First Capital Bank reports 26% profit growth despi...

First Capital Bank reports 26% profit growth despite challenging global and local environment

Nyashadzashe Ndoro

ZIM NOW REPORTER

First Capital Bank Zimbabwe reported a 26% increase in its after-tax profit for the year ended December 31, 2023, to US$15.4 million, defying a difficult global economic climate burdened by high inflation and rising interest rates due to ongoing geopolitical tensions.

The bank’s performance comes amidst a complex global backdrop where the International Monetary Fund revised its 2023 global growth forecast downward to 3.1%, down from 3.5% in 2022.

This slowdown is attributed to tighter monetary and fiscal policies implemented by advanced economies in response to inflationary pressures fuelled by geopolitical tensions.

The local Zimbabwean economy also mirrored these global trends, experiencing a slower growth rate of 5.5% in 2023 compared to 6.5% in 2022. The Zimbabwean dollar depreciated significantly throughout the year, losing 788% of its value against the US dollar. This depreciation, a consequence of a fragile currency management framework, resulted in high local inflation, although it did generate exchange rate gains for the bank.

Despite these challenges, FCB managed to grow its customer base, loan book, and deliver strong earnings. The bank’s core capital also increased by 3% to US$52.5 million, exceeding the regulatory minimum of US$30 million by a comfortable margin.

FCB remains optimistic about the future, but acknowledges the subdued growth prospects for the Zimbabwean economy in 2024. The El-Nino weather phenomenon is expected to negatively impact the upcoming agricultural season, while low global commodity prices could reduce mining earnings. The rapid devaluation of the Zimbabwean dollar adds further pressure to economic performance, highlighting the need for lasting solutions to build market confidence.

Looking ahead, FCB says it is committed to Zimbabwe's development. The bank recently commenced construction of a new environmentally friendly head office and its listing on the Victoria Falls Stock Exchange positions it to attract new funding and contribute to the country’s economic growth.