FBC moves to stem loan defaults

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Speaking at the group’s analysts briefing, Mushayavanhu said NPLs were at $44 million which translate to 16,5%.
An NPL is when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalised, refinanced or delayed by agreement.

“NPL’s have to go to under 10%. Our book is secured we can either realise the security or we can put factors to look at those books. We don’t see why we should sell that book to Zamco [Zimbabwe Asset Management Company],” he said.

Zamco was set up last year to buy the bank’s bad book and free them to lend again to various sectors of the economy.

Mushayavanhu said some corporate loans were restructured in favour of longer term cheaper funding following the closure of $60 million syndicated facility.

He said under Basell II the loans were to be reclassified and there was a six month observation period stipulated before reclassification can be effected.
“Post mandatory six months observation period, some of the restructured loans have since performed and are being upgraded,” he said.

Individuals dominated the group’s loan book at 24% followed by manufacturing (18%), distribution (12%), wholesale and others at 10% respectively.

Mushayavanhu said individuals dominated the lending of the group because the loans were deducted on the source and these kinds of loans have low NPLs.

Profit for the year was $13,9 million down from $15,9 million in 2013.

Interest income for the group stood at $57,2 million in 2014 compared to $43,7 million same period in 2013. Net Interest income stood at $28,7 million from $25,1 million.

Mushayavanhu said the group incurred a $9 million book loss when it divested from Turnall Holdings to return to its core business of financial services.
The group divested from Turnall Holdings Limited by way of dividend in specie during 2014.
“We thought it was simple to leave Turnall but the total book loss was $9 million,” he said.

Mushayavanhu said FBC Bank, the group’s flagship unit, has a 7% market share ($365million) in terms of the banking sector deposits and 8% market share in loans and advances ($314 million).
Last year, the group secured lines of credit amounting to $85 million. This included the $60 million syndicated loan facility from Commerzbank and Standard Chartered which enabled the bank to restructure facilities for its key clients thereby stabilising the group’s liquidity position.

Afreximbank gave the group $15 million which has a three year tenure while PTA Bank gave them a $10 million facility that has a one year tenure.

Mushayavanhu said the group witnessed a 6% growth in assets to $477 million despite the disposal of Turnall.
Total equity for the group decreased due to the disposal of Turnall and loans and advances for the group increased to $314 million from $266million.

Property sales went down during the year 2014 as the company had many of its construction projects up to December 2014.

“We ended the year with stock of houses. We have learnt a lesson our construction will end in September. We ended up with reduced numbers,” he said.