FINCORP’s profit after tax up by 257%
MBABANE – During the 2022/23 financial year, FINCORP achieved the second highest level of profitability since inception.
This was by posting a sum of E20 602 053 after tax, thus depicting reasonable levels of institutional and financial sustainability.
The Eswatini Development Finance Corporation (FINCORP) profit after tax increased significantly from E5 772 908 to E20 602 053, which translates to a growth of 257 per cent.
According to the FINCORP annual report, the increase in profit was partly due to the relaxation of stresses in the expected credit loss (ECL) allowance determination as relating to the Russia-Ukraine war, which has not been applied again in the current year.
The FINCORP subsidiary, Finsure Assurance Limited, contributed a profit of E3.6 million.
Historical data shows that FINCORP has made significant strides since its formation with cumulative loan disbursements now over E10 billion to more than 90 000 beneficiaries. About 15 000 jobs are sustained by businesses financed by the organisation.
Meanwhile, the group loan portfolio has reached a remarkable E1.5 billion mark. FINCORP remains a central pillar of strength in financing small and medium enterprises across the length and breadth of the country, in several economic sectors with agribusiness having a larger share, which is a true reflection of the significantly agricultural oriented economy of Eswatini.
Approvals
Loan approvals increased from E1.020 billion the previous year to E1.113 billion during the year under review. Most new loan approvals were granted to existing clients, who were expanding or refinancing their existing operations.
The corporation further reported that interest income for the group increased by 7 per cent from E233.3 million to E250.4 million. This increase was relatively in line with the growth of the gross loan book by 6 per cent from E1.4 billion the previous year to E1.5 billion.
ECL expensed in the current year is E20.6 million against E23.0 million the previous year. This was a moderate improvement in the performance of the loan book, indicating stability in the economy in comparison to the previous year, where the ECL factored a stressed economy due to inflation caused by the Russia-Ukraine war.
Return on equity decreased significantly from 2 to 7 per cent due to profits increasing from E5.8 million to E20.6 million for reasons explained above. Borrowings increased by a net amount of E21.2 million (5 per cent) from the previous year. This growth is mainly due to funds raised through the local money market.
The company’s balance sheet increased by 2 per cent from E1.49 billion to E1.53 billion. This is an increase of E32.9 million and it is largely due to the growth of the loan book.