FBC income on upward trend

HARARE - FBC Holdings (FBC) will this year record a surge in interest income and commissions following an 18 percent rise in interest income in the first half, a local equities group has said.

Highlighting that the group’s income was set to maintain its upward trajectory on account of the investments in savings bonds and treasury bills as well as an expected slight growth in loans and advances, the analysts at IH Securities said FBC was poised for a profitable second half.

“We have forecast net interest income of $61,51 million, up from $46,07 million, a 33,5 percent growth.

“We expect fee and commission income to register a 15 percent growth to $36,35 million, up from $31,61 million in 2017 while we expect insurance income to remain relatively flat at $18,86 million from $18,70 million,” the researchers said in a note evaluating the bank’s first half performance.

IH also expects operating expenses to remain high as the bank develops its digitalisation platform.

“We believe the year-on-year growth in loans and advances will be 34,1 percent to $403,31 million, up from $300,75 million recorded in 2017.

“We believe deposits will remain relatively high as we have forecast deposits of $823,60 million, up from $523,98 million in 2017 and up from $808,39 million in the first half of 2017,” said IH.

This comes as FBC reported a strong set of results for the half year ended June 30, 2018, particularly for the bank.

Interest income for the period was up 18,7 percent from $32,60 million in the first half of 2017 to $38,70 million as a result of an increase in interest earning assets, particularly loans and advances and treasury bills.

Interest expenses retreated by 33,5 percent from $11,63 million in the
first half of 2017 to $7,74 million, reflecting management’s efforts to source cheaper deposits.

The resultant net interest income for the first half was therefore 47,7 percent higher at $30,97 million.

As a result of cash shortages in the economy, banks have had to make a conscious effort to grow their fee and commission income.

FBC currently has 600 000 accounts, up from 500 000 accounts in 2016 and these have grown mainly on account of these liquidity challenges as the unbanked started to open bank accounts in order to transact with ease.

Fee and commission income for the period therefore grew from $12,36 million in the first half of 2017 to $20,26 million in the first six months of 2018 due to high transactional volumes.

Going forward, lending remains a priority for FBC, however, management did say the demand for loans has been low and hence have had to invest in other financial assets.

“Exporting clients currently in FBC’s loan books are borrowing from FBC offshore and paying back the loans offshore therefore the bank is hedged.

“We believe the rest of the year will remain largely the same as the bank continues with the strategies set out at the beginning of the year,” IH said.

— The Financial Gazette

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