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Mr Mushayavanhu

FBC group chief executive, John Mushayavanhu, says the argument dominating the market on Government’s inability to pay for Treasury Bills (TBs) on maturity does not hold water, as past experiences have proven the State’s ability to pay both interest and principal amount.

Mr Mushayavanhu told analysts recently that Government is not going to pay all the money from the $2,1 billion hitherto issued in TBs. He explained that the $549 million Treasury Bills housed by ZAMCO were issued to rehabilitate companies and by the time those mature and repayment is due, the companies would have recuperated and would be in a position to pay.

“They therefore will pose no strain on the financial sector.”

FBC holds $7,3 million of ZAMCO TBs, which emanated from two companies that were in arrears but approached the bank with the proposal to have the obligation taken on board under ZAMCO. Mr Mushayavanhu also said the $292 million TBs that were issued for the capitalisation of parastatals and state enterprises also don’t pose a threat to Government since those entities; if they turnaround their operations, can make a profit and declare dividends which would be then used to pay for the TBs without putting a strain on Treasury.

The FBC chief said the $457 million TBs issued as budgetary support are the ones that may pose a strain on Government as it is the one that will be supposed to pay upon maturity. FBC holds $67,8 million of those TBs, which it obtained from the market at a discount. Of the group’s total TB holdings, it made a profit of $11 million last year.

On the financials side, the group’s profit after tax increased by 21 percent to $21,9 million compared to $18,1 million in the prior year, on the back of a 14 percent improvement in the group’s total income. Total income surged to $93 million from $81,9 million, underpinned by a 22 percent increase in net interest income and a 24 percent growth in net fee and commission income.

“Net interest income grew by 22 percent to $44,8 million from $36,6 million, while contribution to the group total income increased to 48 percent from 45 percent in 2015”, said Mr Mushayavanhu.

New earned insurance premium however declined by 15 percent and its contribution to total net income declined to 20 percent from 27 percent last year due to reduced revenue from insurance premiums, as consumption of insurance products continued to decline. — Wires.