daniel chigunwe
Business Writer
First Capital Bank reported a robust performance for the first quarter of 2024, with significant growth in total income and a notable improvement in asset quality.
The bank’s trading update for the quarter ending March 31, 2024, highlights a 40 percent increase in total income before once-off fair value adjustments, reaching US$20,5 million compared to US$14,6 million in the same period last year.
“This growth was driven by strong performance in both net interest income and non-funded income,” stated Sarudzai Binha, the company secretary.
The bank’s strategic initiatives, including accelerating lines of credit, contributed to this income boost.
Interest income saw a significant uptick, bolstered by a 15 percent increase in the loan book, which rose to US$91 million as of March 31, from US$79 million recorded a year earlier.
Despite a challenging market environment, the bank managed to maintain deposit growth, albeit marginally.
Total deposits increased to just US$132 million by the end of the first quarter, reflecting general market apprehension. However, funding was bolstered through lines of credit, with drawdowns increasing substantially from US$2,9 million to US$16,5 million between March 2023 and March 2024.
Cost pressures have remained a concern, with operating expenses rising by 12 percent to US$10,4 million in the first quarter of 2024 compared to the same period in 2023.
“The bank has initiated a rigorous rationalisation and optimisation exercise to manage and curtail cost expansion effectively,” the company secretary said.
The bank’s asset quality showed a marked improvement, with the non-performing loan (NPL) ratio decreasing to 7 percent as of March 31, 2024, down from 8 percent in December 2023 and 13 percent in June 2023.
Ms Binha attributed this improvement to various interventions, including sectoral redistribution aimed at enhancing overall asset quality.
In terms of capital, First Capital Bank saw a 25 percent increase during the quarter. The capital adequacy ratio (CAR) stood at a robust 35 percent, well above the regulatory threshold of 12 percent.
The bank’s core capital also remained strong at US$58,2 million, comfortably exceeding the regulatory absolute threshold of US$30 million.
Liquidity ratios were maintained above the minimum regulatory requirement of 30 percent throughout the reporting period.
However, the directors did not declare a dividend for the quarter under review. The bank’s focus remains on balancing growth with prudent risk and cost management.
“The operating environment presents risks and opportunities. The Bank remains positive about growth prospects in the medium-term through diligently harnessing the opportunities while exercising robust risk and cost management,” Ms Binha noted.
Looking ahead, First Capital Bank is preparing to capitalise on anticipated economic improvements.
To boost its capacity to support this expected economic rebound, the bank has secured an additional US$15 million line of credit from the African Development
Bank.
This brings the total available facilities from various regional and international funders to US$48,5 million, significantly enhancing the bank’s ability to support growth in key economic sectors.
First Capital Bank’s performance in the first quarter of 2024 demonstrates its resilience and strategic foresight in navigating a complex operating environment.
The bank’s strong income growth, improved asset quality, and solid capital position it well to support economic recovery and future growth initiatives.
As it mobilises additional funding and optimises its operations, the bank is well-prepared to leverage opportunities and manage risks in the evolving economic landscape.
Bongani Ndlovu