FBC blames tight policy for choking transaction volumes

Financial services giant FBC Bank has attributed a sharp decline in transaction volumes to the Reserve Bank of Zimbabwe's (RBZ) continued tight monetary policy, which it says has squeezed liquidity and hindered lending activity.

The RBZ has maintained a strict monetary stance in 2025 to support the stability of the newly introduced Zimbabwe Gold (ZWG) currency. Key interest rates remain at 35%, and liquidity constraints have been deliberately enforced to curb inflation and promote exchange rate stability.

In a trading update for the quarter ended March 31, 2025, FBC Holdings group company secretary, Tichaona Mabeza, acknowledged the stabilising effect of the policy but warned that it had come at a cost to business activity.

"Locally, Zimbabwe's economy experienced relative stability concerning inflation and exchange rates, despite the global macroeconomic pressures," said Mabeza.
"This is because of a tight monetary policy stance that aims to foster market stability, enhance market confidence and provide a basis for sustainable growth. The tight monetary policy stance has, however, adversely impacted the volume of transactions and lending activities."

FBC also reported that constrained liquidity had negatively affected trading on the Zimbabwe Stock Exchange (ZSE), where the All-Share Index dropped by 5.7% during the period under review.

Despite these challenges, the group posted solid financial results for the first quarter of 2025. Profit before tax stood at ZWG 94.5 million, while total income reached ZWG 578 million. Net fee and commission income accounted for ZWG 337 million of that figure, reflecting FBC's deliberate shift toward fee-based revenue streams to reduce vulnerability to interest rate and currency fluctuations.

Net interest income remained firm at ZWG 321 million, underscoring the resilience of the bank's core lending operations. Total assets were recorded at ZWG 19.9 billion, anchored by a strong loan book valued at ZWG 9.56 billion.

Shareholders' equity rose to ZWG 5.7 billion, which Mabeza said demonstrates the group's commitment to preserving and growing long-term shareholder value.

Looking ahead, FBC anticipates that the current tight fiscal and monetary policy environment will persist until macroeconomic benchmarks are met.

"The Group will prioritise efficient capital deployment, pursue growth opportunities in key economic sectors and improve operational efficiency, driven by innovation and technology investments," Mabeza added.

The bank's performance reflects both the opportunities and constraints of operating in a stabilising, yet liquidity-strapped, economic environment.