Zimbabwe: First Capital reports net interest income growth of 87%

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Leading financial services company, First Capital Bank (FCA) reported strong growth in net interest income (NII) which jumped 87%, driven by the recovery in general economic fundamentals.

Presenting the group’s annual performance for the year 2021, FCA chief executive Ciaran McSharry said the group’s net profit increased to ZWL$2,418 million from ZWL$1,291 million recorded in the past year. a comparative period in 2021.

In banking terms, this type of income is high quality since the NII is a financial performance that reflects the difference between the income generated by a bank’s interest-bearing assets and the expenses associated with paying its interest-bearing liabilities.

In simple terms, it is the excess income generated by interest earned on assets over interest paid on deposits that constitutes net interest income.

By comparison, unfunded revenue just grew 33% in the reporting period.

“The Bank recorded an increase in total revenue in real terms of 39%, to end the year at ZW$7.5 billion compared to ZW$5.4 billion in 2020. This was supported by a positive development core revenue, representing strong earnings quality and improved sustainability of operations,” McSharry said.

The bank acknowledged the positive impact of economic policies which saw restrictive fiscal and monetary policy with inflation falling to 51.5% at the end of the third quarter of 2021 from 106.6% at the end of the first half of the year. year.

The FCA said as a result capacity utilization would have peaked at 61% with timid growth in external sector performance – exports at 28% up from H1 2021 levels amid growth in the sector miner which saw gold deliveries to Fidelity reach 19.7 tonnes.

The main bank attributed the minimum stability in exchange rates posted for the most to the impact of the Reserve Bank of Zimbabwe’s foreign exchange auctions for most of the year.

“The tight monetary policy regime is expected to persist over the medium term to stem inflation in the wake of increased government infrastructure and social spending.

In this environment, the Bank will exercise caution in expanding its balance sheet to ensure that a sufficient buffer is maintained on its capital and liquidity position to deal with stressors,” McSharry added. .