Despite achieving a commendable set of financial results, FBC Holdings’ latest performance review paints a picture of a company struggling to navigate Zimbabwe’s economic uncertainty.
The Group’s profit before tax, adjusted for inflation, stood at ZWL403.5 billion, a 255% increase from the previous year.
The notable performance was, however, largely driven by cost containment and growth in total income rather than any significant improvement in the company’s underlying operations.
This is contained in the bank’s abridged audited results for the year ended 31 December 2023.
The update states that the financial services industry, in which FBC Holdings operates, remained stable and profitable in 2023, but market liquidity tightened as the election period approached, and the company was forced to invest in hedging strategies to preserve shareholder capital and profitability.
The Group’s insurance subsidiaries reported an insurance service loss of ZWL12.4 billion due to a persistent mismatch between premium recording, collections, and foreign currency-indexed claims.
This, according to the bank, highlights the ongoing challenges faced by the insurance sector in Zimbabwe.
Administration expenses increased by 169% to ZWL955.5 billion, primarily due to the re-pricing of overheads in line with exchange rate movements and inflation trends.
“Administration expenses increased by 169% to ZWL955.5 billion from ZWL354.8 billion reported in the previous year as a result of the re-pricing of overheads in line with exchange rate movements and inflation trends.
“Consequently, the Group’s cost-to-income ratio was 75%, compared to 67% in 2022,” FBC Holdings chairman Herbert Nkala said.
The Group’s statement of financial position strengthened to ZWL3.4 trillion, anchored by a growth in loans and advances. However, this growth was largely driven by the increased demand for foreign currency-denominated loans, which now make up the majority of the loan book.
The group said the operating environment in Zimbabwe remains challenging, with currency instability and high levels of inflation continuing to pose significant risks to businesses.
Zimbabwe has since introduced a new currency, the Zimbabwe Gold (ZiG), to address the currency crisis. The ZiG banknotes and coins were rolled out on Tuesday.
The financial performance review also highlighted the company’s struggles with digital transformation and innovation. While FBC Holdings has made some progress in this area, it still lags behind its peers in terms of technology adoption and innovation.
The Group’s compliance and governance structures also came under scrutiny, with the company acknowledging the importance of maintaining stakeholder trust and confidence in its pursuit of providing excellent service.
The acquisition of Standard Chartered Bank’s operations in Zimbabwe, which was approved by shareholders during the period under review, is still pending regulatory approval. The deal is expected to be completed in the second half of the year.
Meanwhile, the company declared a final dividend of US 0.45 cents per share, in addition to an interim dividend of US 0.45 cents paid in September 2023.
“I am pleased to advise that the Company has declared a final dividend of US 0.45 cents per share. This is in addition to an interim dividend of US 0.45 cents, which was paid in September 2023.
“The dividend is payable to Shareholders registered in the books of the Company at the close of business on Friday 19 April 2024.
“The shares of the Company will be traded cum-dividend on the Zimbabwe Stock Exchange up to the market day of 15 April 2024 and ex-dividend as from 16 April 2024. The dividend payment will be made to Shareholders on or about 29 April 2024,” Nkala said.
