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BizDay Zimbabwe

FBC Holdings profits increase 20% to USD8,3Million


FBC HOLDINGS after-tax profit for the half-year period to June 30, 2013 rose 20 percent to US$8,3 million driven by reinsurance, commercial banking and the building society. The group’s earnings capacity continues to be buttressed by its diversity with all subsidiaries except the manufacturing business achieving results than the prior period.

Total income was only marginally up at US$36,7 million largely weighed down by the mandatory reduction in interest margins and charges ordered by the central bank.

However, despite the effect of the Reserve Bank of Zimbabwe’s directive capping bank charges, fees and commissions income increased by 2 percent to US$11,5 million.

Net interest income registered a modest 5 percent increase to US$9,9 million while contributing 27 percent to the group’s total income, the same as last year’s contribution.

Basic earnings per share increased to US1,31c from US1,06c in the same period last year. FBC said that shareholders equity increasing by 31 percent to US$88 million.

FBC said the contribution of gross profit on sales to total income decreased to 17 percent to US$6,3 million as the group’s manufacturing offered discounts to improve stock turn.

Total assets increased by 14 percent to US$451 million while the net asset value per share went up to US$13,10c from US12,5c in the comparative period last year.

Total equity attributable to shareholders of the parent company increased by 31 percent mainly as a result of the disposal of treasury shares at a profit of US$2,6 million and acquisition of 40 percent stake in FBC Building Society from the National Social Security Authority.

The cost to income ratio improved to 73 percent compared to the same period last year due to improved cost containment.
Operating expenses rose by 2,8 percent to US$21,7 million.

Loans and advances increased to US$211 million from US$191 while deposits and borrowings also increased from US$254 million to US$295 million during the half year.

Group chief executive Mr John Mushayavanhu said that there was good contribution from the reinsurance side, the commercial bank and the building society.

“Our profitability came mainly from the banking side. Firstly, our building society is building houses, selling at a profit and giving mortgages. That was significant contribution to our profits.

“On the banking side we increased the number of transactions by going to the lower end of the market introducing new products such as mobile banking so that people are able to transact in the comfort of their homes,” Mr Mushayavanhu said.

He said reinsurance gross premium, had maintained stead growth with claims experience remaining low because of the underwriting philosophy that the company only accepts only those risks that the company considers bankable.

Against this solid performance FBC Holdings and the group’s solid recapitalisation plan, a dividend US0,149 per share has been declared for the six month-interim period.

FBC said it has received regulatory approval for its banking subsidiary to comply with the new minimum capital requirements by merging the bank and the building society.

Commercial banks were required to have reached US$50 million minimum capital by June 2013, US$75 million by September 2013 and US$100 million by June 2014.