FBC Holdings Limited Sees 255% Increase in Profit Before Tax in 2023

Published On: July 2, 2024Company: FBC Holdings Limited (FBC.zw)
Based on the report, what was the main driver behind the substantial increase in FBC Holdings' income and profitability in 2023?
The primary driver was the growth in all revenue streams, apart from insurance and property sales. This includes a rise in total income and net interest income, and an increased transaction volume across digital delivery channels which boosted commission income.

Financial Performance Review

  • The Group’s profit before tax, adjusted for inflation, was ZWL403.5 billion in 2023, representing a 255% increase from the previous year.
  • Total income increased by 138% to ZWL1.3 trillion, driven by growth in all revenue streams except for insurance and property sales.
  • Net fee and commission income rose by 179% to ZWL231.5 billion, mainly due to increased transaction volumes across digital delivery channels.
  • Administration expenses increased by 169% to ZWL955.5 billion due to exchange rate movements and inflation trends. The Group’s cost-to-income ratio was 75%.
  • Shareholders’ funds grew by 141% to ZWL706 billion, mainly due to increased profitability.

Operating Environment

  • Zimbabwe economy grew despite currency instability and high inflation, with a GDP growth of 5.3% in 2023 led by the agriculture and mining sectors.
  • The growing disparity between the Zimbabwean Dollar and the United States Dollar led to increased dollarization within local transactions.
  • Government reforms are expected to improve the business climate, strengthen economic governance, and reduce vulnerabilities.

Financial Services

  • The financial services industry remained stable and profitable in 2023, with significant growth in aggregate loans.
  • The industry responded to National Financial Inclusion Strategy (NFIS) II, with the development of inclusive products and services.

Foreign Exchange

  • The official exchange rate reached ZWL6 105.00:US$1.00 by the end of 2023, though the foreign exchange market remained volatile throughout the year.

Inflation

  • The inflation rate decreased to 26.5% by the end of 2023 due to implementation of strict monetary and fiscal policies.

Insurance Sector

  • Regulation was introduced to discourage credit insurance, improve insurance collections, and increase cash inflows and investments.

Real Estate Market

  • The multi-currency regime led to a slight growth in residential property construction, but sales remained low due to demand for foreign currency payments.

Stock Market Performance

  • The Zimbabwe Stock Exchange All Share Index gained 981.54% in 2023.

Sustainability

  • The Group integrated sustainability best practices into its core strategy and collaborated with stakeholders to create more sustainable communities.

Compliance

  • The group prioritized compliance and governance as fundamental pillars of business strategy.

Dividend

  • The group declared a final dividend of US 0.45 cents per share.

Outlook

  • GDP is projected to be around 3.5% in 2024, reflecting the impact of drought on agricultural production and lower commodity prices.

Useful links

About FBC Holdings Limited (FBC.zw)

FBC Holdings Limited (FBC Bank) is a financial institution in Zimbabwe providing financial products and solutions for retail, commercial and corporate banking; with a range of products and services extending from savings deposit accounts and micro-lending in the informal market to foreign market investment, mortgage financing, micro-lending, re-insurance, short-term insurance and stock-brokering services. Its re-insurance division underwrites classes of insurance for fire, engineering, motoring, marine and miscellaneous incidences. FBC Bank is a wholly-owned subsidiary of First Banking Corporation Holdings Limited which is a publicly-traded financial services company in Zimbabwe. FBC Holdings Limited is listed on the Zimbabwe Stock Exchange

Giri, AfricanFinancials’ Artificial Intelligence (AI) Analyst, sourced this article from the attached or linked document. We cannot guarantee the accuracy or completeness of Giri’s article and we disclaim any liability arising from reliance on information provided in the article. This article is not a recommendation to buy or sell the securities mentioned therein and should be read in conjunction with the original PDF or link to this article. Other sources should be consulted for verification and additional context. Please seek investment advice from an authorised stockbroker or advisor.

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