BY MTHANDAZO NYONI
LISTED financial services concern FBC Holdings achieved a total income of $8,1 billion during the year ended December 31, 2020, following significant growth in lending, the firm said on Tuesday.
The increase represented a 14% rise from $7,2 billion during the comparable period in 2019.
FBC chairman Herbert Nkala said while 2020 was a challenging year, the group managed to post a commendable set of financial results.
The group achieved a profit after tax of $1,5 billion and a net interest of 20% to $1,7 billion during the review period, from $1,4 billion previously.
“While foreign currency revaluation gains contributed significantly to the group’s reported total income, our lending operations managed to record modest growth, as a result of a combination of loan growth and re-pricing, despite the prevailing macro-economic challenges,” FBC chairman Herbert Nkala said.
“Consequently, net interest income was 20% higher with $1,7 billion being achieved during the period under review, against $1,4 billion recorded in the prior year. A 5% decline in interest expenses was also registered as a result of an improvement in the funding mix,” he said.
Nkala said net fees and commission income receded 12% to $1,2 billion from $1,4 billion recorded in 2019, mainly as a result of a marked slowdown in the volume of transactions, in line with reduced economic activity induced by the COVID-19-induced lockdown measures.
“The repricing of this revenue stream, implemented during the year, was inadequate to counterbalance the decrease in the volume of transactions,” he said.
The insurance business recorded a decrease of 5% in net earned insurance premium income to $845 million. The decrease in insurance premium revenues of 21% was offset by improvements in premiums ceded to reinsures and retrocessionaires of 44%.
“The COVID-19 pandemic lockdown effects and the hyperinflationary environment had an initial negative effect on the insurance industry at large. This, however, took a positive turn when the regulatory authorities subsequently permitted the underwriting of insurance policies in foreign currency,” he said.
The group’s administration expenses increased by 16% to $4,5 billion from $3,9 billion reported in 2019, mainly as a result of the repricing of expenses to match the inflationary environment.
The cost-to-income ratio excluding the monetary loss remained static at 64%.
As at December 31 2020, the group’s total assets increased by 19% to $32,4 billion against $27,1 billion for the prior year.
The growth was mainly driven by an increase in deposits and the translation of foreign-denominated assets. The group’s total equity was up 29% from the prior year, closing the current year at $5,1 billion.
Nkala said the financial services sector continued to function satisfactorily with all financial soundness, indicators depicting a reasonable performance.
He said the insurance sector continued to battle extremely challenging operating conditions characterised by currency volatility and high inflation.
Going forward, Nkala said the group planned to diversify its revenue streams through innovative rollout of services and products, while increasing business underwriting in a number of traditional business lines.