FBCH revenue up 19pc

HARARE - Zimbabwe Stock Exchange-listed financial services group FBC Holdings Limited (FBCH) recorded $74 million revenue in the year to December 2012, up 19 percent from prior year.

The group said the performance was driven by its banking and insurance subsidiaries’ strong performance.
Profit before tax stood at $16,9 million, an eight percent increase from last year’s $15,7 million while basic earnings per share increased to 2,42 cents from 1,78 cents.

Post tax profit went up 25 percent to $15,6 million during the period under review, up from $12, 5 million.

John Mushayavanhu, FBCH’s chief executive, said although the group was benefiting from a diversified business model, the subdued performance of its asbestos manufacturing business, Turnall, and stockbroking unit diluted the performance of other subsidiaries.

“The increase in revenues is in line with the increase in customer acquisitions and increased activity on their accounts,” he said.

Mushayavanhu said the group’s net interest income contribution to total group income improved to 27 percent from 23 percent achieved last year as a result of increased lending and better cost of funding.

“Loans and advances to customers recorded a significant growth of 57 percent while the cost of funding was better than last year by 1,3 percent. As a result, the group’s net interest income increased by 47 percent to $20,3 million from the $13,8 million attained the previous year,” he said.

During the period under review, revenue from the group’s insurance business registered a marked increase of 67 percent to $14,6 million as a result of growth in market share.

The contribution of net earned insurance premium to group income increased to 20 percent from 14 percent.

“The group’s cost to income ratio moved from 75 percent in 2011 to 77 percent due to expenses incurred to increase capacity and customer acquisitions,” said Mushayavanhu adding that FBCH will continue to invest in technology to reduce the cost to income ratio to sustainable levels.

Mushayavanhu noted that the group’s statement of financial position increased by 40 percent to $392 million from $280 million on the back of improved brand acceptance by the market resulting in increased customer acquisitions.

FBC Bank, the group’s flagship subsidiary, grew income to $36,2 million, with the contribution of net interest income increasing to 49 percent from 42 percent recorded in the prior year.

FBC Building Society achieved a net surplus of $5,5 million, representing a 90 percent increase from the 2011 net surplus of $2,9 million.

The group’s micro-finance business, Microplan Financial Services, contributed $0,9 million to the overall group profit before tax, representing a 55 percent growth in its first full year of operation.

Mushayavanhu said a subdued performance on the equities market in the first three quarters of 2012 impacted negatively on FBC Securities operations.

“Renewed foreign interest in the last quarter, however, saw trade volumes increasing, giving hope for the future,” he said.

According to the Insurance and Pension Commission report FBC Reinsurance remains the most liquid insurer in Zimbabwe accounting for 60 percent of reinsurers’ liquid assets as at the fourth quarter of last year.

Following Eagle Insurance Company’s acquisition by the group last year, the company’s profitability improved recording a profit before tax of $0,74 million, 74 percent up from the previous year.

Turnall’s $42,5 million turnover was 18 percent lower than the previous year’s, with profit before tax decreasing from $5,1 million to $1,2 million due to a combination of unavailability of liquidity and high interest rates in the market.

“Turnall’s performance was lower but remains positive,” said Mushayavanhu adding that the business changed its model to emphasise cash flow management and cost control rather than growing volumes. - John Kachembere

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