FBC to cash in on economic rebound

HARARE – Banking group, FBC Holdings Limited, is projected to cash in on the anticipated economic rebound, which should see the group improve its lending to productive sectors.

The country is expecting a positive economic outlook on the back of the anticipated bumper harvest this year, a development that will increase economic activity across sectors.

Additionally, economic activity is gradually improving as companies scale up operations post Covid-19 lockdowns, which were first effected on March 30, 2020 to limit the spread of the pandemic.

Market watchers opine this will increase transaction volumes translating to enhanced top line.

“Given the positive economic outlook on the back of a bumper harvest and relaxed Covid-19 lockdown restrictions, the group is likely going to improve its participation in the key business of lending.

“As post-lockdown operations scale up, transaction volumes are likely going to recover hence driving the top-line up.

“With inflation rate predicted to close the year at below 30 percent, assuming the current disinflation trend is sustained, FBC is expected to register growth in real terms on loans as lending rates currently average 40 percent.

“We forecast the group to remain profitable in FY21 on the back of increased economic activity and a better trading environment,” said brokerage firm IH Securities.

Net interest income is forecast to grow 173 percent to $3,16 billion for the financial year 2021 from $1,16 billion recorded in FY20 underpinned by an increase in lending.

IH Securities sees net fees and commissions income to continue growing on the back of the on-going digitisation initiative.

“We estimate this revenue stream to close the year at $1,51 billion from $838,7 million,” said IH Securities.

Trading income and net foreign currency dealing line is expected to increase at a slower rate compared to last year on the back of a relative stable foreign currency exchange rate.

As such, the brokerage firm forecasts an 80 percent increase in this line year on year from to $5,68 billion from $3,15 billion.

Total income is seen doubling to $13,69 billion from $7,21 billion registered in FY20.

With growing digitalisation being experienced in the country accelerated by Covid-19, the group is also expected to continue expanding its digitalisation initiatives to keep abreast with world standards and enhance customer experience.

Said IH Securities: “Hence, we are of the view that digital banking fees will continue to rise as the banking experience moves from the brick-and-mortar business model.” – Business Weekly

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