Zim’s corporate sector defies economic odds with i...

Zim’s corporate sector defies economic odds with impressive Q1 2024 results

Nyashadzashe Ndoro

Despite challenging economic conditions, Zimbabwe’s corporate sector has reported significant growth in income and profits for the first quarter of 2024.

First Capital Bank

First Capital Bank reported a 40% increase in total income to US$20.5 million, driven by growth in net interest income and non-funded income.

“The Bank’s total income, before once-off fair value adjustments, for the first quarter of 2024 grew by 40%, to close at US$20.5 million from US$14.6 million for the same period in 2023,” said Sarudzai Binha, Company Secretary.

The bank’s loan book also saw a 15% increase to US$91 million, contributing to the growth in interest income. However, total deposits only increased marginally to US$132 million, reflecting market apprehension. To address this, the bank drew down on lines of credit, increasing funding from US$2.9 million to US$16.5 million between March 2023 and March 2024.

Operating expenses rose by 12% to US$10.4 million, but the bank is implementing a rigorous cost rationalization and optimization exercise to curb expenses. “A rigorous rationalisation and optimisation exercise is currently underway to curtail cost expansion,” said Binha.

The non-performing loan ratio (NPL) improved to 7% as of March 2024, down from 13% in June 2023, thanks to various interventions. “The Bank’s non-performing loan ratio (NPL) continued to improve quarter-on-quarter closing at 7% as at 31 March 2024,” said Binha.

Zimre Holdings Limited

Zimre Holdings Limited reported a 1,900% increase in core revenue to ZWL$140.4 billion, driven by new business acquisitions and increased market share in Zimbabwe and regional operations.

“The trading environment during the first quarter of 2024 proved to be challenging, but we have managed to defy the odds and post impressive results,” said the group.

The Short-term Insurance business also witnessed remarkable growth, increasing by 43% to ZWL10.7 billion, while the Property segment posted a 62% revenue growth to ZWL11.0 billion.

The Insurance Broking business recorded a revenue growth of 53% to ZWL11.5 billion, driven by strong organic expansion in the Farming and Healthcare segments.

The Life and Pensions segment recorded strong growth, with insurance contract revenue increasing by 20% to ZWL79.0 billion.

“The Vaka product continues to be popular among customers, driving expansion in new retail business for the quarter,” said the company.

The Wealth Management segment also reported significant growth, with revenue increasing to ZWL$19.0 billion.

The Eagle Real Estate Investment Trust (REIT) Fund achieved notable milestones, including progress on the Mazowe Mall project and pre-project works in Victoria Falls, as well as securing Prescribed Asset (PR) Status of USD60 million.

FBC Holdings Limited

FBC Holdings Limited reported an inflation-adjusted total income of ZWL2.7 trillion and a profit before tax of ZWL1.3 trillion, driven mainly by exchange profit.

“The operating environment in the first quarter of 2024 was characterised by local currency volatility, inflationary pressures, and economic uncertainty, but we have managed to defy the odds and post impressive results,” said Tichaona Mabeza, FBC Group Company Secretary.

The results were driven mainly by exchange profit, with total assets reaching ZWL14.6 trillion as of 31 March 2024.

“The nation’s competitiveness in agricultural value chains remains strong, and the potential for tourism and the significant reserves of energy transition minerals, particularly lithium, are poised to impact economic activity positively,” Mabeza said.

The company is strategically positioned to identify and capitalise on opportunities that promote sustainable growth, and the acquisition of Standard Chartered Bank Zimbabwe operations is nearing completion, expected to enhance Group earnings and deliver sustainable shareholder value.

“We commend the Central Bank’s continued efforts to contain inflationary pressures and exchange rate volatility, to foster confidence in the local currency,” said Mabeza.

Despite the challenges, the company remains optimistic about Zimbabwe’s economic prospects, with a projected growth rate of 3.5% in 2024.

NMBZ Holdings Limited

NMBZ Holdings Limited reported impressive results for the first quarter ended 31 March 2024, with an operating income of ZWL3 trillion, representing a 203% increase from the same period in the prior year.

“The quarter started with elevated inflation levels and a rapid depreciation of the local currency, but we have managed to defy the odds and post impressive results,” said Violet Mutandwa, Company Secretary.

The results were anchored on increased transaction volumes, diversified product offering, and a strong balance sheet composed of USD denominated assets that drive foreign currency earnings.

“The Bank continued to practice prudent lending, focusing on quality assets, which has kept the NPL ratio at low levels of 0.73%,” said Mutandwa.

The capital adequacy ratio for the Bank stood at 28.17%, well above the regulatory minimum of 12%.

“The new monetary framework has re-monetised the local currency and enhanced its functions as a medium of exchange and store of value,” said Mutandwa.

The Group is expected to continue focusing on its core business and expanding its footprint in identified growth sectors of the economy.

“Inflation is expected to stabilize and average between 2 and 5% annually, and key sectors such as mining and tourism are expected to drive economic growth in 2024,” said Mutandwa.

The African Development Bank and NMB Bank Limited signed a US$15 million Trade Finance Transaction Guarantee Facility to unlock trade finance opportunities for small and medium-sized enterprises.