FBC revenue increase 7% to $79.50 million

Published: 20 March 2014

FBC Holdings indicated that there was a modest increase of 7% in total income to $79.50 million while profit before tax "slightly decreased by 4%" to $16.22 million, CE John Mushayavanhu told analysts yesterday.

"Cost to income ratio marginally went up to 80% from 77% in the prior period mainly due to increased impairment allowance," he said.

He noted that basic earnings per share slightly decreased to 2.30cents from 2.42cents "in response to the depressed performance by Turnall."

The group's total assets recorded an 18% growth to $461 million while operating expenses grew by 4% to $46.5 million and impairment went up 99% to $7.2 million.

Profit for the period decreased by 10% to $14.08 million

Looking at the total income contribution, Mushayavanhu noted that interest income went up 16% to $43.74 million while net interest income increased by 8% to $21.91 million.

Fees and commission income closed the period at $22.31 million which is an 8% growth. Meanwhile, revenue went up 4% to $55.86 million.

He indicated that gross profit decreased by 7% to $14.93 million.

Insurance premium revenue improved by 21% to $27.82 million while premium ceded to reinsurers grew by 33% to $11.14 million.

Turning to the composition of the total income, Mushayavanhu said net interest income contributed 28% up from 27%, net fee and commission income contributed 28%, gross profit 19% down from 22% and net earned insurance premiums contributed 21% from 20% recorded in the prior period.

Giving the business units performance, under FBC Bank, Mushayavanhu said deposits increased by 16% to $279 million while net loans and advances grew by 35% to $215 million.

"Balance sheet grew by 15% to $323 million while total lines of Credit closed at $75 million. Debt factoring is to be introduced soon and 16 new robust NCR Machines were acquired and are being installed," he said.

Mushayavanhu told analysts that FBC Beitbridge Branch opened in August 2013. Furthermore, he said the loan book is predominantly secured.

Giving the FBC Bank loan sectorial concentration, he stated that individuals took up 31%, manufacturing 18%, and mortgage 11%.

Under FBC Bank deposit concentration by sector, financial services contributed 52%, individuals 17%, manufacturing 5%, agriculture 2%, wholesale and retail 10%, and mining 6%.

"You would also have gathered from the last monetary policy statement that with effect from 1st of April the government's exchequer account is moving to the Reserve Bank. We don't know as yet what exactly they mean by the government exchequer account; whether it means all govt deposits or whatever it is but… FBC has got total government deposits of $12 million," he said.

The bank contributed 71% ($322.8 million) to total assets, 37% ($38.9 million) to total equity, 44% ($7.1 million) to PBT and 46% ($36.7 million) to total income.

Mushayavanhu noted that under FBC Building Society, the total mortgage book grew by 55% in 2013 to $45 million.

"We disbursed an additional $5 million as direct mortgage lending and we released a total of 234 new housing units for the market in 2013," he said.

He further stated that deposits under the building society increased by 48% to $49.9 million while the balance sheet grew by 40% to $78.9 million.

Long term capital raising initiatives, according to Mushayavanhu, remains a key enabler for the group's business model.

In 2013, FBC produced and sold 18 units, 10 units and 160 units under the Masotcha Ndlovu project, Greendale project and Mbizo (Kwekwe) project. The Washington Ave 2 project was completed and handed over in 2013 with 16 units built.

Under the Glaudina project 49 houses were produced and sold "and an additional 40 units are coming in 2014."

The building society contributed 17% ($78.9 million) to total assets, 24% ($25.8 million) to total equity, 44% ($7.1 million) to surplus and 15% ($12.1 million) to total income.

There was a significant market share growth in Microplan and the business is "now ranked 3rd in industry by balance sheet size."

Microplan achieved a 90% asset (loan book) growth of quality low risk assets in 2013 and the balance sheet grew by 51% to $12.9 million contributing 3% to the group's total assets.

Mushayavanhu noted that the business unit contributed 7% ($1.2 million) to PBT, 6% ($4.6 million) to total income and 3% ($3.4 million) to expenses.

Eagle Insurance's claims turnaround period reduced to 5 days, as stated by Mushayavanhu and "underwriting capacity increased through robust and liquid balance sheet."

"Profitability enhanced due to prudent underwriting and efficiency in debtor management and we will continuously focus on improving claims control mechanisms to ensure insurance fraud detection," he said.

The unit contributed 2% ($9 million) to total assets, 3% ($3.6 million) to total equity, 10% ($1.7 million) to PBT and 9% ($7.2 million) to total income.

FBC Reinsurer was described by Mushayavanhu as the "trendsetters for profitability and liquidity management in Zimbabwe's Reinsurance Industry."

He noted that they are aggressively exploring geographical and business mix diversification. Furthermore, he pointed out that they will focus on continuous asset re-balancing in favour of liquid assets to ensure claim settlement abilities.

The business contributed 5% ($22.4 million) to total assets, 8% ($8.7 million) to total equity, 18% ($2.9 million) to PBT and 15% ($11.6 million) to the group's total income.

Turnall contributed 15% ($69 million) to total assets, 25% ($27 million) to total equity, 0% ($3.1 million loss) to PBT and 11% ($8.8 million to total income.

"The company is restructuring its operations in line with the demand obtaining in the market. I am confident that the new initiatives will see the company improving its performance in the current operating environment," he noted.

FBC Securities "returned to profitability" and managed to contribute 0.4% ($1.7 million) to total assets, 0.2% ($0.3 million) to total equities, 0.2% ($0.03 million) to PBT and 1% ($0.4 million) to total income.

Giving the gross capital base for each subsidiary, Mushayavanhu noted that FBC Bank closed at $39 million against the regulatory minimum of $25 million, FBC Building Society was at $25.8 million versus the minimum requirement of $20 million.

FBC Reinsurance closed at $8.7 million against $1.5 million and Eagle Insurance closed at $3.6 million versus the required $1 million.

FBC market capitalisation closed the period at $90.7 million.

Giving the outlook, he indicated that under the insurance business they will focus on collectable premiums written, liquid balance sheets and strong underwriting discipline.
- zfn

Tags: FBC,