21 March 2014

Zimbabwe: FBC Bank Profits Down 10 Percent

FBC Holdings recorded a 10 percent decline in profit to US$14,1 million for the full year ended December 2013 due to an increase in the group's tax burden.

Total net income stood at US$79,5 million up seven from 2012 due to the mandatory reduction of bank charges and interest margins as stipulated in a Memorandum of Understanding signed by financial institutions last year.

The group's financial position was up 18 percent to US$461 million due to an increase in deposits to US$300 million from US$254 million in 2012.

During the period, total expenditure for the group was up four percent to US$46,7 million as the company invested into Micro Plan and Hospital Cash Plan new products that required marketing.

FBC Chief Executive John Mushayavanhu said loans and advances were up 39 percent to US$265,8 million due to the bond that the company secured last year and had to be used.

He said FBC Bank, FBC Re, Eagle Insurance and FBC Securities posted a profit during the period under review.

Chairman Herbert Nkala said having concluded pressing political processes last year, stakeholders were focused on the nation's economic recovery.

"Capital raising initiatives will continue to be at the centre of capital marketing activity, so will be the transition to an automated trading system which is expected to improve the group's activity on the local bourse and increase its depth," he said.

He said the group would leverage on strategic business units to benefit from capital raising initiatives.

FBC Holdings is negotiating a US$15 million loan facility with two undisclosed regional financial institutions which could result in the group starting to offer debt factoring arrangements, an official has disclosed.

Debt factoring is a form of commercial finance which allows a business to sell its debtors (accounts receivable) to a third party, known as a "factor" in return for an immediate cash advance.

Speaking on the side-lines of the company's analyst briefing during the week FBC chief executive officer, John Mushayavanhu said one regional financial institution would advance $10 million to the group, while another one will release $5 million.

"We are in the process of finalising debt factoring with the regional institutions. I cannot disclose the financier now," he said.

Mushayavanhu said locally, finance was not readily available.

He said foreign investors were seeing potential in local banks and taking shareholding in financial institutions facing liquidity challenges.


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