Debt management control puts FBC NPLs on leash


FINANCIAL institution, FBC Bank says its current non-performing loans (NPLs) ratio is below 5% due to aggressive debt management control, adequate collateral security on borrowing as well as due diligence in terms of new borrowing.


FBC Bank official, Priscilla Sadomba, told NewsDay in emailed responses that they have been reducing their NPLs in the last few years despite a hostile economic environment.

“The ratio is below the regulatory benchmark of 5%. This is due to aggressive debt management control, due diligence in terms of new borrowing and ensuring adequate collateral security on all borrowing,” she said.

“Due to the obtaining shortage of foreign currency in the economy, the manufacturing, distribution and transport sectors contributed most to our NPL ratio with an insignificant portion being attributed to individuals.”

Banks have been battling to contain NPLs with the ratio hitting 20,45% in 2014 as companies and individuals struggled to repay sums borrowed from banks. The Reserve Bank of Zimbabwe responded by setting up a special purpose vehicle, Zimbabwe Asset Management Company (Zamco), to buy bad debts from banks.

As at December 31, Zamco had acquired NPLs amounting to $987 million. The central bank said the acquisitions of NPLs assisted banks to clean up their balance sheets so that they were better able to support the economy through the provision of credit.

Sadomba said the FBC Bank was capitalised to the tune of $77,9 million as at December 31, 2017 as per audited financial statements. Top tier banks were supposed to have minimum capital thresholds of $100 million by 2020.

She said the bank supports small-to-medium enterprises (SMEs) which has seen it creating an SME division with a dedicated women’s desk.

“SMEs are the frontier for growth, we will, therefore, actively play our part in ensuring appropriate financial interventions to ensure growth in the sector,” she said.
Sadomba said 99-year leases were “acceptable as collateral for lending to farming operations”.

“The level of security is determined by the value of improvements on the property,” she said.

“However, the most important determinant is the viability of the farming operation, as we do not lend solely on the basis of security.”

Cumulatively, the bank has lent more than $40 million to the agricultural sector this season.