Bank restructures loans, repayments

By Oliver Kazunga

Listed financial services provider, First Capital Bank, has resolved to restructure some of its clients’ loans and repayments in light of the impact of Covid-19.

The financial institution said the move follows a request that has been put forward by some of its customers.

In a trading update for the quarter ended March 31, 2020, the bank said customer deposits and loans were concentrated in various sectors with both local and foreign currency deposits remaining stable since the lockdown.

It said the tourism industry had been significantly impacted due to travel restrictions which has seen the sector contributing just four percent of the bank’s loan book.

The default impact from the tourism sector is therefore expected to be minimal.

“Clients constituting 6,5 percent of the loan book including tourism sector have requested for restructuring of their loan facilities and repayments, with the bank working with these businesses to support them at best we can,” it said.

First Capital Bank said it has put in place measures to mitigate credit risk by conducting a complete review of loan portfolio to ensure that it focuses support and attention on the right sectors and businesses.

During the period under review, the bank posted a strong performance with total income in inflation adjusted terms increasing by 86 percent from ZWL$136 million to ZWL$253 million while in historical cost terms total income increased by 85 percent from ZWL$115 million to ZWL$213 million including one off foreign exchange gains of ZWL$20 million.

Growth is largely due to the increase in loan book in prior year’s fourth quarter, while the loan book remained stable in the first quarter of 2020.

“Additionally, interest rates and prices increases effected towards end of fourth quarter of 2019 contributed significantly to the increase.

“Operating costs on the other hand increased by 20 percent in inflation adjusted terms from ZWL$138 million to ZWL$166 million and in historical cost terms by 14 percent from ZWL$120 million to ZWL$137 million,” said the bank.

Profit after tax grew from a loss of ZWL$58 millon to a profit of ZWL$59 million in inflation adjusted terms while in historical cost terms the increase was 510 percent from a loss of ZWL$10 million to a profit of

ZWL$51 million. Foreign currency loans remained flat at US$6,8 million while foreign currency deposits declined by 10 percent from US$55 million to US$50 million.

The bank said it will not be possible to maintain first quarter performance in the short term largely due to the impact of Covid19.

Total capital adequacy ratio at end of quarter remained flat at 25 percent while liquidity ratio was 58 percent compared to previous quarter of 55 percent. The Chronicle