FBC loses $2.5 million in potential income

FBC loses $2.5 million in potential income

By Happiness Zengeni, HARARE, Aug 21 (The Source) – FBC Holdings on Wednesday said it has lost $2.5 million income in the half year to June 30 following the implementation of a central bank directive to cap interest rates.

The bank’s chief executive John Mushayavanhu told analysts that the mandatory reduction of bank charges and interest margins had weighed heavily on the total income, which only increased $100 000 to $36.8 million.

However the group’s total income is expected to grow in the second half on the back of increased volumes, particularly at the manufacturing unit Turnall.

Net interest income grew a modest five percent to $9.9 million, contributing 27 percent to the total income like the same period last year. Fees and commission income increased two percent to $11.5 million due to increased volume of transactions.

Mushayavanhu said unavailability of adequate credit lines to the country continued to push up the cost of funding, as financial institutions competed to attract the limited deposits.

The group pre-tax profit was up 10 percent to $10 million while the bottom-line grew 20 percent to $8.3 million. Earnings per share increased to 1.31 cents from 1.06 cents.

The cost to income ratio improved to 73 percent from 75 percent as a result of improved cost containment. Operating expenses were up 2.8 percent to $21.7 million.

On the balance sheet, total deposits were up 16 percent to $295 million while loans and advances were at $210.6 million from $190.59 million. Total equity amounted to $101.45 million. However the bank’s capital was on $37.5 million below the $50 million required by RBZ as at June 30.

Mushayavanhu said the capital would be increased to $60 by merging the bank and the society. However, he said the merger would be done on the last day of compliance in order to benefit from the operating a building society.