First Capital Bank Secures Additional US$15 Million Credit Facility from African Development Bank

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HARARE – First Capital Bank (FCB) has successfully mobilized an additional US$15 million credit facility from the African Development Bank (AfDB), further strengthening its financial position.

This, according to The Herald, brings the total available facilities from various regional and international funders to an impressive US$48.5 million.

In a recent trading update to March 31, 2024, the bank highlighted that the increased facilities would significantly enhance its capacity to support growth in key sectors of the economy and facilitate the anticipated economic rebound.

Sarudzai Binha, the company secretary, emphasized the crucial role these funds would play in bolstering the bank’s ability to provide support to local companies, particularly those in export-oriented sectors and agriculture.

Amid projections of a slowdown in Zimbabwe’s real gross domestic product (GDP) growth to 3.3% in 2024, partly due to factors such as the El Nino-related drought and lower commodity prices, the additional credit facilities are poised to inject much-needed liquidity into the economy.

For the quarter under review, FCB reported robust financial performance, with total income before once-off fair value adjustments growing by an impressive 40% to reach US$20.5 million, compared to US$14.6 million for the same period in 2023. This growth was primarily driven by strong performances in both net interest income and non-funded income.

Ms. Binha attributed the bank’s accelerated lines of credit and interest income to a 15% increase in the loan book, which stood at US$91 million as of March 31, 2024, up from US$79 million recorded a year earlier.

While total deposits increased marginally to US$132 million during the period under review, Ms. Binha highlighted that funding was augmented by recourse to lines of credit, with drawdowns increasing from US$2.9 million to US$16.5 million between March 2023 and March 2024.

Despite cost pressures remaining elevated, with operating expenses rising by 12% to US$10.4 million in the first quarter of 2024 compared to the same period in 2023, the bank is actively implementing rigorous rationalization and optimization exercises to curtail cost expansion.

Furthermore, FCB’s non-performing loan ratio (NPL) continued to improve quarter-on-quarter, closing at 7% as of March 31, 2024, from 8% in December 2023 and 13% as of June 2023. This improvement is attributed to various interventions undertaken to enhance overall asset quality.

With a capital adequacy ratio (CAR) of 35%, well above the regulatory threshold of 12%, and core capital comfortably above the regulatory absolute threshold of US$30 million, FCB remains well-positioned to navigate future challenges while capitalizing on growth opportunities in the medium term.