FBC Holdings Limited has recovered in business in the first half of 2021 despite the negative impacts of Covid 19, BusinessMail can report.
The Bank’s financial performance has showed recovery, registering a profit before tax of ZWL1.16 billion and an after tax profit of ZWL529.14 million.
The 2021 interim period was characterised by a challenging macroeconomic environment brought about by the Covid-19 pandemic, which had a significant impact on business operations. Successive episodes of lockdown measures have culminated in the adoption of remote working arrangements, with reduced business operating hours, militating against the Group’s capacity to aggressively grow revenue lines across business segments.
Despite the tough operating environment, the Group’s banking subsidiaries have continued to grow in their key areas of focus supported by the Group’s accelerated digital transformation drive.
FBC’s chairman Herbert Nkala said this performance was largely anchored on the Group’s core business revenue lines which accounted for 66% of total income and its strategic thrust of intensive investment in digitalisation and hedging strategies contributed largely to overall performance.
“The Group achieved a total income of ZWL4.75 billion for the period, representing a 34% decline from the prior year’s corresponding period performance. The Group’s subdued total income outturn was largely influenced by a 76% reduction in net trading and dealing income, following the stabilisation of the ZWL interbank exchange rate against all the major currencies, bolstered by the foreign exchange auction system,”.
“The significant reduction in this revenue line was counter balanced by a strong growth in other core business revenue streams. Net interest and related income was 43% ahead of the prior year’s corresponding period, at ZWL1.33 billion, leveraging on the Group’s 12% growth in loans and advances,” he said.
The Group reduced its minimum lending rate during the period under review in order to assist customers in coping with the Covid-19 induced low economic activity and reduced demand. Fee and commission income improved by 89% to ZWL1.12 billion, partly supported by the Group’s digitalisation thrust which enhanced retail and service fee performance.
Transactional volumes generally subdued within the financial services sector with most institutions implementing digital solutions to augment business growth. The Group’s net insurance premium earned was 40% ahead of the same period last year, at ZWL635.16 million. The insurance portfolio has remained susceptible to the subdued economic activity and general reduction of consumer disposable income.
On the other hand, net profit from property sales was ZWL50.97 million, recording a significant growth of 350% compared to the same period last year. This was achieved as a result of an improvement in pricing and an increased number of units sold.
“The Group’s insurance businesses remain focused on product development and penetrating new market segments, with special focus on micro insurance. The property market remained largely depressed with limited sales activity, and reduced demand for space owing to economic distress. Funding has predominantly remained short term in contrast to the sectors requirements for long term funding.”
“Meanwhile, development activity has remained strong in the residential sector, largely supported by the country’s housing backlog. FBC Building Society’s construction activities are currently in progress at the 858 units Kuwadzana project in Harare with 150 units under phase 1 having already been commissioned. The Group is set to improve this revenue line following significant progress achieved on the Fontaine Ridge project in Harare – Kuwadzana high density suburb,” Nkala added.
According to Nkala, economic outlook for the near term is optimistic, anchored on the growth prospects of key economic sectors, a stable inflationary environment and increased foreign currency availability supported by the International Monetary Fund Special Drawing Rights (SDR) allocation.
“There are hopes that the on-going inoculation exercise will result in significant progress towards the attainment of national herd immunity thresholds and lead to the gradual relaxation of Covid-19 induced restrictions. Downside risks relate to the possible resurgence of new Covid-19 variants which pose potential threats to both humanity and economic activity,” he said.
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