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Enacy Mapakame Business Reporter
Financial services group, FBC Holdings Limited reported profit after tax for the half year to June 30, 2020 came in at $1,6 billion that was 117 percent above the $742 million record during the same period in the prior year.
Group chairman Herbert Nkala, said FBCH has continued to benefit from its diversified business model in addition to its strong risk management culture and the early adoption of digitalisation in spite of the unprecedented challenging environment ignited by the Covid-19 pandemic.
During the half year period, the group registered a profit before tax of $2,1 billion from a loss position of $380,1 million for the same period last year.
Basic earnings per share came in at 265,42 cents from basic loss per share of 119 cents in the same period last year. A net asset value per share of 730 cents was achieved.
“The group performance was mainly driven by the non-funded income derived from its effective hedging strategy.
“The hedging strategy resulted in noteworthy exchange gains and fair value gains being recorded as the local currency depreciated against major currencies,” said Mr Nkala in a statement accompanying the financials.
At $3,5 billion, total income was 82 percent higher than the $1,9 billion recorded for the same period last year.
According to the group, the level of total net income was, however, affected by the low contribution of net interest income as a result of the unsustainable low interest rate regime on local borrowings in a hyperinflationary environment.
A net interest income of $451,3 million was achieved registering a growth of 20 percent compared to the same period last year.
Net fees and commission income went down by 16 percent to $286,7 from $340,7 million achieved for the same period last year mainly as a result of significant reductions in volume of transactions as customers transacted less due to the Covid-19 pandemic lockdown measures.
Said Mr Nkala: “This revenue stream is expected to improve as the lockdown measures are eased. The repricing of services in a hyperinflationary environment was inadequate to compensate the decrease in volumes.
“The country started the Covid-19 pandemic at Level 4 (the highest level) at the end of March 2020 to the current level 2, which is a moderate level and has culminated in an improvement in the volume of transactions.”
Net profit from property sales decreased by 51 percent to $5,5 million from $11,2 million achieved in the same period last year as a result of the challenging and unsustainable operating environment.
Net insurance premium earned decreased by 5 percent to $219 million from $230 million recorded for the corresponding period last year due to the Covid-19 lockdown effects and the hyperinflationary environment which made the insurance business model very challenging.
During the six month period, administrative expenses increased by 56 percent to $1,4 billion mainly driven by the repricing of overheads to match the devaluation of the local currency, and concomitant distorted and speculative pricing.
A net monetary gain of $153 million was recorded for the group compared to the corresponding period net monetary loss amount of $1,2 billion.
By close of the half year period under review, the group’s statement of financial position increased by 29 percent to $20,9 billion from the December 31, 2019 position of $16,3 billion mainly driven by a 31 percent increase in deposits riding on foreign currency denominated deposits and credit lines.
While the economic outlook remains unpredictable due to effects of the Covid-19 pandemic, the group remains upbeat the policies being implemented, which have brought some price stability will help improve the economic environment.
The group declared a dividend of 29,76 cents a share.
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