FIRST CAPITAL BANK LIMITED FCB8381
REVIEWED FINANCIAL RESULTS
For the half year ended 30 June 2022
Chairman's Statement
Introduction
The economy witnessed mixed business sentiments in the first six months of 2022. This was consistent with developments at a global level where uncertainty and supply chain challenges were generally elevated. Despite significant headwinds in the operating environment, the Bank managed to stay on course to generating growth and thus meeting its strategic vision.
Macro-economic environment
The half year saw a strong recovery from the effects of the COVID-19 pandemic, with a sustained reduction in new cases giving impetus to the resumption of 'business-as-usual' across all economic sectors. Global tensions that characterised the first half of the period induced negative pressure on global output and spurred inflationary pressure in advanced economies. This dampened global growth prospects in the aftermath of the COVID 19 peak period with the International Monetary Fund revising its global economic growth forecast for 2022 from 4.9% to 3.6% in April 2022.
With international trade being a significant component of gross national product, the domestic economy suffered from the spill-over effects of supply chain disruptions at a global level and increasing inflation in source markets. This compounded underlying fragility anchored on an unstable monetary environment and a less than expected 2021/22 agriculture output following an erratic rain season. Resultantly, the Government revised downwards its growth projection for 2022 to 4.6% from the initially projected 5.5%.
Annual inflation continued on an upward trend during the period, accelerating to 191.6% in June 2022, up from 60.7% in December 2021. This is against the background of a 237% devaluation of the Zimbabwean dollar (ZW$) against the United States of America's dollar (US$) at the official foreign exchange auction market with the official exchange rate closing the period at ZW$366.27, from ZW$108.67 on 31 December 2021. The official exchange market continued to trade at a substantial discount compared to the parallel markets.
The Reserve Bank of Zimbabwe maintained a tight monetary policy framework to counterbalance expansionary pressure on money supply aiming to restore confidence in the ZW$ and promote its widespread usage in a multi-currency environment. These measures included the mopping up of banks daily excess liquidity through the issuance of 0% Non-negotiable Certificates of Deposit and the hiking of policy interest rates in tandem with projected inflation levels, the latter being aimed at stemming speculative borrowing whilst promoting a culture of saving.
Earnings performance
The Bank's inflation adjusted operating profit (profit before tax excluding fair value credits on investment property and joint venture investments) for the six months to 30 June 2022 amounted to ZW$2.14bn, 10% higher compared to ZW$1.95bn posted in the corresponding period in the prior year. This translates to an Earnings per share of ZW$0.22 for the period which was broadly flat from the first half of 2021. This sustained performance was underpinned by an increase in the customer base, growth in deposits and the loan book, with a marked move towards foreign currency denominated business being noted during the period.
Capitalisation and liquidity
The rapid devaluation of the ZW$ exerted pressure on capital resulting in the Bank's US$ denominated core capital having reduced from US$74.8m as at 31 December 2021 to US$44.4m as at 30 June 2022. This level is still above the regulatory minimum of US$30m with a comfortable margin of safety being maintained. The Bank's capital adequacy ratio remained strong closing the period at 34% which is well above the regulatory minimum of 12%. The Bank also operated with a comfortable buffer above the regulatory minimum liquid assets ratio of 30% throughout the period, representing capacity to underwrite more business.
Dividend
The Board has declared an interim dividend of ZWL44.23 cents per share. A separate dividend notice will be issued, with respect to the dividend declaration.
Outlook
The Board expects the operating environment to remain tight in the short to medium term. Consequently, a fine balance will be maintained between the quest for short term profitability and the long-term sustainability of the business. The Board remains optimistic about the growth prospects of the business notwithstanding the requirement for caution in navigating expected short-term disruptions that may still emerge at a macro-level as policies adopted by regulatory authorities to stabilise the markets take root.
Appreciation
I wish to thank our customers and stakeholders who have exhibited resilience in uncertain times and for their continued support. I extend my appreciation to fellow directors, management, and staff for all the efforts during this period and believe together we will grow the business.
Patrick Devenish (Chairman)
26 August, 2022
Managing Director's Report
Overview
The Bank's outturn for the first half of the period reflects performance resilience against the backdrop of a tenuous operating environment which projected an outlook that did not favour balance sheet expansion for banks. With ZW$ liquidity on the market having been largely constrained throughout the period, the Bank has experienced a notable shift in its operations with foreign denominated business becoming increasingly prominent.
With a volatile macro-economic environment and continued inflationary pressure, the Bank's strategic focus was anchored on preserving capital, building a sustainable operation for the long term, and optimising on growth opportunities on a selective basis.
The continuing economic fragility, characterised by hyperinflation and an unstable foreign exchange regime, remains a matter of concern with respect to performance sustainability going forward.
Business performance
The Bank's total deposits adjusted for inflation grew by 14% from ZW$35.9bn as at 31 December 2021 to ZW$40.8bn as at 30 June 2022. On the same basis, the loans to customers also increased by 37% over the same period to close at ZW$21.4bn, compared to ZW$15.6bn at 31 December 2021, with 68% of business having been underwritten in foreign currency.
Asset quality remained satisfactory, with a loan loss ratio of 1.6% during the period against a non-performing loan ratio of 1.7%, well within the Bank's appetite.
Total income over the six months to 30 June 2022, at ZW$10.4bn increased by 57% over the total income earned in the corresponding period in 2021 which amounts to ZW$6.6bn. This was supported by an improvement from underlying business, with net interest income and net fees and commissions having increased by 12% and 18% respectively. A 290% increase in foreign exchange trading income also contributed significantly to income growth, underlining the effects of exchange rate movements and growth in foreign currency denominated business during the period.
Operating expenses increased by 34% from ZW$4.5bn in the first half of 2021 to ZW$6.1bn in the period under review. However, an improvement in general cost efficiency was noted with the cost to income ratio having moved from 68% in June 2021 to 58% in June 2022.
The Bank posted a profit of ZW$471.9m for the 6 months to June 2022, a slight reduction of 2% from ZW$483.8m recorded for the same period in 2021. This follows a significant increase in the monetary loss of 701% and a higher tax charge increase of 116% computed for 2022. The total comprehensive income for the period, after incorporating revaluation credits on assets and the investment portfolio amounted to ZW$5.3bn for the 6 months to June 2022, 598% higher than the ZW$754.4m reported for the corresponding period in 2021.
Lines of credit
The Bank procured an EUR12.5m open line of credit from the European Investment Bank (EIB) during the period under review. This is a medium-term facility running up to 7 years and is expected to provide capital funding for mid-cap customers. This is a critical intervention coming at a time when the economy is showing signs of a rebound.
Innovation through Product Development
The Bank is committed to providing its customers with relevant products and services that support their individual needs. This is being achieved on the back of strong relationships with like-minded technical and business partners. Recent partnerships with Money Transfer Agencies, RIA and HelloPaisa were followed by the successful launch of Western Union resulting in increased options for customers.
The Bank launched a series of innovative enhancements on its Mobile App, creating a 360-degree banking experience with multiple functionalities. Additionally, a Gold Card with improved security features for those who travel or make payments online was successfully launched during the period.
The Bank will continue to build a presence in the innovation space and capitalise on opportunities.
Capacity building
Investing in local communities is a business imperative. Our belief is that tomorrow's leaders need to be supported today.
For the first half of the period, the Bank partnered with Junior Achievement Zimbabwe (JAZ) during the Global Money week and provided financial literacy training to 4664 students in and around Harare. Additionally, over 200 JAZ students were given an opportunity to shadow our colleagues across the country whilst our staff volunteers ran a mentorship session for over 75 out of school young people in Harare.
To empower and encourage self-sustaining income generating projects, the Bank donated farm inputs to 1500 students and teachers at Chemondoro Primary School in Murehwa and will seek to roll out this model to other provinces.
Appreciation
I would like to thank our customers for their continued support and confidence in our business and the people who drive it. I remain committed to delivering on our promise, to enable our customers to reach their extraordinary. I am grateful to our colleagues who continue to deliver excellent service to our customers often under challenging circumstances.
I look forward to achieving our goals and meeting customer expectations over the period ahead.
Ciaran McSharry
(Managing Director)
26 August, 2022
Corporate Governance Statement
The Board of Directors of First Capital Bank Limited ("the Board/ First Capital Bank") is committed to and recognises the importance of strong governance practices. The Board understands that a comprehensive corporate governance framework is vital in supporting executive management in its execution of strategy and in driving long term sustainable performance. To achieve good governance, the Board subscribes to principles of international best practice in corporate governance as guided by, among others, the Banking Act [Chapter 24:20], the Companies and other Business Entities Act [Chapter 24:31], the Reserve Bank of Zimbabwe Corporate Governance Guideline No.1 of 2004, the Zimbabwe Stock Exchange Listing Rules, SI134/2019 and the Zimbabwe National Code on Corporate Governance.
The Board continuously reviews its internal governance standards and practices, to ensure that it modifies and aligns them with local and international corporate governance requirements as appropriate. As part of its continuing efforts to achieve good governance, the Board promotes the observance of the highest standards of corporate governance in First Capital Bank and ensures that this is supported by the right culture, values, and behaviours from the top down to the lowest member of staff. First Capital Bank is committed to the principles of fairness, accountability, responsibility, and transparency. To this end, the Board is accountable to its shareholders and all its stakeholders including the Bank's employees, customers, suppliers, regulatory authorities, and the community from which it operates through transparent and accurate disclosures.
Board responsibilities
The Board is responsible for setting the strategic direction of the Bank as well as determining the way in which specific governance matters are approached and addressed, approving policies and plans that give effect to the strategy, overseeing and monitoring the implementation of strategy by management and ensuring accountability through among other means adequate reporting and disclosures. The Board is guided by the Board Charter in the execution of its mandate. The roles of the Board Chairman and that of the Managing Director are separate and clearly defined and the Board always ensures a division of responsibilities to achieve a balance of authority and power so that no one individual has unfettered decision making powers.
Board Chairman and non-executive directors
The Board of directors is led by an independent, non-executive Chairman, whose primary duties include providing leadership of the Board and managing the business of the Board through setting its agenda, taking full account of issues and concerns of the Board, establishing and developing an effective working relationship with the executive directors, driving improvements in the performance of the Board and itsCcommittees, assisting in the identification and recruitment of talent to the Board, managing performance appraisals for directors including oversight of the annual Board effectiveness review and proactively managing regulatory relationships in conjunction with management. In addition, the non-executive directors proactively engage with the Bank's management to challenge and improve strategy implementation, counsel, and support to management and to test and challenge the implementation of controls, processes and policies which enable risk to be effectively assessed and managed.
The Chairman works together with the non-executive directors to ensure that there are effective checks and balances between executive management and the Board. The majority of the Board members are independent non-executive directors who provide the necessary independence for the effective discharge of the Board's duties and compliance with regulatory requirements.
Executive directors
The executive management team is led by the Managing Director. Management's role is to act as trustees of the shareholder's capital. Their main responsibilities include reporting to the Board on implementation of strategy, effectiveness of risk management and control systems, business and financial performance, preparation of financial statements and on an ongoing basis, keeping the Board fully informed of any material developments affecting the business.
Directors' remuneration
The Board Human Resources and Nominations Committee sets the remuneration policy and approves the remuneration of the executive directors and other senior executives as well as that of the non-executive directors. The remuneration package of executive directors includes a basic salary and a performance bonus which is paid based on the performance of the company as well as that of the individual. The Bank also has in place a share option scheme, meant to be a long-term retention incentive for employees.
Board diversity
The First Capital Bank Board recognises the importance of diversity and inclusion in its decision-making processes. The Board is made up of six independent non-executive directors, two non- executive directors and two executive directors. Three members of the Board (30%) are female. The Board members have an array of experience in commercial and retail banking, accounting, legal, corporate finance, marketing, business administration, economics, human resources management and executive management.
Access to information
Openness and transparency are key enablers for the Board to discharge its mandate fully and effectively. The non-executive directors have unrestricted access to all relevant records and information of the Bank as well as to management. Further, the Board is empowered to seek any professional advice or opinion it may require, allowing for the proper discharge of its duties.
Share dealings / Insider trading
The directors, management and staff of First Capital Bank are prohibited from dealing in the company's shares whether directly or indirectly, during "closed periods" which are the periods that are a month before the end of the interim or full year reporting period until the time of the publication of the interim or full year results.
Further, directors, management and staff are prohibited from dealing in the company's shares whenever the company is going through certain corporate actions or when they are in possession of non-public information that has the potential of impacting the share price of the company.
Communication with stakeholders
First Capital Bank communicates with its stakeholders through various platforms including the Annual General Meeting, analyst briefings, town halls, press announcements of interim and full year financial results, notices to shareholders and stakeholders and annual reporting to shareholders and stakeholders. The Board and management of First Capital Bank also actively engage regulatory authorities including the Reserve Bank of Zimbabwe, the Zimbabwe Stock Exchange, and the Deposit Protection Corporation.
Internal audit
The First Capital Bank internal audit is an independent control function which supports the business by assessing how effectively risks are being controlled and managed. It works closely with the business helping drive improvements in risk management. This is done through reviewing how the business undertakes its processes as well as reviewing systems used by the business. The internal audit function reports its findings to management and guides them in making positive changes to business processes, systems, and the control environment. The internal audit function also monitors progress to ensure management effectively remediates any internal control weaknesses identified as quickly as possible.
The First Capital Bank Head of Internal Audit reports directly to the Chairman of the Board Audit Committee and administratively to the Managing Director.
Declaration of interest
The Board of First Capital Bank believes in the observance of ethical business values from the top to the bottom. To this end, the Board has in place a policy that manages conflict of interest including situational and transactional conflict. Directors disclose their interests on joining the Board and at every meeting of the directors they disclose any additional interests and confirm or update their declarations of interest accordingly.
First Capital Bank is a Registered Commercial Bank and a member of the Deposit Protection Scheme. Terms and conditions apply. | First Capital Bank REVIEWED FINANCIAL RESULTS June 2022 | 1 |
Corporate Governance Statement (continued)
Ethics
In our endeavour to instill a culture of sound business ethics, all employees and directors are requested to attest to an Anti- Bribery and Corruption declaration which essentially seeks to ensure that our directors, management, and staff always observe the highest standards of integrity in all their dealings and conduct. The Bank has a zero-tolerance policy to bribery and corruption. In addition, the business has a whistle-blowing facility managed by Deloitte through which employees can raise any concerns they may have anonymously.
Director induction and development
Board conformance and performance is enhanced through continuous learning. As part of its learning program, the Board has in place a comprehensive induction plan for on-boarding new directors. Further, as part of continuing director development, Board members attend director training programs.
Board activities
TheBoardofDirectorsanditsCommitteesholdmeetingsatleastonceineveryquarter.EachBoardCommitteeheldatleastfour quarterlymeetings.Theareasoffocusincludedthesettingofstrategicdirection,thereviewofstrategyandbusinessoperations, business continuity in light of the COVID-19 pandemic and the attendant lockdowns, credit sanctioning as per approved limits, review of internal controls and financial reports, review of the quality of the loan book, review and oversight of the Bank's risk management processes and oversight of the recruitment, remuneration and performance reviews of senior management. A table detailing director's attendance of meetings during the perid under review is shown in the last part of this report.
Board and director evaluation
The Board conducts an annual evaluation process which assesses its overall performance and effectiveness, and that of individual directors, the Board Chairman and its Committees. This process is facilitated by an external party to allow for objectivity. The evaluation process involves directors completing evaluation questionnaires and having one on one meeting with the facilitator. The results of the evaluation are collated, a report is produced, and feedback provided to the Board. The Board also submits the evaluation report to the Reserve Bank of Zimbabwe.
Board committees
The Board has delegated some of its duties and responsibilities to sub-committees to ensure the efficient discharge of its mandate. The ultimate responsibility of running the Bank, however, remains with the Board. The sub-committees of the Board are regulated by terms of reference which are reviewed every year or as and when necessary. The Committees meet at least once every quarter and are all chaired by Independent non-executive directors as detailed below.
Audit Committee
The primary functions of the Committee are to oversee the financial management discipline of the Bank, review the Bank's accounting policies, the contents of the financial reports, disclosure controls and procedures, management's approach to internal controls, the adequacy and scope of the external and internal audit functions, compliance with regulatory and financial reporting requirements, oversee the relationship with the Bank's external auditors, as well as providing assurance to the Board that management's control assurance processes are being implemented and are complete and effective. At each meeting, the Committee reviews reported and noted weaknesses in controls and any deficiencies in systems and the remediation plans to address them. The Committee also monitors the ethical conduct of the Bank, its executives and senior officers and advises the Board as to whether the Bank is complying with the aims and objectives for which it has been established. During the period under review, there were no material losses because of internal control breakdowns.
The committee is wholly comprised of independent non-executive directors. The members of the Committee as of 30 June
2022 were:
A. Chinamo (Chairperson)
- Moyo K. Terry
Board Credit Committee
"The Board Credit Committee is tasked with the overall review of the Bank's lending policies. At each meeting, the Committee deliberates and considers loan applications beyond the discretionary limits of management. It ensures that there are effective procedures and resources to identify and manage irregular or problem credit facilities, minimize credit loss and maximize recoveries. It also directs, monitors, reviews, and considers all issues that may materially impact the present and future quality of the Bank's credit risk management.
The Committee comprises three non-executive directors. The members of the Committee as of 30 June 2022 were: K. Terry (Chairperson)
- Anadkat K. Naik
Loans Review Committee
This Committee has the overall responsibility for the complete review of the quality of the Bank's loan portfolio to ensure that the lending function conforms to sound lending policies and keeps the Board and management adequately informed on noted risks. It assists the Board with discharging its responsibility to review the quality of the Bank's loan portfolio. At every meeting, it reviews the quality of the loan portfolio with a view to ensuring compliance with the banking laws and regulations and all other applicable laws as well as internal policies.
The Committee comprises three non-executive directors. The members of the Committee as of 30 June 2022 were: T. Moyo (Chairperson)
- Chinamo S. Moyo
Human Resources and Nominations Committee
The Human Resources and Nominations Committee assists the Board in the review of critical personnel issues as well as acting as a Remuneration and Terminal Benefits Committee. The Committee reviews and approves overall recommendations on employee remuneration as well as approving managerial appointments. The Committee ensures that the remuneration of directors is in line with the nature and size of the operations of the Bank as well as the Banks performance. In addition, the Committee also considers nominations to the Board and succession planning for the Board.
The Committee comprises three non-executive directors. The members of the Committee as of 30 June 2022 were: K. Naik (Chairperson)
- Devenish H. Anadkat
Board Risk Committee
The Board Risk Committee is charged with the responsibility to oversee the Bank's overall enterprise risk environment under three broad areas of Operational Risk, Credit Risk Management and Market Risk. These are controlled and managed independently from risk-taking functions and other committees of the Bank. The committee is responsible for the policies and procedures designed to monitor, evaluate, and respond to risk trends and risk levels across the Bank ensuring that they are kept within acceptable levels.
The Committee comprises three non-executive directors. As of 30 June 2022, members of the committee were: S. N. Moyo (Chairperson)
- Chinamo M. Gursahani
Board IT Committee
The Board IT Committee is a committee of the Board, established to have strategic oversight and governance of the Company's strategic investment in IT, as well as data protection and information management.
The Committee comprises three non-executive directors. As of 30 June 2022, the Committee was made up of the following members:
K. Terry (Chairperson) T. Moyo
M. Gursahani
In addition to the Board Committees, management operates through several committees including the Executive Management Committee and the Assets and Liabilities Committee. The Committees terms of reference are as below.
Executive Committee (EXCO)
The Executive Committee is the operational management forum responsible for the delivery of the Bank's operational plans. The Executive Committee acts as a link between the Board and management and is responsible for the implementation of operational plans, annual budgeting, and periodic review of strategic plans, as well as identification and management of key risks. The Executive Committee also reviews and approves guidelines for employee remuneration. The Executive Committee assists the Managing Director to manage the Bank, to guide and control the overall direction of the business of the Bank and acts as a medium of communication and co-ordination between business units and the Board. The Committee comprises of executive directors and senior management.
Assets and Liabilities Committee (ALCO)
ALCO is tasked with ensuring the achievement of sustainable and stable profits within a framework of acceptable financial risks and controls. The Committee ensures maximization of the value that can be generated from active management of the Bank's balance sheet and financial risk within agreed risk parameters. It manages the funding and investment of the Bank's balance sheet, liquidity, and cash flow, as well as exposure of the Bank to interest rate, exchange rate, market, and other related risks. It ensures that the Bank adopts the most appropriate strategy in terms of the mix of assets and liabilities given its expectation of the future and potential consequences of interest rate movements, liquidity constraints foreign exchange exposure and capital adequacy. It also ensures that strategies conform to the Bank's risk appetite and level of exposure as determined by the Risk Management Committee. The Committee comprises executive directors and heads of functions key to the proper discharge of the Committee's responsibilities.
FCB8381
REVIEWED FINANCIAL RESULTS
For the half year ended 30 June 2022
Board and Committees attendance 2022
Main Board
Name | Total Meetings | Present | Absent** |
P. Devenish | 2 | 2 | Nil |
H. Anadkat | 2 | 2 | Nil |
A. Chinamo | 2 | 2 | Nil |
M Gursahani | 2 | 2 | Nil |
F. Kapanje | 2 | 2 | Nil |
S. N. Moyo | 2 | 2 | Nil |
T. Moyo | 2 | 2 | Nil |
K. Naik | 2 | 2 | Nil |
C. McSharry | 2 | 2 | Nil |
K. Terry | 2 | 2 | Nil |
Audit committee | |||
Name | Total Meetings | Present | Absent |
A. Chinamo | 2 | 2 | Nil |
T. Moyo | 2 | 2 | Nil |
K. Terry | 2 | 2 | Nil |
Human resources & nominations committee | |||
Name | Total Meetings | Present | Absent |
K. Naik | 2 | 2 | Nil |
P. Devenish | 2 | 2 | Nil |
H. Anadkat | 2 | 2 | Nil |
Loans review committee | |||
Name | Total Meetings | Present | Absent |
T. Moyo | 2 | 2 | Nil |
A Chinamo | 2 | 2 | Nil |
S.N. Moyo | 2 | 2 | Nil |
Risk committee | |||
Name | Total Meetings | Present | Absent** |
Name | Total Meetings | Present | Absent |
S.N. Moyo | 2 | 2 | Nil |
A. Chinamo | 2 | 2 | Nil |
M. Gursahani | 2 | 2 | Nil |
IT Committee | |||
Name | Total Meetings | Present | Absent |
K. Terry | 2 | 2 | Nil |
T. Moyo | 2 | 2 | Nil |
M. Gursahani | 2 | 2 | Nil |
C. McSharry | 2 | 2 | Nil |
Directors shareholding
The following is a schedule of the directors' shareholdings in the Bank as of 30 June 2022.
P. Devenish | Nil |
H. Anadkat * | 36,068,751 (direct interest) |
A.Chinamo | Nil |
M. Gursahani | Nil |
F. Kapanje | Nil |
S. N. Moyo | Nil |
T. Moyo | Nil |
K. Terry | Nil |
K. Naik | 25,000 (direct interest) |
C. McSharry | Nil |
*Mr Hitesh Anadkat holds indirect interest in Afcarme Holdings Zimbabwe (Private) Limited, which in turn holds the majority shareholding in the Bank.
Half-year financial results
The Directors are responsible for the preparation and integrity of the financial results and related financial information contained in this report. The financial results are prepared in accordance with international accounting practices, and they incorporate responsible disclosures to ensure that the information contained therein is both relevant and reliable. These reviewed financial results have been prepared under the supervision of Chief Finance Officer, Fanuel Kapanje CA (Z) PAAB Registered Accountant No. 2295.
Compliance
The Board is of the view that the Bank complied with the applicable laws and regulations throughout the reporting period.
By Order of the Board
Sarudzai Binha
Acting Company Secretary
26 August 2022
First Capital Bank is a Registered Commercial Bank and a member of the Deposit Protection Scheme. Terms and conditions apply. | First Capital Bank REVIEWED FINANCIAL RESULTS June 2022 | 2 |
Auditor's statement
for the half year ended 30 June 2022
The inflation adjusted financial results for the 6 months ended 30 June 2022 have been reviewed by the Bank's external auditors, Deloitte & Touche, who have issued a qualified review conclusion as a result of the valuation of property in the comparative period ended 30 June 2021.
The financial results for the comparative statement of comprehensive income carried a qualified review conclusion at 30 June 2021 as a result of the valuation of the land and buildings, investment property and the joint venture investment. This qualification was remediated at 31 December 2021 and therefore will not impact subsequent financial reporting periods. However, because the 30 June 2021 results presented have not been restated to correct this position, the review conclusion has carried forward the qualification.
The partner for the review engagement was Mr. Lawrence Nyajeka, PAAB practice certificate number 0598.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the half year ended 30 June 2022
"Inflation | |||||
Inflation | adjusted | "Historical | |||
adjusted Restated**" Historical* Restated**" | |||||
30.06.2022 30.06.2021 30.06.2022 30.06.2021 | |||||
Notes | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Interest income | 3 | 3,358,208 | 2,837,330 | 2,162,205 | 919,762 |
Interest expense | 4 | (220,597) | (48,204) | (141,543) | (15,482) |
Net interest income | 3,137,611 | 2,789,126 | 2,020,662 | 904,280 | |
Net fee and commission income | 5 | 3,431,103 | 2,911,549 | 2,298,437 | 938,578 |
Net trading and foreign exchange income | 6 | 3,656,488 | 938,506 | 2,600,517 | 299,513 |
Net investment and other income | 7 | 118,987 | 136,271 | 78,111 | 44,461 |
Fair value gain / (loss) on investment property | 19 | 47,815 | (136,717) | 1,604,625 | 12,583 |
Total non interest income | 7,254,393 | 3,849,609 | 6,581,690 | 1,295,135 | |
Total income | 10,392,004 | 6,638,735 | 8,602,352 | 2,199,415 | |
Impairment losses on financial assets | 8 | (344,876) | (84,078) | (218,605) | (26,370) |
Net operating income | 10,047,128 | 6,554,657 | 8,383,747 | 2,173,045 | |
Operating expenses | 9 | (6,069,186)(4,516,409)(3,744,602)(1,225,308) | |||
Net monetary loss | 10 | (1,792,052) | (223,765) | - | - |
Share of profit / (loss) from joint venture | 21 | 184,984 | (451,220) | 3,820,330 | 47,150 |
Profit before tax | 2,370,874 | 1,363,263 | 8,459,475 | 994,887 | |
Taxation | 11 | (1,899,003) | (879,470)(1,203,648) | (272,835) | |
Profit for the period | 471,871 | 483,793 | 7,255,827 | 722,052 | |
Other comprehensive income | |||||
Items that will not be subsequently reclassified to profit or loss | |||||
Gain / (loss) on revaluations | 18 | 4,142,528 | (410,185) | 8,227,570 | 52,024 |
Deferred tax | (25,666) | 101,398 | (1,001,650) | (12,859) | |
Gain on financial assets at fair value through other comprehensive | 720,250 | 609,369 | 2,019,406 | 219,390 | |
income | |||||
Deferredtax | (42,199) | (29,934) | (113,318) | (10,786) | |
Total other comprehensive income | 4,794,913 | 270,648 | 9,132,008 | 247,769 | |
Total comprehensive income | 5,266,784 | 754,441 | 16,387,835 | 969,821 | |
Earnings per share | |||||
Basic (cents per share) | 22 | 22 | 336 | 33 | |
Diluted (cents per share) | 22 | 22 | 335 | 33 |
*Refer to note 2.2
**Restated to reflect correction of cost classification error in 2021 (note 9.2)
FCB8381
REVIEWED FINANCIAL RESULTS
For the half year ended 30 June 2022
Consolidated Statement of Financial Position
as at 30 June 2022
Inflation adjusted | Historical* | ||||
30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | ||
Notes | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Assets | |||||
Cash and bank balances | 12 | 20,323,636 | 19,920,309 | 20,323,636 | 9,099,463 |
Derivative financial instruments | 13 | 47,499 | 3,921 | 47,499 | 1,791 |
Investment securities | 14 | 4,951,067 | 6,347,697 | 4,951,067 | 2,899,585 |
Loans and receivables from banks | 15 | 670,782 | 75,520 | 670,782 | 34,497 |
Loans and advances to customers | 16 | 21,397,042 | 15,634,290 | 21,397,042 | 7,141,638 |
Other assets | 17 | 10,977,474 | 6,018,036 | 10,363,030 | 2,654,391 |
Investment properties | 19 | 2,913,751 | 2,798,509 | 2,913,751 | 1,278,340 |
Investment in joint venture | 21 | 6,915,632 | 6,751,687 | 6,904,455 | 3,084,125 |
Property and equipment | 18 | 11,806,246 | 7,728,026 | 11,806,246 | 3,515,459 |
Intangible assets | 20 | 501,891 | 571,176 | 10,461 | 11,982 |
Right of use assets | 22.1 | 1,845,699 | 376,402 | 1,667,779 | 171,938 |
Total assets | 82,350,719 | 66,225,573 | 81,055,748 | 29,893,209 | |
Liabilities | |||||
Derivative financial instruments | 13 | - | 2,785 | - | 1,272 |
Lease liabilities | 22.2 | 1,781,460 | 374,419 | 1,781,460 | 171,032 |
Deposits from banks | 23 | 708,760 | 1,198,265 | 708,760 | 547,359 |
Deposits from customer | 24 | 40,840,528 | 35,896,583 | 40,840,528 | 16,397,317 |
Employee benefit accruals | 25 | 311,925 | 440,642 | 311,925 | 201,283 |
Other liabilities | 26 | 7,796,321 | 3,136,527 | 7,752,326 | 1,424,672 |
Current tax liabilities | 774,700 | 27,711 | 774,700 | 12,658 | |
Balances due to group companies | 35.3 | 1,379,001 | 503,641 | 1,379,001 | 230,060 |
Deferred tax liabilities | 28 | 1,976,061 | 1,811,093 | 1,779,948 | 735,439 |
Total liabilities | 55,568,756 | 43,391,666 | 55,328,648 | 19,721,092 | |
Equity | |||||
Capital and reserves | |||||
Share capital | 29.1 | 25,178 | 25,178 | 216 | 216 |
Share premium | 29.1 | 2,783,770 | 2,783,761 | 24,094 | 24,085 |
Retained earnings | 12,184,182 | 13,158,025 | 13,197,222 | 6,902,433 | |
Non - distributable reserve | 29.2 | 908,745 | 908,745 | 7,785 | 7,785 |
Fair value through other comprehensive income reserve | 29.3 | 2,781,374 | 2,103,323 | 2,920,679 | 1,014,591 |
Property revaluation reserve | 29.4 | 7,825,143 | 3,708,281 | 9,446,654 | 2,220,734 |
General reserve | 29.5 | 126,981 | - | 126,981 | - |
Share - based payment reserve | 29.6 | 146,590 | 146,594 | 3,469 | 2,273 |
Total equity | 26,781,963 | 22,833,907 | 25,727,100 | 10,172,117 | |
Total equity and liabilities | 82,350,719 | 66,225,573 | 81,055,748 | 29,893,209 | |
*Refer to note 2.2 |
Consolidated Statement of Changes in Equity
for the half year ended 30 June 2022
Fair value | |||||||||
Non- | through other | Property | Share-based | ||||||
Inflation adjusted 2022 | Retained | distributable comprehensive | revaluation | General | payment | Total | |||
Share capital Share premium | earnings | reserves | income | reserves | reserve | reserve | equity | ||
ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Balance at 1 January 2022 | 25,178 | 2,783,761 | 13,158,025 | 908,745 | 2,103,323 | 3,708,281 | - | 146,594 | 22,833,907 |
Profit for the period | - | - | 471,871 | - | - | - | - | - | 471,871 |
Other comprehensive income for the period | - | - | - | - | 678,051 | 4,116,862 | - | - | 4,794,913 |
Total comprehensive income for the period | - | - | 471,871 | - | 678,051 | 4,116,862 | - | - | 5,266,784 |
Transfer between reserves | - | - | (126,981) | - | - | - | 126,981 | - | - |
Recognition of share - based payments | - | - | - | - | - | - | - | 1,199 | 1,199 |
Issue of ordinary shares under share-based payment plans | - | 9 | - | - | - | - | - | (1,203) | (1,194) |
Dividends paid | - | - | (1,318,733) | - | - | - | - | - | (1,318,733) |
Balance at 30 June 2022 | 25,178 | 2,783,770 | 12,184,182 | 908,745 | 2,781,374 | 7,825,143 | 126,981 | 146,590 | 26,781,963 |
Historical 2022* | |||||||||
Balance at 1 January 2022 | 216 | 24,085 | 6,902,433 | 7,785 | 1,014,591 | 2,220,734 | - | 2,273 | 10,172,117 |
Profit for the period | - | - | 7,255,827 | - | - | - | - | - | 7,255,827 |
Other comprehensive income for the period | - | - | - | - | 1,906,088 | 7,225,920 | - | - | 9,132,008 |
Total comprehensive income for the period | - | - | 7,255,827 | - | 1,906,088 | 7,225,920 | - | - | 16,387,835 |
Transfer between reserves | - | - | (126,981) | - | - | - | 126,981 | - | - |
Recognition of share-based payments | - | - | - | - | - | - | - | 1,200 | 1,200 |
Issue of ordinary shares under share-based payment plans | - | 9 | - | - | - | - | - | (4) | 5 |
Dividend paid | - | - | (834,057) | - | - | - | - | - | (834,057) |
Balance at 30 June 2022 | 216 | 24,094 | 13,197,222 | 7,785 | 2,920,679 | 9,446,654 | 126,981 | 3,469 | 25,727,100 |
*Refer to note 2.2
Consolidated Statement of Cash Flows
for the half year ended 30 June 2022
Inflation | Inflation | Historical* | Historical | ||
adjusted | adjusted | restated** | |||
restated** | |||||
30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | ||
Notes | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Cash flows from operating activities | |||||
Profit before tax | 2,370,874 | 1,363,263 | 8,459,475 | 994,887 | |
Adjustments: | |||||
Depreciation of property, equipment, software amortisation | 326,841 | 355,578 | 103,594 | 29,438 | |
and the right of use asset impairment | |||||
Impairment loss on financial assets | 8 | 345,283 | 84,228 | 218,858 | 26,417 |
Share of (profit)/loss from joint venture | 21 | (184,984) | 451,220 | (3,820,330) | (47,150) |
Fair value (gain )/loss on investment property | 19 | (47,815) | 136,717 | (1,604,625) | (12,583) |
Dividend income | 7 | (78,718) | (108,921) | (45,828) | (35,544) |
Loss/ (profit) on disposal of property and equipment | (14,253) | (1,076) | (14,748) | (494) | |
Interest on investment securities | 3 | (243,283) | (58,154) | (147,594) | (18,513) |
Staff loan prepayment amortisation | 307,174 | 424,232 | (2,117) | (1,459) | |
Interest on lease liabilities | 22.2 | 40,042 | 44,055 | 30,106 | 14,149 |
Net monetary loss | 1,792,052 | 223,765 | - | - | |
Share based payment expense | 1,199 | 1,101 | 1,199 | 378 | |
Derivatives | (47,499) | (3,369) | (47,499) | (1,155) | |
Cash flow from operating activities | 4,566,913 | 2,912,639 | 3,130,491 | 948,371 | |
Decrease in loans and advances to customers | (5,762,751) | (4,770,459) | (14,429,383) | (2,138,217) | |
Decrease in other assets | (6,340,277) | (913,477) | (7,676,889) | (637,024) | |
Increase/(decrease) in deposits from customers | 4,943,944 | (2,370,813) | 24,443,211 | 1,002,406 | |
Increase/(Decrease) in other liabilities | 5,406,437 | (1,381,848) | 7,587,239 | (281,725) | |
Corporate income tax paid | (626,941) | (883,273) | (512,065) | (291,262) | |
Net cash generated/(utilised) from operating activities | 2,187,325 | (7,407,231) | 12,542,604 | (1,397,451) | |
Inflation | Inflation | Historical* | Historical | ||
adjusted | adjusted | restated** | |||
restated** | |||||
30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | ||
Notes | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Cash flows from investing activities | |||||
Purchase of property, equipment and intangible assets | 18 | (198,552) | (525,741) | (158,318) | (173,483) |
Proceeds from sale of property and equipment | 15,346 | 1,607 | 14,922 | 498 | |
Dividends received | 78,718 | 108,921 | 45,828 | 35,544 | |
Increase in loans and receivables from banks | (595,262) | - | (636,285) | - | |
Interest received from investment securities | 506,277 | 114,366 | 199,473 | 43,559 | |
Purchase of investments securities | (6,248,693) | (27,856,651) | (3,017,880) | (8,802,003) | |
Proceeds from sale and maturities of investment securities | 6,073,180 | 28,861,485 | 3,136,389 | 9,105,000 | |
Net cash (utilised) /generated from investing activities | (368,986) | 703,987 | (415,871) | 209,115 | |
Cash flows from financing activities | |||||
Proceeds from issue of shares under a share based payment plan | 5 | 103 | 5 | 34 | |
Dividend paid | (1,318,733) | - | (834,057) | - | |
Lease liabilities payments | 22.2 | (96,284) | (82,529) | (68,508) | (26,473) |
Net cash used in financing activities | (1,415,012) | (82,426) | (902,560) | (26,439) | |
Net increase/(decrease) in cash and cash equivalents | 403,326 | (6,785,675) | 11,224,173 | (1,214,775) | |
Cash and cash equivalents at the beginning of the period | 19,920,309 | 18,905,347 | 9,099,463 | 5,372,648 | |
Cash and cash equivalents at the end of the period | 12 | 20,323,636 | 12,119,676 | 20,323,636 | 4,157,873 |
*Refer to note 2.2 |
First Capital Bank is a Registered Commercial Bank and a member of the Deposit Protection Scheme. Terms and conditions apply. | First Capital Bank REVIEWED FINANCIAL RESULTS June 2022 | 3 |
Notes to Consolidated Financial Statements
for the half year ended 30 June 2022
-
General information
First Capital Bank Limited ("the Bank") provides retail, corporate and investment banking services in Zimbabwe. The Bank which is incorporated and domiciled in Zimbabwe is a registered commercial bank under the Zimbabwe Banking Act Chapter (24:20). The ultimate parent company is FMBcapital Holdings PLC incorporated in Mauritius. The Bank has a primary listing on the Zimbabwe Stock Exchange.
- Basis of preparation
2.1 Basis of measurement
The reviewed consolidated financial results have been prepared on the basis of IAS 29: Financial Reporting for Hyperinflationary Economies and in accordance with International Financial Reporting Standards (IFRS), as well as the requirements of the Companies and Other Business Entities Act (Chapter 24:31) and the Banking Act (Chapter 24.20).
The following All items CPI indices were used to prepare the rviewed consolideted financial results:
All items CPI Indices | Conversion factors | |
30-Jun-22 | 8,707.35 | 1.00 |
31-Dec-21 | 3,977.46 | 2.19 |
30-Jun-21 | 2,986.44 | 2.92 |
The procedures applied for the above restatement are as follows:
Financial statements prepared in the currency of a hyper-inflationary economy are stated in terms of the closing Consumer Price Index ("CPI") at the end of the reporting period. The historical cost financial information is re-stated for the changes in purchasing power (inflation), and corresponding figures for the prior period are restated in the same terms. Monetary assets and liabilities are not restated while non-monetary assets and liabilities that are not carried at amounts current at balance sheet date and components of shareholders' equity are restated by the relevant monthly conversion factors.
All items in the income statement are restated by applying the relevant monthly, yearly average or year-end conversion factors with the exception of depreciation, amortisation and fair value gains and losses which applies the balance sheet approach.
-
Historic financial information
The historical amounts are shown as supplementary information. This information does not comply with International Financial Reporting Standards in that it has not taken account of the requirements of International Accounting Standard 29: Financial Reporting for Hyperinflationary Economies. As a result the auditors have not expressed an opinion on the historical financial information."
Accounting policies
The accounting policies applied in the preparation of the audited financial results are consistent with the most recent financial statements for the year ended 31 December 2021." - Consolidated financial statements
The Bank owns 100% in Thulile (Private) Limited, a company that owns a piece of land measuring 18 786 sqm. The property is currently not leased out and is earmarked for further development over the next three years. The Bank therefore prepares consolidated financial statements per IFRS 10 requirements. Land is the only line item in the subsidiary and no other transactions exist. Investment in subsidiary and equity of the subsidiary are eliminated when consolidating. No goodwill or gain on bargain purchase arose on acquisition of Thulile (Private) Limited ." - Functional and presentation currency
The financial results are presented in Zimbabwe Dollars (ZWL), the functional and presentation currency of the Bank.
Conversion of foreign currency transactions and balances at interbank exchange rates.
The Bank used the interbank exchanges rates as derived from the auction to convert foreign currency transactions and balances in the financial results. During the period, the majority of the Bank`s transaction were processed using auction determined exchange rates. - Material estimates and judgements
Estimates, judgements and assumptions made by management which would have significant effects on the reviewed consolidated finacial statements are on the following areas: - Determination of the functional currency
- Measurement of the expected credit losses on financial assets
- Fair value computations on securities, investment properties, property and equipment and the value of share options
- Useful lives of property and equipment
- Computation of tax liabilities; and
- Determination of exchange rate for translating foreign currency balances.
Inflation adjusted | Historical | |||||
30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | |||
3 | Interest income | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Bank balances | 62,563 | 161,517 | 19,175 | 51,663 | ||
Loans and receivables from banks and investment securities | 243,283 | 58,154 | 147,594 | 18,513 | ||
Loans and advances to customers | 3,046,795 | 2,614,845 | 1,992,005 | 848,686 | ||
Promissory notes | 5,567 | 2,814 | 3,431 | 900 | ||
Total interest income | 3,358,208 | 2,837,330 | 2,162,205 | 909,672 | ||
4 | Interest expense | |||||
Interest on lease liabilities | (40,042) | (44,055) | (30,106) | (14,149) | ||
Deposits from banks | (115,110) | (4,149) | (66,828) | (1,333) | ||
Customer deposits | (65,445) | - | (44,609) | - | ||
Total interest expense | (220,597) | (48,204) | (141,543) | (15,482) | ||
5 Net fee and commission income | ||||||
Fee and commission income | ||||||
Account maintainance fees | 732,340 | 584,028 | 442,418 | 166,857 | ||
Insurance commission received | 11,354 | 7,150 | 8,322 | 2,291 | ||
Transfers and other transactional fees | 1,250,253 | 1,153,205 | 879,797 | 394,132 | ||
Guarantees | 124,339 | 104,684 | 82,507 | 33,244 | ||
Card based transaction fees | 499,494 | 420,932 | 326,300 | 134,767 | ||
Cash withdrawal fees | 824,051 | 649,353 | 563,137 | 209,782 | ||
Fee and commission income | 3,441,831 | 2,919,352 | 2,302,481 | 941,073 | ||
Fee and commission expense | ||||||
Guarantees | (10,728) | (7,803) | (4,044) | (2,495) | ||
Fee and commission expense | (10,728) | (7,803) | (4,044) | (2,495) | ||
Net fee and commission income | 3,431,103 | 2,911,549 | 2,298,437 | 938,578 |
Net fee and commission income above excludes amounts included in determining the effective interest rate on financial assets measured at amortised cost.
6 Net trading and foreign exchange income | |||||
Net foreign exchange revaluation gain | 2,381,639 | 37,552 | 1,682,525 | 11,453 | |
Net foreign exchange trading income | 1,274,849 | 900,954 | 917,992 | 288,060 | |
Total trading and foreign exchange | 3,656,488 | 938,506 | 2,600,517 | 299,513 | |
7 Net investment and other income | |||||
Dividend income | 78,718 | 108,921 | 45,828 | 35,544 | |
Profit on disposal of property and equipment | 14,253 | 1,076 | 14,748 | 494 | |
Rental income | 25,286 | 24,671 | 17,016 | 7,897 | |
Sundry income | 730 | 1,603 | 519 | 526 | |
Total net investment and other income | 118,987 | 136,271 | 78,111 | 44,461 |
FCB8381
REVIEWED FINANCIAL RESULTS
For the half year ended 30 June 2022
Inflation adjusted | Historical | |||||
8 | Impairment losses on financial assets | 30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | |
Stage 1 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ||
Loans and advances to customers | (95,008) | (67,002) | (72,783) | (20,861) | ||
Balances with banks - local & nostro | (4,092) | (154) | (3,473) | (53) | ||
Investment securities - treasury bills & bonds | 7,048 | (7,314) | 3,156 | (2,523) | ||
Other assets including RBZ Net Operating Position | (61,863) | 3,958 | (44,562) | 1,304 | ||
(NOP) receivable | ||||||
Total | (153,915) | (70,512) | (117,662) | (22,132) | ||
Stage 2 | ||||||
Loans and advances to customers | 3,641 | (2,327) | 1,541 | (633) | ||
Total | 3,641 | (2,327) | 1,541 | (633) | ||
Stage 3 | ||||||
Loans and advances to customers | (195,009) | (11,389) | (102,737) | (3,652) | ||
Total | (195,009) | (11,389) | (102,737) | (3,652) | ||
Total impairment raised during the period | (345,283) | (84,228) | (218,858) | (26,417) | ||
Recoveries of loans and advances previously written off | 407 | 150 | 253 | 47 | ||
Impairment losses recognised in profit/ loss | (344,876) | (84,078) | (218,605) | (26,370) | ||
9 | Operating expenses | |||||
Staff costs | 9.1.1 | (2,404,579) | (1,662,070) | (1,440,554) | (417,685) | |
Infrastructure costs | 9.1.2 | (1,166,055) | (1,151,780) | (663,757) | (284,199) | |
General expenses | 9.1.3 | (2,498,552) | (1,702,559) | (1,640,291) | (523,424) | |
Total operating expenses | (6,069,186) | (4,516,409) | (3,744,602) | (1,225,308) | ||
Breakdown of the expenses is as shown in note 9.1. | ||||||
9 .1 Operating expenses Analysis | ||||||
9.1.1 Staff costs | ||||||
Salaries and allowances | (1,599,033) | (1,172,104) | (918,383) | (260,833) | ||
Retention incentive and 13th cheque | (358,126) | (177,605) | (226,167) | (56,698) | ||
Medical costs | (125,947) | (81,561) | (83,940) | (26,175) | ||
Social security costs | (16,141) | (3,045) | (11,357) | (998) | ||
Pension costs: defined contribution plans | (146,849) | (96,282) | (91,940) | (30,927) | ||
Retrenchment costs | (27,713) | - | (27,713) | - | ||
Directors` remuneration - for services as management | (129,571) | (130,372) | (79,855) | (41,676) | ||
Share based payments | (1,199) | (1,101) | (1,199) | (378) | ||
Total staff cost | (2,404,579) | (1,662,070) | (1,440,554) | (417,685) | ||
Average number of employees during the period: | 514 | 474 | 514 | 474 | ||
9.1.2 Infrastructure costs | ||||||
Repairs and maintenance | (118,786) | (102,216) | (81,708) | (33,107) | ||
Heating, lighting, cleaning and rates | (113,763) | (111,757) | (74,865) | (35,778) | ||
Security costs | (86,084) | (52,735) | (57,418) | (16,988) | ||
Depreciation of property and equipment | (194,342) | (140,620) | (63,398) | (8,944) | ||
Depreciation of right of use asset | (63,215) | (145,673) | (38,675) | (18,973) | ||
Software amortisation | (69,285) | (69,285) | (1,521) | (1,521) | ||
Operating lease - short term leases | (21,364) | (18,818) | (13,706) | (6,018) | ||
Connectivity, software and licences | (499,216) | (510,676) | (332,466) | (162,870) | ||
Total infrastructure costs | (1,166,055) | (1,151,780) | (663,757) | (284,199) | ||
9.1.3 General expenses | ||||||
Auditors' remuneration: | ||||||
Audit related services | (21,579) | (18,267) | (15,060) | (5,830) | ||
Review services | (3,532) | (7,931) | (2,177) | (2,535) | ||
Total auditors' remuneration | (25,111) | (26,198) | (17,237) | (8,365) | ||
Consultancy, legal & professional fees | (43,629) | (48,953) | (34,086) | (15,865) | ||
Subscription, publications & stationery | (94,153) | (110,407) | (62,363) | (31,404) | ||
Marketing, advertising & sponsorship | (175,789) | (73,493) | (124,381) | (23,835) | ||
Travel & accommodation | (117,425) | (78,907) | (89,083) | (25,578) | ||
Entertainment | (285) | (121) | (261) | (40) | ||
Cash transportation | (196,434) | (189,721) | (131,808) | (61,128) | ||
Directors fees | (20,709) | (9,852) | (12,003) | (3,103) | ||
COVID-19 costs | (54,478) | (82,503) | (33,575) | (26,374) | ||
Insurance costs | (126,902) | (126,261) | (80,976) | (40,421) | ||
Telex, telephones & communication | (212,572) | (132,640) | (151,962) | (42,378) | ||
Group recharges | (1,053,945) | (626,240) | (736,324) | (200,449) | ||
Card operating expenses | (78,969) | (81,505) | (53,111) | (26,281) | ||
Other administrative & general expenses | (298,151) | (115,758) | (113,122) | (18,203) | ||
Total general expenses | (2,498,552) | (1,702,559) | (1,640,292) | (523,424) |
9.2 Restatement of statement of profit or loss and other comprehensive income
Expenses presentation
The statement of profit or loss and other comprehensive income for the half year ended 30 June 2021 has been restated to present expenses by their function, as IAS 1 Presentation of Financial Statements requires that these items be presented by either their function or by their nature. This restatement has no impact on the net profit reported in the comparative period.
The table below highlights the impact of restatement: | ||||||
As previously reported | Re-stated | |||||
Inflation | Historical | Inflation | Historical | |||
adjusted | adjusted | |||||
ZWL000 | ZWL000 | ZWL000 | ZWL000 | |||
30.06.2022 | 30.06.2022 | 30.06.2022 | 30.06.2022 | |||
Staff costs | (1,662,070) | (417,685) | ||||
Infrastructure costs | (1,151,780) | (284,199) | ||||
Administration and general expenses | (1,702,559) | (523,424) | ||||
Operating expenses | (4,516,409) | (1,225,308) | (4,516,409) | (1,225,308) | ||
10 Net monetary loss (NML) | ||||||
Net monetary loss is broadly comprised of the following: | ||||||
Inflation adjusted | ||||||
30.06.2022 | 30.06.2021 | |||||
ZWL000 | ZWL000 | |||||
Average monetary assets | 29,984,527 | 35,537,313 | ||||
Average monetary liabilities | 28,381,574 | 34,188,093 | ||||
Average net monetary position | 1,602,953 | 1,349,219 | ||||
Index movement | 1.19 | 0.21 | ||||
Net monetary loss | 1,906,190 | 279,128 | ||||
Other monetary movements | (114,138) | (55,363) | ||||
Total net monetary loss charged to profit or loss | 1,792,052 | 223,765 | ||||
Inflation adjusted | Historical | |||||
11 Taxation | 30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | ||
11.1 Income tax recognised in profit or loss | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ||
Normal tax - current period | (1,761,993) | (905,012) | (1,274,107) | (293,141) | ||
Deferred tax credit/(expense) recognised in the current period | (137,010) | 25,542 | 70,459 | 20,306 | ||
Total income tax charge recognised in the current period | (1,899,003) | (879,470) | (1,203,648) | (272,835) |
First Capital Bank is a Registered Commercial Bank and a member of the Deposit Protection Scheme. Terms and conditions apply. | First Capital Bank REVIEWED FINANCIAL RESULTS June 2022 | 4 |
Notes to Consolidated Financial Statements
for the half year ended 30 June 2022
Inflation | |||||
Inflation | adjusted | Historical | |||
adjusted | restated* | Historical | restated* | ||
30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | ||
12 | Cash and bank balances | ZWL000 | ZWL000 | ZWL000 | ZWL000 |
Balances with central bank | 2,277,977 | 4,367,253 | 2,277,977 | 1,994,932 | |
Statutory reserve balance with central bank | 900,040 | 1,344,882 | 900,040 | 614,333 | |
Cash on hand - foreign currency | 5,322,130 | 6,665,297 | 5,322,130 | 3,044,663 | |
Cash on hand - local currency | 75,893 | 113,386 | 75,893 | 51,793 | |
Balances due from group companies | 146,340 | 84,597 | 146,340 | 38,643 | |
Balances with banks abroad | 11,604,479 | 7,347,647 | 11,604,479 | 3,356,356 | |
Cash and bank balances | 20,326,859 | 19,923,062 | 20,326,859 | 9,100,720 | |
Expected credit losses | (3,223) | (2,753) | (3,223) | (1,257) | |
Net cash and bank balances* | 20,323,636 | 19,920,309 | 20,323,636 | 9,099,463 |
*Cash and bank balances include restricted amounts relating to Reserve Bank of Zimbabwe (card transaction cash security, ZWL501million (2021:532million) and Statutory reserve for customer deposits, ZWL900million (2021:1.3billion) and Letters of credit foreign bank security deposits (Crown Agency and Afrexim Banks, ZWL2.4billion (2021:1.8billion)
13 Derivative financial instruments
The Group uses cross-currency swaps to manage the foreign currency risks arising from asset and deposit balances held which are denominated in foreign currencies. Forward exchange contracts are for trading and foreign currency risk management purposes.
Carrying amount
The fair value of the derivative financial instruments represents the present value of the positive or negative cash flows, which would have occurred if the rights and obligations arising from that instrument were closed out in an orderly market place.
Contract amount
The gross notional amount is the sum of the absolute value of all bought and sold contracts. The amount cannot be used to assess the market risk associated with the position and should be used only as a means of assessing the Bank's participation in derivative contracts.
Inflation adjusted | Historical | ||||
30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | ||
Foreign exchange derivatives - assets | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Foreign exchange swaps | |||||
Notional contract amount - Asset | 791,167 | 3,790,303 | 791,167 | 1,731,385 | |
Notional contract amount - Liability | (743,668) | (3,786,382) | (743,668) | (1,729,594) | |
Carrying amount | 47,499 | 3,921 | 47,499 | 1,791 | |
Foreign exchange derivatives - liabilities | |||||
Foreign exchange spot trades | |||||
Notional contract amount - Asset | - | 850,020 | - | 388,283 | |
Notional contract amount - Liability | - | (852,805) | - | (389,555) | |
Carrying amount | - | (2,785) | - | (1,272) | |
14 | Investment securities | ||||
Treasury bills and bonds | 1,835,166 | 3,941,808 | 1,835,166 | 1,800,591 | |
Promissory notes | 14,210 | 39,170 | 14,210 | 17,893 | |
Equity securities | 3,101,691 | 2,366,719 | 3,101,691 | 1,081,101 | |
Balance at the end of the period | 4,951,067 | 6,347,697 | 4,951,067 | 2,899,585 | |
14.1 Treasury bills and bonds | |||||
Balance at beginning of period | 3,941,808 | 3,409,270 | 1,800,591 | 968,868 | |
Additions | 6,167,185 | 37,258,206 | 2,967,646 | 12,179,361 | |
Accrued interest | 243,283 | 388,646 | 147,594 | 154,840 | |
Monetary adjustment | (2,817,541) | (710,339) | - | - | |
Maturities | (5,684,847) | (36,429,684) | (3,081,949) | (11,515,088) | |
Changes in fair value | (14,722) | 25,709 | 1,284 | 12,610 | |
Balance at the end of the period | 1,835,166 | 3,941,808 | 1,835,166 | 1,800,591 |
As at 30 June 2022, ZWL200 million of the Treasury bills and bonds was used as security against borrowings from third parties.
Inflation adjusted | Historical | ||||
14.2 | Promissory notes | 30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 |
ZWL000 | ZWL000 | ZWL000 | ZWL000 | ||
Balance at beginning of period | 39,170 | - | 17,893 | - | |
Additions | 81,508 | 224,659 | 50,234 | 79,528 | |
Accrued interest | 850 | 1,730 | 524 | 612 | |
Maturities | (88,333) | (175,844) | (54,441) | (62,247) | |
Monetary adjustments | (18,985) | (11,375) | - | - | |
Balance at the end of the period | 14,210 | 39,170 | 14,210 | 17,893 | |
14.3 | Equity securities | ||||
Balance at beginning of period | 2,366,719 | 176,712 | 1,081,101 | 50,219 | |
Changes in fair value | 734,972 | 2,095,140 | 2,020,590 | 998,345 | |
Additions | - | 94,867 | - | 32,537 | |
Balance at the end of the period | 3,101,691 | 2,366,719 | 3,101,691 | 1,081,101 |
Treasury bills and bonds classified as investment securities are held to collect contractual cash flows and sell if the need arises. They are measured at fair value through other comprehensive income.
Expected credit losses are accounted for through fair value through other comprehensive income reserve. A total of ZWL6.1 million has been recognised as expected credit loss as at 30 June 2022.
Equity securities are designated as fair value through other comprehensive income and measured at fair value.
Financial assets held for investment purpose are classified as financial assets at amortised cost. These financial assets are held to earn interest income over their tenure and to collect contractual cash flows. No treasury bills were held for trading purposes as at 30 June 2022.
Inflation adjusted | Historical | ||||
30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | ||
15 Loans and receivables from banks | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Interbank placements | 603,567 | - | 603,567 | - | |
Clearing balances with other banks | 67,215 | 75,520 | 67,215 | 34,497 | |
Total carrying amount of loans and receivables from banks | 670,782 | 75,520 | 670,782 | 34,497 |
FCB8381
REVIEWED FINANCIAL RESULTS
For the half year ended 30 June 2022
Clearing balances with other banks include Zimswitch transactions net settlement receivables.
Corporate | |||||
and | |||||
Retail | Business Investment | ||||
Banking | Banking | Banking | Total | ||
16 | Loans and advances to customers | ZWL000 | ZWL000 | ZWL000 | ZWL000 |
Historical and inflation adjusted 30 June 2022 | |||||
Personal and term loans | 3,822,404 | 1,839,765 | 13,176,281 | 18,838,450 | |
Mortgage loans | 15,499 | - | - | 15,499 | |
Overdrafts | 75,574 | 1,066,780 | 1,676,239 | 2,818,593 | |
Gross loans and advances to customers | 3,913,477 | 2,906,545 | 14,852,520 | 21,672,542 | |
Less: allowance for expected credit losses | |||||
Stage1 | (54,222) | (17,440) | (79,803) | (151,465) | |
Stage2 | (1,488) | (115) | (4,269) | (5,872) | |
Stage3 | (29,807) | (109) | (88,247) | (118,163) | |
Allowance for expected credit losses | (85,517) | (17,664) | (172,319) | (275,500) | |
Net loans and advances to customers | 3,827,960 | 2,888,881 | 14,680,201 | 21,397,042 | |
Corporate | |||||
and | |||||
Retail | Business Investment | Total | |||
Banking | Banking | Banking | Banking | ||
Inflation adjusted 31 December 2021 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Personal and term loans | 3,868,436 | 1,669,876 | 7,407,235 | 12,945,547 | |
Mortgage loans | 40,053 | - | - | 40,053 | |
Overdrafts | 7,572 | 582,582 | 2,280,783 | 2,870,937 | |
Gross loans and advances to customers | 3,916,061 | 2,252,458 | 9,688,018 | 15,856,537 | |
Less: allowance for expected credit losses | |||||
Stage1 | (59,099) | (21,946) | (91,204) | (172,249) | |
Stage2 | (4,569) | (5,078) | (6,582) | (16,229) | |
Stage3 | (26,729) | (7,040) | - | (33,769) | |
Allowance for expected credit losses | (90,397) | (34,064) | (97,786) | (222,247) | |
Net loans and advances to customers | 3,825,664 | 2,218,394 | 9,590,232 | 15,634,290 | |
Historical 31 December 2021 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Personal and term loans | 1,767,075 | 762,788 | 3,383,575 | 5,913,438 | |
Mortgage loans | 18,296 | - | - | 18,296 | |
Overdrafts | 3,459 | 266,119 | 1,041,846 | 1,311,424 | |
Gross loans and advances to customers | 1,788,830 | 1,028,907 | 4,425,421 | 7,243,158 | |
Less: allowance for expected credit losses | |||||
Stage1 | (26,996) | (10,025) | (41,661) | (78,682) | |
Stage2 | (2,087) | (2,319) | (3,006) | (7,412) | |
Stage3 | (12,210) | (3,216) | - | (15,426) | |
Allowance for expected credit losses | (41,293) | (15,560) | (44,667) | (101,520) | |
Net loans and advances to customers | 1,747,537 | 1,013,347 | 4,380,754 | 7,141,638 | |
Inflation adjusted | Historical | ||||
30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | ||
17 | Other assets | ZWL000 | ZWL000 | ZWL000 | ZWL000 |
Prepayments and stationery | 1,022,225 | 582,564 | 606,875 | 235,768 | |
Card security deposit and settlement balances | 849,541 | 550,861 | 849,541 | 251,629 | |
Customer auction funds ZWL receivable | 5,920,938 | 2,297,976 | 5,920,938 | 1,049,700 | |
Other receivables | 388,244 | 231,776 | 388,244 | 105,875 | |
RBZ receivable - NOP support* | 2,464,442 | 1,963,567 | 2,464,442 | 896,944 | |
RBZ other legacy debts | 3,901 | 2,533 | 3,901 | 1,157 | |
Staff loans prepaid benefit | 410,180 | 470,795 | 211,086 | 150,793 | |
Total before expected credit losses | 11,059,471 | 6,100,072 | 10,445,027 | 2,691,865 | |
Less: Expected credit loss | (81,997) | (82,036) | (81,997) | (37,474) | |
Total other assets | 10,977,474 | 6,018,036 | 10,363,030 | 2,654,391 | |
Current | 8,223,583 | 4,007,069 | 7,797,679 | 1,656,539 | |
Non - current | 2,753,888 | 2,010,968 | 2,565,351 | 997,852 | |
Total | 10,977,474 | 6,018,036 | 10,363,030 | 2,654,391 |
- The receivable relates to the foreign currency commitment by the Reserve Bank to provide cash flows to cover USD16.2 million net open position which arose after separation of RTGS and foreign currency balances. Refer to note 30 for the valuation assumptions.
18 | Consolidated Property and | Land and | Computers | Equipment | Furniture | Motor | |
equipment | buildings | and fittings | vehicles | Total | |||
Inflation adjusted 2022 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | ZWL000 | |
Balance at beginning of period | 7,333,975 | 177,159 | 23,438 | 4,731 | 188,723 | 7,728,026 | |
Additions | - | 32,298 | 61,851 | 719 | 103,684 | 198,552 | |
Revaluation | 103,827 | 346,932 | 1,731,502 | 288,215 | 1,672,052 | 4,142,528 | |
Disposals | - | (40,067) | (1,004) | (490) | (12,878) | (54,439) | |
Depreciation charge on disposals | - | 39,733 | 246 | 489 | 12,878 | 53,346 | |
Transfer to investment properties | (67,426) | (67,426) | |||||
Depreciation charge & Impairment | (82,456) | (38,657) | (18,051) | (20,805) | (34,372) | (194,341) | |
charge | |||||||
Carrying amount at end of the | 7,287,920 | 517,398 | 1,797,982 | 272,859 | 1,930,087 | 11,806,246 | |
period | |||||||
Cost or valuation | 7,287,920 | 1,411,852 | 2,228,503 | 517,056 | 2,423,022 | 13,868,353 | |
Accumulated depreciation and | - | (894,454) | (430,521) | (244,197) | (492,935) | (2,062,107) | |
impairment | |||||||
Carrying amount at end of the | 7,287,920 | 517,398 | 1,797,982 | 272,859 | 1,930,087 | 11,806,246 | |
period | |||||||
Property and equipment | |||||||
Historical 2022 | |||||||
Balance at beginning of period | 3,350,110 | 65,623 | 21,741 | 5,325 | 72,660 | 3,515,459 | |
Additions | - | 18,691 | 56,040 | 363 | 83,224 | 158,318 | |
Revaluation | 4,008,175 | 442,759 | 1,723,996 | 267,850 | 1,784,790 | 8,227,570 | |
Disposals | - | (343) | (195) | (4) | (110) | (652) | |
Depreciation charge on disposals | - | 340 | 52 | 4 | 110 | 506 | |
Transfers to Investment property | (30,786) | - | - | - | - | (30,786) | |
Depreciation charge | (39,580) | (9,701) | (3,642) | (659) | (10,587) | (64,169) | |
Carrying amount at end of the | 7,287,919 | 517,369 | 1,797,992 | 272,879 | 1,930,087 | 11,806,246 | |
period | |||||||
Cost or valuation | 7,370,382 | 543,532 | 1,807,905 | 275,923 | 1,951,034 | 11,948,776 | |
Accumulated depreciation and | (82,463) | (26,163) | (9,913) | (3,044) | (20,947) | (142,530) | |
impairment | |||||||
Carrying amount at end of the | 7,287,919 | 517,369 | 1,797,992 | 272,879 | 1,930,087 | 11,806,246 | |
period |
First Capital Bank is a Registered Commercial Bank and a member of the Deposit Protection Scheme. Terms and conditions apply. | First Capital Bank REVIEWED FINANCIAL RESULTS June 2022 | 5 |
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First Capital Bank Limited published this content on 26 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 August 2022 21:40:02 UTC.
