‘Open’ economy drives First Capital Bank loans
Listed banking firm, First Capital Bank (FCB) says demand for both local and foreign loans during the third quarter to September 30, 2021 increased on the back of enhanced economic activity experienced following the gradual easing of lockdown restrictions.
The loan book has continued to perform well with non-performing loans at 0,19 percent of the loan book.
Total loans grew by 27 percent to $6,1 billion compared to $4,8 billion in the same prior period.
A loan loss ratio of 0,6 percent, in the half year to June 2021, demonstrated the quality of the loan book, which had a non-performing loan ratio of 0,14 percent against a market average of 0,3 percent with loans under watchlist constituting 3,3 percent of the loan book.
Management is optimistic about the economic environment and look forward to a second half characterised by further growth in loans and deposits in both local and foreign currency whilst maintaining a quality loan book.
While interest rates have remained stable during the third quarter compared to the previous quarter, the banking group said these may trend up as the regulators seek positive real interest rates.
Figures from the bank show that its year to date operating income increased by 60 percent to $3,7 billion in inflation adjusted terms. FCB attributed the growth to the increase in loans and transactional income.
Year to date operating expenses increased by 62 percent to $2,6 billion from $1,6 billion recorded during the same period in the prior year.
According to a trading update for the quarter under review, year to date operating profit excluding investment property gains more than doubled to $1,5 billion from $686 million.
Customer deposits grew by 28 percent to $12,6 billion compared with growth from both local and foreign currency depositors.
Of the total deposits, foreign currency accounts constituted 46 percent.
Despite the growth, the period under review had its fair share of challenges.
“The third quarter of the year had some headwinds due to Covid 19 which impacted business operating hours hence transactional levels were lower.
Inflation rate had been trending downwards with September monthly inflation below 5 percent.
“However, recent upward inflationary pressure could alter this trajectory. The interbank exchange rate has recently seen some depreciation of the local currency after a period of relative stability.
In addition, there has been a notable depreciation of the local currency on the informal market, which may result in increased costs in the short to medium term,” said acting company secretary Sarudzai Binha in a trading update.-The Herald
