eBusiness Weekly
Enacy Mapakame
Financial services provider, First Capital Bank (FCB), returned to the black as profit for the year to December 31, 2020 amounted to $472 million from a loss position of $732 million in 2019.
Chairman, Patrick Devenish ,said the bank posted a solid performance during the year under review despite the economic headwinds that prevailed during the year under review.
Operating profit excluding property gains was $606 million in inflation adjusted terms whilst in historical terms it was $785 million.
This translates to inflation adjusted earnings per share of 21,89 from a loss per share of 33,98 cents.
Total income for the year rose 37 percent to $3,3 billion compared to $2,4 billion recorded in the prior year.
FCB was not spared from the adverse impacts of the Covid 19 pandemic.
“This year has once again been dominated by events outside our control, with the continuing impact of hyperinflation, a devaluing local currency and the impact of Covid-19.
“Covid-19 required the mobilisation of bank resources to facilitate working under new and challenging conditions and I am immensely proud of the way our strong business continuity management procedures and structures, coupled with outstanding team responses ensured seamless service delivery in 2020.
“The easing of lock down, improvement in the operation and price discovery on the auction system and allowing customers with funds to pay in foreign currency brought stability and more business optimism in the second half of the year
“Our 2020 results highlight the robustness of a business model that has positioned us on a future growth trajectory supported by a strategy that is built around our values,” said Devenish in a statement accompanying financial results.
During the year under review, total deposits grew by 331 percent driven by a 298 percent growth in local currency deposits to $4 billion while foreign currency deposits grew by $3,7 billion.
According to Devenish, these local currency deposits were deployed into loans, which grew by 279 percent to $2,3 billion, a 63 percent loan to deposit ratio.
Said Devenish: “Foreign currency loans declined in value due to the repayments of high value corporate loans held prior year, although volumes increased compared to prior year.”
Cost to income ratio improved from 95 percent to 50 percent on the back of growth in income.
Funded income grew by 695 percent, driven by increase in loans and advances together with an improved loans yield.
Fee and commission income improved due to enhanced economic confidence in second half of 2020 which saw transactional activity grow coupled with targeted price increases.
Operating costs increased on the back of inflation, exchange rate depreciation and Covid-19 related expenses.
FCB’s non-performing loans ratio stood at 0,16 percent lower than prior year 0,22 percent and market average of 0,3 percent.
The bank’ capital adequacy and liquidity ratio closed the year at 29 percent and 70 percent respectively, up from 26 percent and 55 percent in prior year whilst core capital stood at US$26 million compared to regulatory target of US$30 million required by year end.
“Given the mix in the capital base between local and foreign currency denominated assets, the tracking towards the US$30m target will be impacted by the volatility in the exchange rates, and will demand that we build a capital buffer to protect against devaluation. The Bank however is on track and confident in meeting this target,” said Devenish.
