FCB board okays migration to VFEX

Nelson Gahadza Business Reporter

First Capital Bank (FCB) is set to be the first listed banking firm to de-list its shares from the Zimbabwe Stock Exchange (ZSE) after the board endorsed the proposal and subsequent listing of the shares on the Victoria Falls Stock Exchange (VFEX).

A number of non-banking firms have already migrated to the VFEX following its launch in 2020. These include Padenga Holdings, Simbisa Brands, SeedCo, Caledonia Mining Corporation, Bindura Nickel Corporation, Innscor Africa, National Foods and Axia.

FCB said in a cautionary to shareholders and investors that the board had approved the delisting from the ZSE and the planned relisting on the VFEX.

“Further details of the transaction will be provided to shareholders once all regulatory processes have been finalised.

“Shareholders are therefore advised to exercise caution and consult their professional advisors when trading in the company’s shares,” it said.

The VFEX offers a number of incentives and trading advantages compared to the ZSE for which has been the pulling factor for listings.

The US dollar-denominated exchange provides extended options for capital raising including debt listing in foreign currency.

It also offers lower trading costs of 2,12 percent compared to 4,63 percent on the ZSE and this would enable shareholders to retain more value.

The VFEX also offers tax incentives for shareholders, which includes a 5 percent withholding tax on dividends and no capital gains tax on share disposal, thus providing enhanced earnings for shareholders compared to the ZSE.

Furthermore, the bourse provides a good hedge against inflation contrary to the ZSE where firms trade in local currency, providing greater investor protection.

According to FCB’s trading update, the bank said it would adopt a cautious lending approach that involves extensive assessment of borrower capacity as part of efforts to avert risk.

This comes as the bank expects the aggressive liquidity management policies and high-interest rates monetary framework to subsist as means to counteract inflationary pressures.

According to the bank, this may present downside risks on credit performance as borrower capacity to carry related costs is strained.

The bank’s total income for the quarter increased to $26 billion, an increase of $9,6 billion from the second quarter of 2022.

Foreign-denominated earnings at 40 percent of total income for the quarter show an increase from about 22 percent in the first quarter.

The bank’s year-to-date operating expenses rose 43 percent to $1,9 billion in the 3rd quarter under review compared to $9,7 billion in the comparative period indicating cost expansion in response to the inflationary pressure.

Total assets grew by 41 percent between December 2021 and September 2022 driven by customers’ loans and deposits growth of 59 percent and 30 percent respectively.

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