC Holdings, has announced a $365,99 billion net profit after tax for its half-year ended June 30, 2023, an 840 percent increase from the 2022 comparative.

The performance was supported by a 516 percent rise in net foreign currency trading and dealing income, which reached $515,2 billion. Fair value adjustments to the group’s investment properties contributed $124,8 billion. This saw the group’s total income surge 319 percent to $854 billion.

Growth in the group’s core revenue was comparatively subdued, with net interest income rising by 76 percent to $63,4 billion, net fees and commissions rising by 151 percent to $56,96 billion and net insurance income falling by 655 percent to a loss of $8,3 billion.

It is becoming increasingly difficult to make anything of local currency denominated financial statements. The most noticeable thing here is the significant share of exchange rate related unrealised gains in the groups income mix.

The relatively subdued growth in the group’s more conventional revenue streams is also noticeable but its core income increased by 98 percent compared to growth in operating expenses of 265 percent.

Consequently, the group’s operating expenditure to core income ratio worsened from 165 percent to 304 percent.

Economist, Gladys Shumbabiri, said the decline in the group’s deposits in real terms is easily noticeable.

“The size of the decline being larger than peer banking groups is also a concern. All this suggests that growth in the group’s underlying business is not meeting expectations and there has been a concerted effort to firmly establish FBC as one of the big boys in Zimbabwe’s financial services sector,” Shumbambiri added.

There is a big spotlight on the group’s impending acquisition of Standard Chartered Zimbabwe. In the wake of CBZ’s acquisition of FMHL group, this transaction reads a bit like a reactionary defensive move.

“It is hard to argue the strategic value of the acquisition considering that a large part of the customer appeal of Standard Chartered is probably in its status as a foreign controlled entity that is part of a reputable international banking group. Time will tell, but there may have been other avenues for the group to pursue growth,” she said.-ebusinessweekly