Listed financial institution, First Capital Bank had a postive first quarter as income rose on the back of a bigger loan book.
In inflation adjusted terms, the group’s income increased by 86% from $136 million to $253 million, while in historical cost terms total income increased by 85% from $115 million to $213 million.
The improvement in income durimg the period under review was also boosted by a one off foreign exchange gains of $20 million.
Said management in a trading update:
“The increase is largely due to increase in loan book in prior year quarter four, while the loan book remained stable in quarter one of 2020.
“Additionally, interest rates and prices increases effected towards end of quarter four of 2019 contributed significantly to the increase.”
But operating costs spiked during the quarter.
The group’s operating costs during the quarter increased by 20% in inflation adjusted terms from $138 million to $166 million and in historical cost terms by 14% from $120 million to $137 million.
The bank reported a profit after tax growth of 100% from a loss of $58, million to a profit of $59 million in inflation adjusted terms, adding that in historical cost terms the increase was 510% from a loss of $10 million to a profit of $51 million.
First Capital’s balance sheet growth over the first quarter was driven by Zimbabwe dollar loans which grew by 9% from $620 million to $673 million while the local currency deposits grew by 21% from $886 million to $1,073 million.
Management however said foreign currency loans remained flat at US$6.8 million while foreign currency deposits declined by 10% from US$55 million to US$50 million.
The group’s total capital adequacy ratio at end of quarter remained flat at 25%, while the liquidity ratio was 58% compared to previous quarter of 55%.
Although the bank’s first quarter escaped the effects of the pandemic, First Capital Bank said it will feel the full wrath of Covid-19 on its business from this second quarter due to the lockdown imposed by Government from March 30, 2020.
The lockdown has since been extended indefinitely.
“On a forward looking basis, the bank will not maintain quarter one performance in the short term largely due to the impact of Covid-19.
“Covid-19 will impact the business directly and indirectly. Due to the lockdown non-funded income for quarter two is expected to decline by circa 15%, whilst costs are also expected to increase from quarter two on the back of the costs necessary for Covid-19 preventative measures.
“There will inevitably be an impact on impairment, which is expected to materialise in quarter two onwards, with the full impact to be assessed,” said the financial institution.