FBC total income up 13%

FBC total income up 13%
Published: 02 April 2018
FBC Financial Holdings has reported a 13 percent growth in total income to $105 million while profit before tax rose by 14 percent to $29.3 million in the year 2017 from $25.7 million recorded in the prior year.

This was on the back of an improvement in revenue contributions from the group's six subsidiaries, a statement accompanying the group's financial results for the year ended December 31, 2017, shows.

Chief executive officer Mr John Mushayavanhu said during the period under review, total income also increased by $12.3 million to $105.3 million.

"The increase in the group's total income by 13 percent in 2017 is a strong indicator of the revenue generating capacity of FBC Holdings that is strengthened by our preferred diversified business model," he said.

"The group's net interest income grew by three percent to $46.1 million from $44.8 million recorded in 2016. Its contribution to the group's total income declined to 44 percent from 48 percent in 2016, despite an increase of nine percent in the lending portfolio from $276.5 million recorded in 2016 to $300.7 million during the period under review."

Mr Mushayavanhu said the group continues to be cautious in its lending philosophy and consistently monitors asset quality to preserve shareholder value.

The group adopted a deliberate strategy to manage cost of funds and attract cheaper sources of funding.

Gross profit on property sales was up 22 percent although the group deliberately slowed down on property sales in view of the need to hedge against inflationary pressures that were witnessed between the second and third quarters of 2017.

"Construction activities, however, progressed in line with project plans, owing to advance purchase and warehousing of key construction materials at the start of 2017.

"FBC Holdings continues to benefit from operational efficiencies through cost containment strategies across all its subsidiaries, with the cost to income ratio improving further to 72 percent in 2017 from 73 percent the previous year. Operating expenses at $57 million were, however, 20 percent higher than the previous year's figure of $47.5 million," said Mr Mushayavanhu.

During the period under review, the group recorded a 17 percent growth in total assets at $712.4 million compared to the previous year. The growth in the statement of financial position was a result of continued customer loyalty to the FBC brand. The bank's core capital, which presently stands at $75.2 million, was well in excess of the $25 million minimum capital requirement set by the Reserve Bank of Zimbabwe.

"We are confident that the bank will trade itself into compliance with the 2020 capital requirement of $100 million. For this to be achieved, the bank has to post a minimum profit after tax of $8 million every year between 2018 and 2020 and based on the current trading history, we expect the bank to post profits well in excess of that target minimum," said Mr Mushayavanhu. During the period FBC Bank recorded a profit after tax of $16.6 million compared to $12.2 million in the prior year.

"This was largely driven by the shift in transaction volumes towards internet, mobile platforms, plastic money and agency banking. The statement of financial position for the bank grew by 19 percent from $470.2 million in 2016 to $558.1 million, driven by growth in deposits," he said.

FBC Bank participated in the issuance of agro-bills amounting to $20 million in an effort to promote growth and development of various agriculture value chains. FBC Building Society, Mr Mushayavanhu said, remains a dominant player in the properties market with 60 additional housing units having been completed and sold during 2017. The group reported that increased demand in the properties market continues to present further business opportunities for the society.

"Despite the limited access to correctly-priced long-term financing, the building society posted a net surplus of $9.3 million, which is nine percent up from the 2016 net surplus of $8.5 million," said Mr Mushayavanhu.

"Total net income for the period amounted to $17.2 million against $15.6 million recorded in 2016, while operating expenses increased by 14 percent to $7.3 million due to price distortions stemming from inflationary pressures experienced during the course of 2017."
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