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BizDay Zimbabwe

FBC secures US$40m

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LISTED financial services group FBC Holdings’ flagship subsidiary, FBC Bank has secured a US$40 million credit facility from Cairo-headquartered trade finance institution, African Export-Import Bank (Afreximbank).Priscilla Sadomba, the group’s head of marketing and public relations, last week told The Financial Gazette’s Companies & Markets that the three-year facility would benefit the bank’s corporate clients.
She said the gesture was a sign that Afreximbank had confidence in the bank, despite a cut back by some of the regional and multinational lenders on disbursements to Zimbabwe.
“FBC Bank has secured a US$40 million line of credit from regional financial institution African Export-Import Bank in a vote of confidence on the bank,” Sadomba said.
“The three year facility is earmarked to benefit FBC Bank’s corporate clients in improving their liquidity and cash flows.
“This is a real boost in confidence for this market because some of these regional and multinational lenders had downsized or stopped doing business in Zimbabwe because they had lost money. The payment record of FBC has been so impeccable that they (Afreximbank) did not have any reason to remove our facility.”

Due to the short term nature of deposits, banks have been finding it difficult to lend long term and attempts to seek foreign lines of credit have been frustrated by the country’s high risk profile.
FBC’s ability to attract funding, at a time when the country is going through a liquidity crisis, is an indication that the bank is credit-worthy.
Last month, FBC Holdings reported a solid performance in the first half of the year to June 30, 2013, driven by increased revenue from the financial services operations as well as cost containment.
The group’s earnings capacity continues to be strengthened by its diversity, with all subsidiaries except the manufacturing business achieving better than the prior period results.
Total income was marginally up at US$36,7 million largely weighed down by mandatory reduction in  interest margins and charges ordered by the Reserve Bank of Zimbabwe.
However, despite the effect of the RBZ’s directive, income increased by two percent to US$11,5 million.

Profit after tax during the six months reached US$8,3 million, representing a 20 percent increase from US$6,9 million for the corresponding period last year.
Basic earnings per share rose from 1,06 US cents to 1,31 US cents from the same period last year while its cost to income ratio improved to 73 percent from 75 percent.
The improvement in the cost to income ratio was due in part to the group’s ability to maintain operating expenses in line with inflation, while also decreasing staff costs through a rise in automation and electronic transactions.

Management said e-commerce would continue to be a primary focus for the group as banking makes its transition into the future.
Recently, a Mauritian-based private equity firm ShoreCap II Limited through its United States based fund managers Equator Capital Planners, acquired a 10 percent shareholding valued to US$5 million in FBC Holdings. The Financial Gazette

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