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Conrad Mwanawashe Business Reporter
FBC Holdings Limited recorded an increase in insurance business underwritten in the six months to June with net earned insurance premium registering an 18 percent growth to $11 million from $9,3 million achieved in the same period last year. However, the group registered a marginal two percent decline in total income to $39,9 million from $40,9 million recorded in the comparative period last year.

Group chief executive Mr John Mushayavanhu told media and analysts that the decline in total income was a result of the impact of reduction in unit cost of transactions and the lowering of interest rates. “The central bank said interest rates must go down which means the interest income is also going down in tandem with the revised interest rates,” said Mr Mushayavanhu.

Net interest income in the six months to June at $14,9 million was 11 percent down on the $16,9 million recorded in the same period last year. Mr Mushayavanhu said the group is migrating its business to digital based revenue streams, which are low value, high volume. He said most clients were switching to plastic money and e-transacting as a result of technological developments.

The volume of electronic transactions continues to increase exponentially compared to over the counter and related manually delivered services. The business is focusing on expanding its customer reach through leveraging on the various technology investments in line with financial inclusion milestones as well as unlocking new market segments.

Fees and commissions contributed 31 percent to total income with no real growth due to a downward revision in fees as the group moved towards e-channel transactions, which are high in volume and low in value. The group’s strategy is to further increase traffic from its various e-channel product offerings. “When it comes to fee income, transactions have shifted from the traditional over the counter to mobile payments which tend to be small transactions but high volume. For these we charge 10 cents, 20 cents, 25 cents depending on the transaction.

“Previously people used to go into the banking hall and withdrawing all their salary and the bank will charge a cash deposit fee. You find that when you analyse the numbers the amount that we used to collect as cash deposit fee has significantly reduced. But what is encouraging is when you look at the total number of transactions and you compare quarter by quarter they are going up exponentially which means that this is the area that we should be concentrating on,” said Mr Mushayavanhu.

Successful control of administrative expenses, current focus on renegotiating contracts with our service providers will see savings going forward. The group’s cost to income ratio increased marginally to 75 percent from 73 percent for the same period last year as a result of marginally lower revenues. Mr Mushayavanhu said the group will remain firmly focused on managing costs and achieving cost efficiencies through process re-engineering and other initiatives.