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First Capital Restructure Struggling Firms Loans Amid Covid-19 Disruption

Financial services provider, First Capital Bank is restructuring its loanbook with various companies, mostly in the tourism sector that have been adversely affected by the Covid-19 lockdown disruptions to their businesses, 263Chat Business reports.

The bank announced in its first quarter 2020 trading update released Monday morning, that it was also reviewing the loan portfolio to ensure prudent lending under the current environment.

Most companies, particularly in the tourism sector brought to a standstill due to Covid-19 are struggling to repay loans owing to poor cashflows since lockdown began.

“Clients constituting 6.5% of the loan book including tourism sector have requested for restructuring of their loan facilities and repayments, with the bank working with these businesses to support them as best we can,” the bank said.

“We have put in place measures to mitigate credit risk by conducting a complete review of our loan portfolio to ensure that we focus our support and attention on the right sectors and businesses,” it added.

The bank however revealed that in the case of defaulting by its debtors, the impact will not offset a strong performance recorded in the loan portfolio during the period.

“Balance sheet growth was driven by ZWL loans which grew by 9% from ZWL 620 million to ZWL 673 million,” it said.

Foreign currency loans remained flat at USD 6.8 million.

The Bank had a strong performance during the first quarter with total income in inflation adjusted terms increasing by 86% from ZWL136 million to ZWL 253 million, whilst in historical cost terms total income increased by 85% from ZWL 115 million to ZWL 213 million including one off foreign exchange gains of ZWL 20 million.

“The increase is largely due to increase in loan book in prior year quarter four, while the loan book remained stable in quarter one of 2020. Additionally, interest rates and prices increases effected towards end of quarter four of 2019 contributed significantly to the increase,” the bank said.

Profit after tax grew by 100% from a loss of ZWL 58 million to a profit of ZWL 59 million in inflation adjusted terms, while in historical cost terms the increase was 510% from a loss of ZWL 10 million to a profit of ZWL 51 million.

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