First Capital Bank  to double income in FY23

Business Writer

Listed banking group First Capital Bank (FCB) is expected to nearly double its net income for the financial year 2023 (FY23) to $41,49 billion, according to analysts’ projections.

The growth will be driven by increase in dollarised income lines as the group has also announced plans to migrate to US dollar-denominated exchange – the Victoria Falls Stock Exchange (VFEX).

FCB said it intends to move to VFEX by the 17th of May 2023, in line with its expansion strategy. This will allow for deeper access to forex capital, enhance its regional and commercial standing and provide further opportunities and an avenue for a USD-denominated dividend for shareholders.

FCB’s foreign currency income contributions are now between 55 percent and 65 percent versus the 75 percent foreign currency spent in the broader economy. Its foreign currency-denominated deposits for FY22 registered above 70 percent allowing rollout for more foreign currency-denominated products.

“We believe that we will keep seeing an appetite for forex loans in the economy due to increasing economic activity in key sectors such as mining and construction. We, however, are of the view that non-performing loans will likely come in higher going forward as installments will not be susceptible to erosion by inflation as was the case in the ZWL era,” said stockbrokers IH Securities.

“We forecast FY23 net income of $41,49 billion, up 94 percent year on year. RoAE (Return on Average Equity) expected to moderate to 66 percent in the current financial year,” added IH Securities.

The RBZ has been adjusting the policy rate downwards in line with positive inflation developments allowing for some recovery in demand for ZWL-denominated loans.

IH Securities however holds non-funded income will continue to be the major driver of revenue in the short term as the bank has made further investments into its digital channels via revamped internet and mobile banking platforms.

Cost pressure remains an area of significant concern and future focus for management as the environment has necessitated regular cost of living adjustments to staff wages.