The recently launched AFC Holdings has posted a strong set of numbers for FY2020, with profit before tax for the year in historical cost terms rising by 1 086 percent to ZWL$569.1 million, from the ZWL$47.9 million recorded in the prior comparable period.
AFC emerged from a strategic restructuring of Agribank Holdings.
Management attributed the strong profitability primarily to “improved revenue contributions from ICT’s electronic banking (e-channels), marked growth in the loan book.”
The financier’s net interest income grew by 790% to ZWL$281.8 million from ZWL$31.7 million in historical cost terms.
Said acting CEO Elfas Chimbera:
“The Bank’s lending portfolio increased during the period under review reflecting expansion in support of the agriculture sector. The Bank also instituted measures to improve asset quality and yields and the initiatives contributed to the positive results.
“Mindful of the current macroeconomic environment, the Bank increased the expected credit losses on financial assets.”
Non-interest income increased significantly by 802% in historical cost terms to ZWL$496.3 million from ZWL$54.9 million achieved in the prior year.
“This growth was on the back of increased transactional volumes on digital banking platforms, supported by increased investment in our digital infrastructure,” said the CEO.
Total income from e-channels and POS machines for the year 2020 accounted for 40% of total non-interest income. This remains an area of growth for the Bank.
Other operating income increased by 1 232% in historical cost terms to ZWL657.9 million from ZWL49.4 million achieved in the prior year.
Growth in other income was mainly driven by foreign currency fair valuation gains and fair valuation gains on investment properties and unquoted equities.
“The growth reflects the Bank’s value preservation strategies as we are operating in a hyperinflationary environment,” added Mr Chimbera.
Total operating income amounted to ZWL$1.4 billion in historical cost terms representing a growth of 877% over the previous year.
Total operating expenditure for the year amounted to ZWL$747.2 million in historical cost terms representing an annual growth of 753% over the previous year.
Management said the Covid-19 pandemic required the Bank to refocus its resources in the short term, but the Bank’s main priorities continued to drive activities.
While costs increased, the Bank’s cost to income ratio further improved to 53% from 61% the previous year. The staff cost to income ratio for the year was maintained at 22% compared to prior year.
Sustained cost containment also helped the Bank to achieve profitability.