First Capital Bank growing US$ loan book prompts VFEX listing – NewZimbabwe.com

By Alois Vinga

LEADING financial services provider, First Capital Bank (FCA) top management has approved the decision to list on the Victoria Falls Stock Exchange (VFEX) due to a growing US$ loan book among other considerations.

In a recent circular to shareholders, FCA listed the fact that surging US$ transactions and account balances as chief among the reasons to migrate from the ZWL denominated bourse.

“The bank has seen a growth in its US$ loan book and balances to over 70%, with foreign currency income contributions between 55% and 65% in recent months.

“Furthermore, the bank plans to roll out more foreign currency denominated products to boost its foreign currency revenue.

“The potential increase in the Bank’s US$ earnings increases the shareholders’ expectation to receive their return in US$ through US$ dividends and US$ capital gains on share disposal which the VFEX offers in comparison to the ZSE,” the bank said.

FCA also considered that it provides corporate services and funding to companies in Zimbabwe that are exposed to US$ denominated costs amid expectations of improved access to US$ facilities for the Bank through the VFEX which will enable the bank to maintain a competitive position in the market by offering US$ capital to such corporates.

The world class financier said it has mobilised lines of credit from regional and international partners that include the African Development Bank, Afreximbank, the European Investment Bank and the Trade and Development Bank which are expected to provide a boost to the economy through trade finance and medium-term capital opportunities which smoothen trade cycles and facilitate capital investment for long term projects.

“Access to foreign currency capital through the VFEX can attract more facilities of this nature and provide sustainability to the existing relationships.

“The current reporting framework which is based on the ZWL and upon which adjustment is made for hyperinflation has created substantial complexity in the reporting process and volatility in the reported numbers,” the bank said.

By listing on the VFEX, the Bank is required to report its financial performance in US$ which is a stable currency that will assist current and potential investors to better understand the performance of the entity.

“The US$ implied valuation of FCA  following its VFEX listing which mitigate valuation volatility and provides a more accurate reflection of the Bank’s market capitalization which will result in shareholders realising the true value of their holdings on disposal.

“The VFEX offers lower foreign exchange risk arising from local currency depreciation, tax incentives and lower trading costs of 2,12% compared to 4,63% on the Zimbabwe Stock Exchange for shareholders and potential investors,” added FCA.