BY THOMAS MUPFUKA
FIRST Capital Bank, formerly Barclays Bank Zimbabwe’s managing director, Sam Matsekete, says the bank’s loan book has not been affected by the floating of the quasi-bond note currency as most of their borrowings were in local currency.
Speaking on the sidelines of the bank’s analysts briefing for the full year-ended December 31, 2018 results on Monday, Matsekete said real US$ loans were extended only to those who had the capacity to generate US$ revenues.
“We would not have done US$ loans to people that do not generate US$ revenues.
“So to us, the make-up of our loan book is not a big exposure in real US$. Where we have real US$ loans, it is to people that we are clear have the capacity to remain generators of foreign currency and that they are generating it at a level that gives us confidence that they will remain viable.
“So, in those cases, we will continue collecting in US$, but the majority of loan book is local currency,” he said.
In addition, he said foreign currency loans are still being issued under special arrangements with the bank.
Matsekete said the bank was currently sitting on short tenure Treasury Bills (TBs) worth $74 million that were issued by the Reserve Bank of Zimbabwe (RBZ).
“We have $74 million of TBs, but it is gradual, it is graduated in short-term. We also have long-term Treasury Bills,” he said.
The bank’s financial performance for the year-ended December 31, 2018, however, saw the institution recording a profit after tax of $24,3 million, up 23% from the $19,8 million achieved in 2017.
Net interest income grew by 86% compared to prior year, driven by growth in interest earning assets.
“Surplus liquidity was invested mainly in government securities to optimise return on assets, while efforts to grow customer assets also yielded a strong outcome.”
Gross loans and advances to customers grew by 72% from $117 million at the end of 2017 to $201 million as at December 31, 2018. Net interest income constituted 49% of the total income, compared to 30% for prior year.
“The loan to deposit ratio was raised to 36% from 26% a year earlier. The increase in impairment to $2,5 million for the year-ended December 31 , 2018 from $0,1 million for the prior year reflects general provisions driven by growth in the loan book and other interest earning assets as well as the effect of aligning the provisioning approach to the new International Financial Reporting Standard 9. The Bank continues to sustain disciplined lending practices, especially considering the high credit risk environment currently prevailing in the market. The bank’s deposits grew by 25% over the period,” Matsekete added.
He said the bank will continue to be associated with Barclays Bank until next year. They are still in the transition programme following the shareholders’ approval to change the bank’s name to First Capital Bank Limited in July 2018, leading to the adoption of a core brand in October 2018.