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Eric Chiriga

FBC Holdings Ltd (FBC) has recorded a profit after-tax of $61,17 billion and the group says it has already met the new $100 billion capital requirement for commercial banks.

The Reserve Bank of Zimbabwe introduced new capi

tal requirement effective September 30, 2004 under which the minimum capital requirement for commercial banks was increased from $10 billion to $100 billion.

The group also recorded a profit of $7 billion at its mortgage-lending subsidiary, FBC Building Society, former Zimbabwe Building Society (ZBS).

“I am pleased to report that FBC Building Society has been turned around and has recorded a modest profit of $7 billion for the six months ended June 30,” Herbert Nkala, group chairman of FBC, said in the group’s unaudited interim results for the six months ended June.

He said the turnaround of the building society is set to improve the group’s performance in the second half.

FBC made a profit before-tax of $88,6 billion and profit attributable to shareholders was $58,4 billion.

The $88,6 billion profit represents a 31% increase over that of the pro forma corresponding period last year and 58% of the historical profit before-tax of the whole of the year 2004.

The group declared a dividend per share of $55.

“The group interim results were achieved in a most difficult and unpredictable operating environment,” Nkala said.

He said the period was characterised by hyperinflation, cutthroat competition in the insurance industry resulting in sub-economic premiums and high interest rates which made commercial lending to customers untenable.

Nkala said commercial lending was restricted because of the high cost of borrowing.

He said during the first half their focus was on concessionary borrowing and anticipated that the second half would be focused on borrowing under the Agricultural Sector Productivity Enhancement Facility.

Before its acquisition by FBC, ZBS was facing financial problems.

The building society was acquired this year through a share swap, of which FBC procured 60% of ZBS.

At an annual general meeting held on June 30, shareholders unanimously approved the consolidation of ordinary shares on a ratio of 5:1.

“The rationale of the consolidation,” Nkala said, “was to reduce speculative trading, curtail administrative and transaction costs as well as aligning the number of shares with FBC peers.”

Nkala said FBC Bank and FBC Reinsurance have continued to attain investor grade ratings from international agencies and the rating of the building society was still in progress.

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