First Capital Bank : 2023 FY Results & Audit Report

Chairman's Statement

Operating Environment:

The world economy continues to be impacted by inflationary pressure in advanced economies and increasing geo-political tension linked to the on-going war in Ukraine, amongst many other factors. This has affected post-pandemic global growth prospects, with the International Monetary Fund further revising its forecast for 2022 from 3.6% to 3.4% which compares to a growth of 6.2% in 2021. A further slowdown is projected in 2023 with a growth forecast of 2.9%.

Government estimates the local economy to have grown by 4% in 2022, reflecting a high level of resilience against global and domestic fragility.

Annual domestic inflation closed the year 2022 at 243.8%, compared to 60.7% in December 2021. The Zimbabwean dollar depreciated rapidly against the United States dollar, losing 530% of its value to exchange at ZW$687.28 against the US$ on 31 December 2022 at the official market.

A tight monetary policy was maintained throughout 2022 to curb the adverse effects of high inflation and to also achieve stability in the exchange rate. Amongst these measures were:

• a) Continued issuance of Zero-Coupon Non-Negotiable Certificates of Deposits (NNCDs) to mop up excess ZW$ liquidity.

• b) The introduction of the foreign currency Willing Buyer Willing Seller market to augment the Foreign Exchange Auction Market and improve access and allocation efficiency.

• c) The introduction of Gold Coins as an alternative investment instrument and to also sterilise excess liquidity.

• d) The introduction of statutory reserves on foreign currency deposits with the effect of slowing down credit expansion.

• e) The hiking of the Bank policy rate to 200% which sought to combat speculative lending and yielded real returns for lenders.

The combined impact of the above measures on the economy was a slowdown in inflation which, having peaked at 30.7% on a month-on-month basis in June 2022, reduced to a low of 2.5% in December 2022. Additionally a modicum of exchange rate stability during the last quarter of 2022 was also observed.

For the banking sector local currency asset creation slowed down considerably as borrowers reassessed their operations in relation to the new cost model. At the same time an increase in the demand for US$ denominated products also became evident.

On the Zimbabwe Stock Exchange, following a rally during the first half of the year, activity became bearish during the second half after fiscal measures were implemented by Government to deal with perceived speculative activity which was deemed to be partially responsible for the rapid movements in the exchange rate. Consequently, market capitalisation during the second half declined by 16.2%, restricting the year-on-year growth to 55.2%, well below the inflation outturn for the period.

The Victoria Falls Exchange (VFEX) All Share Index, still in its early stages, dropped by 13.6%, from 109.7 points recorded in December 2021.

Earnings performance

Despite the challenges in the operating environment, the Bank posted an inflation adjusted profit of ZW$8.4bn on a total asset base of ZW$160.8bn.

The performance is discussed in more detail by the Managing Director in his report.

Capital Requirements

The Bank comfortably met the minimum core capital requirement of US$30m, achieving a translated total capital of US$61m with core capital amounting to US$46.2m.

Dividends

The Board has declared a final dividend of ZW$127 cents per share. This brings the total dividend for the year ended 31 December 2022 to ZW$171 cents per share.

Managing Director's Report

Introduction

The primary financial statements of the Group, upon which my commentary is based, are adjusted for the effects of hyperinflation. Historical financial statements are presented for information purposes only. Reference to "Group" and "Consolidated" is restricted to the Zimbabwean context and arise from the consolidation of the Bank together with an entity whose sole mandate is to hold a property earmarked for future development by the Bank.

Performance Outturn

The Group posted a 42% increase in total income, growing from ZW$25.9bn in 2021 to ZW$36.7bn in 2022. This was on the back of broad-based performance improvement across all revenue lines.

Net interest income increased by 37% following a 77% increase in interest earning assets. Its contribution to total income however reduced to 34% from 36% in the prior year. A 25% year-on-year increase in fees and commissions was posted, reflecting the impact of increased platform usage by clients and an 48% increase in the customer base. Fees and commissions contributed 33% to total income, a reduction from 38% recorded in 2021.

Trading and foreign exchange income increased by 267%, contributing 31% to total income, up from 12% in 2021. This largely reflects the implications of the devaluation of the local currency at a level not fully captured in the inflation index. A fair value loss on investment property was posted at ZW$0.4bn, compared to a profit of ZW$2.8bn in 2021.

The impairment charge related to credit risk on financial assets increased by 174% from ZW$0.2bn in 2021 to ZW$0.7bn in 2022. This is driven primarily by the growth in the loan book, with the non-performing loans ratio remaining low at 0.8% (2021 - 1%) which is well within the business's appetite.

Against the backdrop of pricing models for supplies that track movements in the exchange rate, and the need for regular cost of living adjustments on staff expenses, operating expenses increased by 37% from ZW$15.0bn in 2021 to ZW$20.6bn in 2022. This yielded a cost to income ratio of 56%, an improvement from 58% in 2021.

Whilst a 4% positive jaws ratio was achieved for 2022, cost pressure remains an area of significant concern and future focus given the technical nature of some of the credits included under total income.

A net monetary loss arising from holding a substantial monetary net asset portfolio was recognised at ZW$6.5bn, increasing from ZW$1.9bn in 2021. This constitutes 18% of net operating income, up from 7% in 2021, thus underlining the value destruction effect of inflation.

A 43% reduction in earnings from a joint venture operation from ZW$5.3bn in 2021 to ZW$3.1bn in 2022 was recognised. This relates to a 50% share in a hospitality and leisure asset. The Group is working on a product improvement plan which is expected to boost future earnings from this asset.

A profit after tax of ZW$8.4bn was posted, being a 27% reduction from ZW$11.5bn achieved in 2021. However, operating profit excluding the impact of property valuations increased by 57%.

Credits posted to other comprehensive income amounted to ZW$5.8bn, 12% down from ZW$6.6bn in 2021. This resulted in a ZW$14.2bn total comprehensive income which is a reduction from ZW$18.2bn posted in 2021.

Meanwhile, the total balance sheet increased by 55% from ZW$104.0bn on 31 December 2021 to close at ZW$160.8bn on 31 December 2022. This was largely driven by a 66% growth in deposits which moved from ZW$56.4bn in 2021 to ZW$93.5bn at the end of 2022.

Loans to customers increased by 85%, from ZW$24.6bn at the end of 2021 to ZW$45.3bn on 31 December 2022. This is reflective of an increase in credit appetite which, for many borrowers, was constrained by reduced absorption capacity when interest rates were reviewed upwards. The loans to deposit ratio increased marginally from 44% on 31 December 2021 to 48% as of 31 December 2022.

The funding of the balance sheet generally remained transient in nature, resulting in a significant level of resources, 33% in 2022 and 30% in 2021, being carried in the form of cash and bank balances to meet customer transactions. The overall liquidity ratio was always maintained above 50%, well above the regulatory threshold of 30%.

The Group's equity increased by 30% whilst the Bank's closing capital adequacy ratio was 34%, representing substantial headroom to underwrite new business.

Operations Update

A new internet banking platform was launched during the year and offers a vastly improved interface and service spectrum to our customers. A few teething problems were experienced at the time of migration and were resolved in short order. An improved mobile banking application was also launched during the year with great appeal to the consumer banking sector. During the year, the Bank expanded its money transfer partner network thus improving general convenience for its customers.

Lines of credit were negotiated with the European Investment Bank (EUR12.5m) and Afreximbank (US$20m) and are at varying stages of disbursement. The Bank is looking forward to expanding this network in the year ahead.

The Bank responded swiftly to the demand by its customers to provide seasonal banking facilities in Rusape and Karoi and will extend further service as necessary, subject to feasibility assessment. Generally, the Bank's systems were able to deliver to an expected level during the period under review.

Talent Management

Total staff complement at the end of the year was 528, with permanent staff constituting 88% whilst 12% were employed as fixed contract staff. A total of 1 183 attendances were recorded at 20 training courses during the year as the organisation sought to deepen its skills. Within a very challenging macro environment, we work hard to maintain a cordial industrial relations climate through regular dialogue. Regular engagements were undertaken to share the strategic vision for the business and to promote the sharing of ideas and insights that makes the business deliver its objectives more effectively and efficiently.

Citizenship

We continued to support our communities during the period under review. The following activities were conducted in 2022:

• 1. Junior Achievement Zimbabwe | Job Shadow Activities

  Twenty-one schools across the country participated, with a total of 200 students (124 females and 76 males) being mentored. Over 150 First Capital Bank colleagues participated in this initiative.

• 2. Global Money Week | Train-the-Trainer Mentorship Programme

  Our curriculum reached 7 schools where ten A-Level students from each institution were capacitated to train other students at neighbouring schools. With the downstream knowledge sharing approach a total of 4 664 students were impacted, 2 116 females and 2548 males in Harare.

• 3. We Gotcha Mentorship Session

  A total of 75 graduates were mentored (42 females and 33 males) by 10 colleague mentors.

• 4. ZFU Chemhondoro Farming Input donation

  The donation comprised of water pumps, diamond mesh wire, water tanks, fertilisers, and other farming implements. This will equip young farmers to produce food crops for the school and for business. More than 3000 students and the larger community will benefit directly from this project.

Appreciation

On behalf of the entire management team, I would like to extend our sincere appreciation to our customers for all the support we get from you. As ever we are happy to receive feedback, as that is how we improve. We promise to do more for you. Additionally, I extend my gratitude to the Board for its support and counsel and to our regulators for their guidance.

Lastly to our staff I send my sincere appreciation for all your hard work, commitment, and belief in the brand. Without you we would not achieve the success we have.

Ciaran McSharry

(Managing Director)

21 March 2023

Corporate Governance Report

The Board of Directors of First Capital Bank Limited ("the Board/ First Capital Bank") is committed to and recognizes the importance of strong governance practices. The Board understands that a comprehensive corporate governance framework is vital in supporting executive management in its execution of strategy and in driving long term sustainable performance. In order to achieve good governance, the Board subscribes to principles of international best practice in corporate governance as guided by, among others, the Banking Act [Chapter 24:20], the Companies and other Business Entities Act [Chapter 24:31], the Reserve Bank of Zimbabwe Corporate Governance Guideline No.1 of 2004, the Zimbabwe Stock Exchange Listing Rules, SI134/2019 and the Zimbabwe National Code on Corporate Governance.

The Board continuously reviews its internal governance standards and practices, to ensure that it modifies and aligns them with local and international corporate governance requirements as appropriate. As part of its continuing efforts to achieve good governance, the Board promotes the observance of the highest standards of corporate governance in First Capital Bank and ensures that this is supported by the right culture, values and behaviors from the top down. First Capital Bank is committed to the principles of fairness, accountability, responsibility and transparency. To this end, the Board is accountable to its shareholders and all its stakeholders including the Bank's employees, customers, suppliers, regulatory authorities, and the community from which it operates through transparent and accurate disclosures.

Board responsibilities

The Board is responsible for setting the strategic direction of the Bank as well as determining the way in which specific governance matters are approached and addressed, approving policies and plans that give effect to the strategy, overseeing and monitoring the implementation of strategy by management and ensuring accountability through among other means adequate reporting and disclosures. The Board is guided by the Board Charter in the execution of its mandate. The roles of the Board Chairman and that of the Managing Director are separate and clearly defined. The Board ensures a division of responsibilities at all times to achieve a balance of authority and power so that no one individual has unfettered decision making powers.

Board Chairman and non-executive directors

The Board of directors is led by an independent, non-executive Chairman, whose primary duties include providing leadership of the Board and managing the business of the Board through setting its agenda, taking full account of issues and concerns of the Board, establishing and developing an effective working relationship with the Executive directors, driving improvements in the performance of the Board and its committees, assisting in the identification and recruitment of talent to the Board, managing performance appraisals for directors including oversight of the annual Board effectiveness review and proactively managing regulatory relationships in conjunction with management. In addition, the non-executive directors proactively engage with the Bank's management to challenge and improve strategy implementation, counsel, and support to management and to test and challenge the implementation of controls, processes and policies which enable risk to be effectively assessed and managed.

The Chairman works together with the non-executive directors to ensure that there are effective checks and balances between executive management and the Board. The majority of the Board members are independent non-executive directors who provide the necessary independence for the effective discharge of the Board's duties and compliance with regulatory requirements.

Executive directors

The executive management team is led by the Managing Director. Management's role is to function as trustees of the shareholder's capital. Their main responsibilities include reporting to the Board on implementation of strategy, effectiveness of risk management and control systems, business and financial performance, preparation of financial statements and on an ongoing basis, keeping the Board fully informed of any material developments affecting the business.

Directors' remuneration

The Board Human Resources and Nominations Committee sets the remuneration policy and approves the remuneration of the executive directors and other senior executives as well as that of the non-executive directors. The remuneration package of executive directors includes a basic salary and a performance bonus which is paid based on the performance of the company as well as that of the individual. The Bank also has in place a share option scheme, meant to be a long-term retention incentive for employees.

Board diversity

The First Capital Bank Board recognises the importance of diversity and inclusion in its decision making processes. The Board is made up of six independent non-executive directors, two non- executive directors and two executive directors. Three members of the Board (30%) are female. The Board members have an array of experience in commercial and retail banking, accounting, legal, corporate finance, marketing, business administration, economics, human resources management and executive management.

Access to information

Openness and transparency are key enablers for the Board to discharge its mandate fully and effectively. The non-executive directors have unrestricted access to all relevant records and information of the Bank as well as to management. Further, the Board is empowered to seek any professional advice or opinion it may require to allow for the proper discharge of its duties.

Share Dealings / Insider trading.

The directors, management and staff of First Capital Bank are prohibited from dealing in the company's shares whether directly or indirectly, during "closed periods" which are the periods that are a month before the end of the interim or full year reporting period until the time of the publication of the interim or full year results.

Further, directors, management and staff are prohibited from dealing in the company's shares whenever the company is going through certain corporate actions or when they are in possession of non-public information that has the potential of impacting the share price of the company.

Communication with stakeholders

First Capital Bank communicates with its stakeholders through various platforms including the Annual General Meeting, analyst briefings, town halls, press announcements of interim and full year financial results, notices to shareholders and stakeholders and annual reporting to shareholders and stakeholders. The Board and management of First Capital Bank also actively engage regulatory authorities including the Reserve Bank of Zimbabwe, the Zimbabwe Stock Exchange, and the Deposit Protection Corporation.

Internal Audit

First Capital Bank Internal Audit is an independent control function which supports the business by assessing how effectively risks are being controlled and managed. It works closely with the business helping drive improvements in risk management. This is done through reviewing how the business undertakes its processes as well as reviewing systems used by the business. The internal audit function reports its findings to management and guides them in making positive changes to business processes, systems and the control environment. The Internal Audit function also monitors progress to ensure management effectively remediates any internal control weaknesses identified as quickly as possible.

The First Capital Bank Head of Internal Audit reports directly to the Chairman of the Board Audit Committee and administratively to the Managing Director.

Declaration of interest

The Board of First Capital Bank believes in the observance of ethical business values from the top to the bottom. To this end, the Board has in place a policy that manages conflict of interest including situational and transactional conflict. Directors disclose their interests on joining the Board and at every meeting of the directors they disclose any additional interests and confirm or update their declarations of interest accordingly.

Ethics

In our endeavor to instill a culture of sound business ethics, all employees and directors are requested to attest to an Anti- Bribery and Corruption declaration which essentially seeks to ensure that our directors, management and staff observe the highest standards of integrity in all their dealings and at all times. The Bank has a zero tolerance policy to bribery and corruption. In addition, the business has a whistle-blowing facility managed by Deloitte& Touche through which employees can raise any concerns they may have anonymously.

Director induction and development

Board conformance and performance is enhanced through continuous learning. As part of its learning program, the Board has in place a comprehensive induction plan for on-boarding new directors. Further, as part of continuing director development, Board members attend director training programs.

Board activities

The Board of Directors held five Board meetings in the year 2022, one strategy review meeting and a Board evaluation review meeting. Each Board Committee held at least four quarterly meetings. The areas of focus included the setting of strategic direction, the review of strategy and business operations, business response to the macroeconomic dynamics in light of the exchange rate and interest rate movements, credit sanctioning as per approved limits, review of internal controls and financial reports, review of the quality of the loan book, review and oversight of the Bank's risk management processes and oversight of the recruitment, remuneration and performance reviews of senior management. A table detailing director's attendance of meetings during 2022 is shown in the last part of this report.

Board and director evaluation

The Board conducts an annual evaluation process which assesses the performance and effectiveness of individual directors, the Board Chairman, Committees and overall performance of the Board. The process was facilitated by an external party to allow for objectivity. The evaluation process involves directors completing evaluation questionnaires and having one on one meetings with the facilitator. The results of the evaluation are collated, a report is produced and feedback provided to the Board. The Board also submits the evaluation report to the Reserve Bank of Zimbabwe.

Board committees

The Board has delegated some of its duties and responsibilities to sub-committees to ensure the efficient discharge of the Board's mandate. The ultimate responsibility of running the Bank however still remains with the Board. The subcommittees of the Board are regulated by terms of reference which are reviewed every year or as and when necessary. The Committees meet at least once every quarter and are all chaired by Independent non-executive directors as detailed below.

Audit Committee

The primary functions of the Committee are to oversee the financial management discipline of the Bank, review the Bank's accounting policies, the contents of the financial reports, disclosure controls and procedures, management's approach to internal controls, the adequacy and scope of the external and internal audit functions, compliance with regulatory and financial reporting requirements, oversee the relationship with the Bank's external auditors, as well as providing assurance to the Board that management's control assurance processes are being implemented and are complete and effective. At each meeting, the Committee reviews reported and noted weaknesses in controls and any deficiencies in systems and the remediation plans to address them. The Committee also monitors the ethical conduct of the Bank, its executives and senior officers and advises the Board as to whether the Bank is complying with the aims and objectives for which it has been established. During the period under review, there were no material losses as a result of internal control breakdowns. The committee is wholly comprised of independent non-executive directors. The members of the Committee as at 31 December 2022 were:-

A. Chinamo (Chairperson) T. Moyo

K. Terry

Board Credit Committee

The Board Credit Committee is tasked with the overall review of the Bank's lending policies. At each meeting, the Committee deliberates and considers loan applications beyond the discretionary limits of management. It ensures that there are effective procedures and resources to identify and manage irregular or problem credit facilities, minimize credit loss and maximize recoveries. It also directs, monitors, reviews and considers all issues that may materially impact on the present and future quality of the Bank's credit risk management.

The Committee comprises three non-executive directors. The members of the Committee as at 31 December 2022 were: - K. Terry (Chairperson)

H. Anadkat

K. Naik

Loans Review Committee

This Committee has the overall responsibility for the complete review of the quality of the Bank's loan portfolio to ensure that the lending function conforms to sound lending policies and keeps the Board and management adequately informed on noted risks. It assists the Board with discharging its responsibility to review the quality of the Bank's loan portfolio. At every meeting, it reviews the quality of the loan portfolio with a view to ensuring compliance with the banking laws and regulations and all other applicable laws as well as internal policies. The Committee comprises three non-executive directors. The members of the Committee as at 31 December 2022 were: -

T. Moyo (Chairperson)

A. Chinamo

S.N. Moyo

Human Resources and Nominations Committee

The Human Resources and Nominations Committee assists the Board in the review of critical personnel issues as well as acting as a Remuneration and Terminal Benefits Committee. The Committee reviews and approves overall recommendations on employee remuneration as well as approving managerial appointments. The Committee ensures that the remuneration of directors is in line with the nature and size of the operations of the Bank as well as the Banks performance. In addition, the Committee also considers nominations to the Board and succession planning for the Board.

The Committee comprises three non-executive directors. The members of the Committee as at 31 December 2022 were: - K. Naik (Chairperson)

P. Devenish

H. Anadkat

Board Risk Committee

The Board Risk Committee is charged with the responsibility to oversee the Bank's overall enterprise risk environment under three broad areas of Operational Risk, Credit Risk Management and Market Risk. These are controlled and managed independently from risk-taking functions and other committees of the Bank. The committee is responsible for the policies and procedures designed to monitor, evaluate and respond to risk trends and risk levels across the Bank ensuring that they are kept within acceptable levels.

The Committee comprises three non-executive directors. As at 31 December 2022 members of the committee were: - S. N. Moyo (Chairperson)

A. Chinamo

M. Gursahani

Board IT Committee

The Board IT Committee is a committee of the Board, established to have strategic oversight and governance of the Company's strategic investment in IT, as well as data protection, cyber security, and information management.

The Committee comprises three non-executive directors. As at 31 December 2022, the Committee was made up of the following members:-K. Terry (Chairperson)

T. Moyo

M. Gursahani

In addition to the Board Committees, management operates through a number of committees including the Executive Committee, the Country Management Committee and the Assets and Liabilities Committee. The Committees terms of reference are as below.

Executive Committee (EXCO)

The Executive Committee receives its authority from the Board of First Capital Bank Limited. The Managing Director and the Executive Committee are responsible for managing and overseeing all aspects of the bank's operations and functions, developing the strategy of the Bank and delivery of the annual business plan. The Executive Committee assists the Managing Director to manage the Bank, to guide and control the overall direction of the business of the Bank and acts as a medium of communication and co-ordination between business units and the Board. The Committee delegated work and authority to management committees including but not limited to the Country Management Committee, Asset and Liability Management Committee, Enterprise Risk Management Committee, Management Credit Committee and other specialized Committees. The Committee comprises of executive directors and senior management.

Country Management Committee (CMC)

The Country Management Committee is the operational management forum responsible for the delivery of the Bank's operational plans including implementation of operational plans, annual budgeting, and periodic review of strategic plans, as well as identification and management of key risks. The Committee shall be responsible for providing direction and oversight on operations across the business. The Committee assists the Managing Director in delivering the business mandate and in designing and assuring the adequacy and effectiveness of internal controls. The Committee derives its mandate from the Executive Committee. The Committee comprises of executive directors and senior management.

Assets and Liabilities Committee (ALCO)

ALCO is tasked with ensuring the achievement of sustainable and stable profits within a framework of acceptable financial risks and controls. The Committee ensures maximization of the value that can be generated from active management of the Bank's balance sheet and financial risk within agreed risk parameters. It manages the funding and investment of the Bank's balance sheet, liquidity and cash flow, as well as exposure of the Bank to interest rate, exchange rate, market and other related risks. It ensures that the Bank adopts the most appropriate strategy in terms of the mix of assets and liabilities given its expectation of the future and potential consequences of interest rate movements, liquidity constraints foreign exchange exposure and capital adequacy. It also ensures that strategies conform to the Bank's risk appetite and level of exposure as determined by the Enterprise Risk Management Committee. The Committee comprises executive directors and heads of functions key to the proper discharge of the Committee's responsibilities.

Board and Committees attendance 2022

Main Board

Name	Total Meetings	Present	Absent
P. Devenish	5	5	Nil
T. Moyo	5	5	Nil
S. Moyo	5	5	Nil
H. Anadkat	5	5	Nil
K. Terry	5	5	Nil
K. Naik	5	4	1
A. Chinamo	5	5	Nil
M Gursahani	5	4	1
C. McSharry	5	5	Nil
F. Kapanje	5	5	Nil

Audit committee

Name	Total Meetings	Present	Absent
A. Chinamo	4	3	1
T. Moyo	4	3	1
K. Terry	4	4	Nil

Human resources & nominations committee

Name	Total Meetings	Present	Absent
K. Naik	4	4	Nil
P. Devenish	4	4	Nil
H. Anadkat	4	4	Nil

Loans review committee

Name	Total Meetings	Present	Absent
T. Moyo	4	4	Nil
A Chinamo	4	4	Nil
S.N. Moyo	4	4	Nil

Risk committee

Name	Total Meetings	Present	Absent
S.N. Moyo	4	4	Nil
A. Chinamo	4	4	Nil
M. Gursahani	4	4	Nil

IT Committee

Name	Total Meetings	Present	Absent
K. Terry	5	5	Nil
T. Moyo	5	5	Nil
M Gursahani	5	5	Nil

Directors' shareholding

The following is a schedule of the directors' shareholdings in the Bank as at 31 December 2022.

P. Devenish	Nil
S. N. Moyo	Nil
T. Moyo	Nil
H. Anadkat *	36 068 751 (direct interest)
K. Terry	Nil
A. Chinamo	Nil
K. Naik	25 000 (direct interest)
C. McSharry	Nil
F. Kapanje	Nil
M. Gursahani	Nil

*Mr Hitesh Anadkat also holds indirect interest in Afcarme Holdings Zimbabwe (Private) Limited, which in turn holds the majority shareholding in the Bank.

Annual financial statements

The Directors are responsible for the preparation and integrity of the financial results and related financial information contained in this report. The financial statements, which for the basis of these financial results, are prepared in accordance with International Financial Reporting Standards and the Banking Act (Chapter 24:20) and they incorporate full and responsible disclosure to ensure that the information contained therein is both relevant and reliable. These audited results have been prepared under the supervision of Chief Finance Officer, Fanuel Kapanje CA (Z) PAAB Registered Accountant No. 2295.

Compliance

The Board is of the view that the Bank complied with the applicable laws and regulations throughout the reporting period.

By Order of the Board

Sarudzai Binha Company Secretary

21 March 2023

Auditor's Opinion

The audited financial results should be read in conjunction with the complete set of financial statements for the year ended 31 December 2022 which have been audited by Deloitte & Touche. An unmodified audit opinion was issued thereon. The audit report includes a key audit matter on the determination of expected credit losses on financial assets.

The auditors report has been made available to management and those charged with governance of First Capital Bank Limited. The engagement partner responsible for this audit is Lawrence Nyajeka.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 December 2022

Notes

Interest income 3

Interest expense 4 Net interest income

Net fee and commission income 5

Net trading and foreign exchange income 6

Net investment and other income 7

Fair value (loss) / gain on investment property 19 Total non interest income

Total income

Impairment losses on financial assets 10 Net operating income

Operating expenses 8

Net monetary loss 9

Share of profit from joint venture 21

Profit before tax

Taxation

Profit for the year

Other comprehensive income

11

2022 ZWL000 2021 ZWL000	2022 ZWL000 2021 ZWL000
13,299,059 (657,666) 9,411,441 (182,481)	9,542,159 (421,814) 2,187,593 (40,450)
12,641,393 9,228,960 12,191,026 9,749,013 11,521,494 3,142,440 753,466 (420,298) 997,797 2,805,950	9,120,345 2,147,143 8,671,394 2,263,413 7,382,014 726,038 642,251 270,616 2,770,874 990,860
24,045,688 16,695,200	19,466,533 4,250,927
36,687,081 25,924,160	28,586,878 6,398,070
(683,745) 36,003,336 (249,281) 25,674,879 (20,644,296) (15,035,892) (6,472,694) (1,915,997) 3,040,310 5,312,902	(683,745) 27,903,133 (57,110) 6,340,960 (14,157,772) (2,936,095) - 10,395,324 - 2,126,189
11,926,656 (3,533,876) 14,035,892 (2,505,717)	24,140,685 (2,723,624) 5,531,054 (609,126)
8,392,780 11,530,175	21,417,061 4,921,928

12,641,393 9,228,960

12,191,026 9,749,013

11,521,494 3,142,440

Items that will not be reclassified subsequently to profit or loss

Gain on revaluations Deferred tax

Gain on financial assets at fair value through other comprehensive income

Deferred tax

Net gain on other comprehensive income

Total other comprehensive income

Total comprehensive income

Earnings per share

Basic (cents per share)

Diluted (cents per share)

*Refer to note 2.1 (f)

18

Inflation adjusted

2022

Consolidated Statement of Financial Position as at 31 December 2022

NotesAssets

Cash and bank balances 12

Derivative financial instruments 13

Investment securities 14

Loans and receivables from Banks 15

Historical*

13,299,059

2021

9,411,441

9,120,345 2,147,143

8,671,394 2,263,413

7,382,014 726,038

753,466

9,542,159 2,187,593

997,797 2,805,950 16,695,200 25,924,160

(420,298) 24,045,688 36,687,081

642,251 270,616

2,770,874 990,860

19,466,533 4,250,927

28,586,878 6,398,070

36,003,336

25,674,879

(6,472,694) 3,040,310

27,903,133 6,340,960

(1,915,997) 5,312,902

11,926,656

-

-10,395,324 2,126,189

14,035,892

8,392,780

24,140,685 5,531,054

11,530,175

6,268,428 (557,318) 141,188

21,417,061 4,921,928

4,557,266 (1,110,138) 3,359,517

(39,855)

15,178,042 2,009,893

(2,314,979) 2,758,125

(171,897)

5,812,443 5,812,443 14,205,223

6,634,748 6,634,748 18,164,923

(170,809)

15,450,379 2,489,701

(486,016) 1,019,728

(53,904)

15,450,379 2,489,701

36,867,440 7,411,629

388 388

534 533

991 228 990 228

Loans and advances to customers 16

Other assets 17

Current tax asset

Investment properties 19

Investment in joint venture 21

Property and equipment 18

Intangible assets 20

Right of use assets 22

Total assets

Liabilities

Derivative financial instruments 13

Lease liabilities 22

Deposits from banks 23

Deposits from customer 24

Employee benefit accruals 25

Other liabilities 26

Current tax liabilities

Balances due to group companies 33.5

Deferred tax liabilities 28

Total liabilities

Equity

Capital and reserves

Share capital 29.1

Share premium 29.2

Non - distributable reserve 29.3

Fair value through other comprehensive income 29.4 reserve

Property revaluation reserve 29.5

General Reserve 29.6

Share - based payment reserve Retained earnings

Total equity

Inflation adjusted

Historical*

Total equity and liabilities *Refer to note 2.1 (f)

29.7

2022 ZWL000 2021 ZWL000	2022 ZWL000 2021 ZWL000
53,609,309 12,576 13,225,558 225,622 31,280,302 6,157 9,967,610 118,587 45,342,180 24,550,086 8,001,970 9,449,956 1,072,374 -4,080,000 4,394,420 13,479,449 10,601,984 18,814,882 12,135,095 679,309 896,900 2,242,038 591,054	53,609,309 12,576 13,225,558 225,622 9,099,463 1,791 2,899,585 34,497 45,342,180 7,141,638 7,710,234 2,654,391 1,072,374 -4,080,000 1,278,340 13,479,449 3,084,125 18,814,882 3,515,459 8,941 11,982 1,042,315 171,938
160,785,267 103,992,151	158,623,440 29,893,209
- 4,373 1,823,304 587,939 800,769 1,881,601 93,514,048 56,367,397 1,166,032 691,923 12,184,655 - 4,925,197 43,514 47,628 790,854 4,578,693 2,843,908	- 1,272 1,823,304 171,032 800,769 547,359 93,514,048 16,397,317 1,166,032 12,183,437 -201,281 1,424,672 12,658 47,628 230,060 3,834,865 735,439
114,115,129 68,136,706	113,370,083 19,721,090
39,537 39,536 4,371,354 4,371,261 1,426,975 1,426,975 3,111,479 3,302,790 11,534,121 5,823,011 126,981 230,159 25,829,532 - 230,195 20,661,677	216 216 24,160 24,085 7,785 7,785 3,601,907 1,014,591 15,083,797 2,220,734 126,981 5,010 26,403,501 - 2,274 6,902,434
46,670,138 35,855,445	45,253,357 10,172,119
160,785,267 103,992,151	158,623,440 29,893,209

ZWL000

ZWL000

160,785,267

103,992,151

114,115,129

68,136,706

25,829,532 46,670,138 160,785,267

20,661,677 35,855,445 103,992,151

45,253,357 10,172,119

158,623,440 29,893,209

ZWL000

ZWL000

158,623,440 29,893,209

113,370,083 19,721,090

26,403,501 6,902,434

Consolidated Statement of Changes in Equity for the year ended 31 December 2022

Issue of ordinary shares under share-based payment plans 1 93 - - - - (3,393)

General	Share-	Retained
Reserve	based	earnings
payment
reserve
ZWL000	ZWL000	ZWL000
-	230,195	20,661,677
-	-	8,392,780
-	-	-
-	8,392,780
-	3,451	-
-	(3,487)	-
-	-	-
126,981	-	(126,981)
-	-	(3,097,944)
126,981	230,159	25,829,532
ZWL000	ZWL000	ZWL000
-	2,274	6,902,434
-	-	21,417,061
-	-	-
-	-	21,417,061
-	2,768	-
-	(32)	-
-	-	(126,981)
-	-	(1,789,013)
-	5,010	26,403,501

Inflation adjusted 2022

Balance at 1 January 2022

Profit for the year

Other comprehensive income for the year Total comprehensive income for the year Recognition of share - based paymentsImpairment of fair value through other comprehensive Regulatory impairment allowances

Dividends paid

Balance at 31 December 2022

Share capitalZWL000

Historical 2022

Share

Non-premium distributableFair value through other

reserve comprehensive incomeZWL000

Property revaluation reserveImpairment reserveZWL000

ZWL000

ZWL000

ZWL000

Balance at 1 January 2022

Profit for the year

Other comprehensive income for the year Total comprehensive income for the year Recognition of share-based payments

Issue of ordinary shares under share-based payment plans Regulatory impairment allowances

Dividend paid

Balance at 31 December 2022

Total equityZWL000

Consolidated Statement of Cash Flows for the year ended 31 December 2022

Cash flows from operating activities Profit before tax

Notes

Adjustments:

Depreciation of property, equipment and the right of use 8.2 asset impairment

Software amortisation 8.2

Impairment loss on financial assets 10

Share of profit from joint venture 21

Fair value loss / (gain) on investment property 19

Dividend income 7

Loss/ (profit) on disposal of property and equipment 18

Interest on investment securities 3 Staff loan prepayment amortisation

Interest on lease liabilities 22 Net monetary loss

Share based payment expense Derivatives

Cash flow from operating activities Increase in loans and advances to customers (Increase)/ decrease in other assets Increase in deposits from customers Increase/ (decrease) in other liabilities Corporate income tax paid

Net cash generated from operating activities

Inflation adjusted

Historical*

2022 ZWL000 2021 ZWL000 11,926,656 14,035,892 861,683 1,687,424 217,591 217,592 684,090 249,731 (3,040,310) (5,312,902) 420,298 (2,805,950) (290,746) (793,480) 5,444 91,588 (757,416) (651,707) 606,854 589,866 184,992 122,757 6,472,694 3,451 (12,576) 1,915,997 4,208 (1,785)	2022 ZWL000 2021 ZWL000 24,140,685 5,531,054 922,800 62,997 3,041 3,041 684,090 57,207 (10,395,324) (2,126,189) (2,770,874) (990,860) (206,569) (202,255) 4,752 5,173 (504,914) (162,470) (2,588) 38,356 139,574 26,715 - 2,767 (12,576) - 1,098 (519)
17,282,705 9,349,231	12,004,864 2,243,348
(20,792,094) (11,515,715) (599,101) 981,734 37,146,651 7,654,673 6,990,067 (3,278,579) (3,877,095) (2,821,767)	(38,844,292) (4,823,864) (4,541,102) (488,527) 77,116,731 7,581,331 11,540,813 103,538 (3,195,019) (671,398)
36,151,133 369,577	54,081,995 3,944,428

36,151,133

ZWL000

ZWL000

11,926,656 14,035,892

861,683 1,687,424

217,591 217,592

684,090 249,731

5,444 91,588

606,854 589,866

184,992 122,757

6,472,694 3,451 (12,576)

1,915,997 4,208 (1,785)

17,282,705 (20,792,094)

9,349,231 (11,515,715)

(599,101)

981,734

• 37,146,651 7,654,673

• 6,990,067 (3,278,579)

(3,877,095) (2,821,767)

• (38,844,292) (4,823,864)

• (4,541,102) (488,527)

• 77,116,731 7,581,331

• 11,540,813 103,538

(3,195,019)

ZWL000

24,140,685 5,531,054

922,800 62,997

3,041 3,041

684,090 57,207

4,752 5,173

(2,588) 38,356

139,574 26,715

- 2,767 (12,576)

12,004,864

369,577

54,081,995

Consolidated Statement of Cash Flows (continued)

for the year ended 31 December 2022

ZWL000

Cash flows from investing activities

Purchase of property, equipment and intangible assets 18

Proceeds from sale of property and equipment 18

Purchase of equity securities 14.3 Dividends received

Interest received from investment securities Purchase of investments securities

Proceeds from sale and maturities of investment securities

Net cash (used in ) /generated from investing activities Cash flows from financing activities

Proceeds from issue of shares under a share based payment planDividend paid

- 1,098 (519)

Lease liabilities payments

Net cash used in financing activities

2,243,348

Net increase /(decrease)in cash and cash equivalents Cash and cash equivalents at the beginning of the yearCash and cash equivalents at the end of the year

(671,398)

*Refer to note 2.1 (f)

Inflation adjusted

Historical*

22

12

2022 ZWL000	2021 ZWL000	2022 ZWL000	2021 ZWL000
(1,067,219) 82,084 - 290,746 521,445 (16,904,120) 6,781,636	(2,722,699) 11,478 (148,965) 855,467 302,155 (58,858,291) 57,178,478	(888,715) 113,301 - 206,569 275,639 (11,179,681) 4,022,196	(614,214) 2,853 (32,537) 220,288 68,452 (12,258,889) 11,577,335
(10,295,428) 49 (3,097,944) (428,803)	(3,382,377) 275 (441,905) (398,239)	(7,450,691) 45 (1,789,013) (332,490)	(1,036,712) 63 (108,013) (58,637)
(3,526,698)	(839,869)	(2,121,458)	(166,587)
22,329,007	(3,852,669)	44,509,846	2,741,129
31,280,302	35,132,971	9,099,463	6,358,334
53,609,309	31,280,302	53,609,309	9,099,463

82,084 11,478

290,746 855,467

521,445 302,155

113,301 2,853 206,569 220,288 275,639 68,452

(16,904,120)

6,781,636

(58,858,291) 57,178,478

(11,179,681)

4,022,196

(10,295,428)

(3,382,377)

49

275

(3,097,944)

(441,905)

(7,450,691)

45

(1,789,013)

22,329,007 31,280,302

(3,852,669) 35,132,971

9,099,463 6,358,334

44,509,846 2,741,129

53,609,309

31,280,302

53,609,309 9,099,463

(12,258,889) 11,577,335

(1,036,712)

63

(108,013)

3,944,428

Notes to the Audited Financial Results for the year ended 31 December 2022

1. General information and statement of compliance 1.1. General information

First Capital Bank Limited ("the Bank") provides retail, corporate and investment banking services in Zimbabwe. The Bank which is incorporated and domiciled in Zimbabwe is a registered commercial bank under the Zimbabwe Banking Act Chapter (24:20). The ultimate parent company is FMBcapital Holdings PLC incorporated in Mauritius. The Bank has a primary listing on the Zimbabwe Stock Exchange.

2.1(a) Basis of preparation

The audited financial results have been prepared on the basis of IAS 29: Financial Reporting for Hyperinflationary Economies, as well as the requirements of the Companies and Other Business Entities Act (Chapter 24:31) and the Banking Act (Chapter 24.20).

The following All items CPI indices were used to prepare the financial results:

Dates	All items CPI Indices	Conversion factors
Dec-22	13,672.91	1
Dec-21	3,977.46	3.44

The procedures applied for the above restatement are as follows:

• • Financial statements prepared in the currency of a hyper-inflationary economy are stated in terms of the closing Consumer Price Index ("CPI") at the end of the reporting period. The historical cost financial information is re-stated for the changes in purchasing power (inflation), and corresponding figures for the prior period are restated in the same terms.

• • Monetary assets and liabilities are not restated while non-monetary assets and liabilities that are not carried at amounts current at balance sheet date and components of shareholders' equity are restated by the relevant monthly conversion factors.

• • All items in the income statement are restated by applying the relevant monthly, yearly average or year-end conversion factors with the exception of depreciation, amortisation and fair value gains and losses which applies the balance sheet approach.

• 2.1(b) Basis of measurement

  The consolidated financial statements for the period are measured on historical cost basis except for the following:

  • i) Fair value through OCI equity investments and debt instruments measured at fair value

  • ii) Fair value through profit and loss debt instruments for trading measured at fair value

  • iii) Investment property measured at fair value

  • iv) Land and buildings measured at fair value using the revaluation method

  • v) Investment in joint venture, the underlying investment property is measured at fair value

  The consolidated annual financial statements have been prepared on the basis of accounting policies applicable to a going concern.

• 2.1(c) Consolidated financial statements

  The Bank owns 100% in Thulile (Private) Limited, a company that owns a piece of land measuring 18 786 sqm and also holds cash. The property is currently not leased out and is earmarked for further development over the next three years.

  The Bank therefore prepares consolidated financial statements per IFRS 10 requirements. Investment in subsidiary and equity of the subsidiary are eliminated when consolidating.

• 2.1(d) Accounting policies

  The accounting policies applied in the preparation of the audited financial results are consistent with the most recent financial statements with the exception of valuation of movable assets within property and equipment which began in the current reporting period for the year ended 31 December 2022.

• 2.1(e) Functional and presentation currency

The financial results are presented in Zimbabwe Dollars (ZWL), the functional and presentation currency of the Group.

• 2.1(f) Historic financial information

  The historical amounts are shown as supplementary information. This information does not comply with International Financial Reporting Standards in that it has not taken account of the requirements of International Accounting Standard 29: Financial Reporting for Hyperinflationary Economies. As a result the auditors have not expressed an opinion on the historical financial information.

• 2.1(g) Approval of Financial Statements

  The Consolidated Financial Statements were approved by the Board of Directors on the 21st of March 2023.

• 2.1(h) Conversion of foreign currency transactions and balances at interbank exchanges rates

The Bank used the interbank exchanges rates to convert foreign currency transactions and balances in the financial results. The interbank exchanges rates were determined by management as appropriate given that during this period the Bank can demonstrate transactions where customers were buying and selling foreign currency at interbank rates and the Bank also purchased foreign currency at interbank rates for its own use.

3

Interest income Bank balances

Loans and receivables from Banks and investment securities

Loans and advances to customers Promissory notes

Total interest income

4

Interest expense Interest on lease liabilities Deposits from banks Customer deposits Total interest expense

5

Net fee and commission income Fee and commission income Account maintenance fees Insurance commission received Transfers and other transactional fees Guarantees

Card based transaction fees Cash withdrawal fees

Fee and commission income

Fee and commission expense Guarantees

Fee and commission expense Net fee and commission income

2022 ZWL000 2021 ZWL000 426,875 431,824 757,416 651,707 12,103,934 10,834 8,312,368 15,542	2022 ZWL000 2021 ZWL000 320,671 96,574 504,914 162,470 8,710,609 5,965 1,925,046 3,503
13,299,059 9,411,441	9,542,159 2,187,593

Inflation adjusted	Historical
ZWL000	ZWL000	ZWL000
426,875	320,671	96,574
757,416	504,914	162,470
8,710,609	1,925,046
5,965	3,503
9,542,159	2,187,593
(139,574)	(26,715)
(128,236)	(4,234)
(154,004)	(9,501)
(421,814)	(40,450)
1,764,833	387,188
29,564	5,572
3,291,364	986,152
223,462	87,504
979,643	317,522
2,384,071	484,140
8,672,937	2,268,078
(1,543)	(4,665)
(1,543)	(4,665)
8,671,394	2,263,413

ZWL000 431,824 651,707

(184,992) (122,757)

(251,909) (20,223)

(220,765) (39,501)

1,491,158 1,371,729

12,103,934 10,834 13,299,059

8,312,368 15,542 9,411,441

(657,666)

(182,481)

1,874,990 24,177 4,043,445 374,076

3,238,605 2,088,427

9,776,844

(2,803)

(27,831)

(2,803) 12,191,026

(27,831) 9,749,013

Net fee and commission income above excludes amounts included in determining the effective interest rate on financial assets measured at amortised cost.

8.1

6

7

8

Net trading and foreign exchange income	ZWL000
Net foreign exchange revaluation gain	332,045
Net foreign exchange trading income	4,148,155	2,810,395
Total	11,521,494	3,142,440
Net investment and other income
Dividend income	290,746	793,480
Loss on disposal of property and equipment	(5,444)	(91,588)
Rental income	119,114	77,504
Sundry income	349,050	218,401
Total	753,466	997,797
Operating expenses	ZWL000	ZWL000
Staff costs	(8,638,550)	(5,565,703)
Infrastructure costs	(4,243,990)	(4,306,455)
General expenses	(7,761,756)	(5,163,734)
Total	(20,644,296)	(15,035,892)
Operating expenses analysis	2022	2021
Staff costs	ZWL000	ZWL000
Salaries, allowances and Directors remuneration	(7,593,464)	(4,988,069)
Medical costs	(447,787)	(262,206)
Social security costs	(75,847)	(17,897)
Pension costs: defined contribution plans	(518,001)	(293,323)
Share based payments	(3,451)	(4,208)
Total staff cost	(8,638,550)	(5,565,703)
Average number of employees during the	520	491
period:

2022 ZWL000 7,373,339 4,148,155 2021 ZWL000 332,045 2,810,395	2022 ZWL000 2021 ZWL000 4,464,412 82,886 2,917,602 643,152
11,521,494 3,142,440	7,382,014 726,038

Notes to the Audited Financial Results (continued)

for the year ended 31 December 2022

Historical

8.2

Infrastructure costs
Repairs and maintenance
Heating, lighting, cleaning and rates
Security costs
Depreciation of property, equipment and right
of use asset
Software amortisation
Operating lease - short term leases
Connectivity, software and licences
Total infrastructure costs
General expenses
Consultancy, legal & professional fees
Subscription, publications & stationery
Marketing, advertising & sponsorship
Travel & accommodation
Entertainment
Cash transportation
Directors fees
COVID-19 costs
Insurance costs
Telex, telephones & communication
Group recharges	(2,872,500)
Card operating expenses	(50,230)
Other administrative & general expenses	(936,382)
Total general expenses	(7,761,756)
Included in the operating expenses are the following:
Directors fees and remuneration:
For services as part of management	(397,526)
For the oversight role as the director	(66,068)
Total	(463,594)
Auditors' remuneration
Audit related services	(70,583)
Review services	(24,610)
Total auditors' remuneration	(95,193)
Net monetary loss (NML)

Inflation adjusted
ZWL000
(234,364)
(327,811)
(738,471)
(515,316)
(1,592)
(66,068)
(215,039)
(479,229)
(702,316)

Inflation adjusted
ZWL000	ZWL000	ZWL000
(439,679)	(317,910)	(91,326)
(481,217)	(360,413)	(68,558)
(270,104)	(181,945)	(44,663)
(217,591)	(3,041)	(3,041)
(89,568)	(66,309)	(14,336)
(1,359,243)	(332,839)
(3,211,661)	(617,760)
Historical
ZWL000	ZWL000
(170,647)	(51,689)
(229,938)	(69,498)
(564,325)	(68,182)
(398,070)	(57,407)
(1,323)	(365)
(43,171)	(9,006)
(118,408)	(51,032)
(343,296)	(91,090)
(495,896)	(118,119)
(1,879,885)	(367,006)
27,963	(44,084)
(526,763)	(98,524)
(5,163,096)	(1,142,369)
(218,890)	(54,075)
(43,171)	(9,006)
(262,061)	(63,081)
(55,768)	(12,816)
(13,551)	(2,397)
(69,319)	(15,213)

(5,163,734)

2022 ZWL000 2021 ZWL000 (234,364) (227,204) (327,811) (300,542) (738,471) (275,833) (515,316) (247,720) (1,592) (1,416) (622,438) (518,919) (66,068) (38,529) (215,039) (226,373) (479,229) (397,077) (702,316) (503,316) (2,872,500) (1,622,660) (50,230) (205,197) (936,382) (598,948)	2022 ZWL000 2021 ZWL000 (170,647) (51,689) (229,938) (69,498) (564,325) (68,182) (398,070) (57,407) (1,323) (365) (419,337) (116,367) (43,171) (9,006) (118,408) (51,032) (343,296) (91,090) (495,896) (118,119) (1,879,885) (367,006) 27,963 (44,084) (526,763) (98,524)
(7,761,756) (5,163,734)	(5,163,096) (1,142,369)

2022 ZWL000 2021 ZWL000 (439,679) (387,710) (481,217) (301,770) (270,104) (190,519) (861,683) (1,687,424) (217,591) (217,592) (89,568) (61,767) (1,884,148) (1,459,673)	2022 ZWL000 2021 ZWL000 (317,910) (91,326) (360,413) (68,558) (181,945) (44,663) (922,800) (62,997) (3,041) (3,041) (66,309) (14,336) (1,359,243) (332,839)
(4,243,990) (4,306,455)	(3,211,661) (617,760)

ZWL000 (387,710) (301,770) (190,519)

(1,884,148)

(4,243,990)

8.3

(217,592) (61,767) (1,459,673)

(4,306,455)ZWL000

(227,204)

(300,542)

(275,833)

(247,720)

(1,416)

(38,529)

(226,373)

(397,077)

(503,316)

(1,622,660)

(205,197)

(598,948)

(239,872) (38,529)

(278,401)

(58,604) (10,632)

(69,236)

9

Net Monetary Loss is the cost of inflation representing loss in value on net monetary assets. The current cost of ZWL6.4 bn (2021: ZWL1.9 bn) in the statement of profit or loss and other comprehensive income was calculated using the balance sheet method.

10

Impairment losses on financial assets Stage 1

Loans and advances to customers Balances with banks - local & nostro Investment securities - treasury bills & bonds Other assets

Total Stage 2

Loans and advances to customers Total

Stage 3

Loans and advances to customers Total

Total impairment raised during the period Recoveries of loans and advances previously written off

Impairment losses recognised in profit/ loss

11

Taxation

Income tax recognised in profit or loss Current tax

2022 ZWL000 2021 ZWL000 (298,719) (128,814) (7,145) (9,257) (129,785) (38,535) 37,309 (4,074)	2022 ZWL000 (298,719) 2021 ZWL000 (27,708) (7,145) (439) (129,785) (8,772) 37,309 (3,970)
(398,340) (180,680)	(398,340) (40,889)
(91,828) (7,064) (91,828) (7,064) (193,921) (61,987)	(91,828) (1,686) (91,828) (1,686) (193,923) (14,632)
(193,921) (61,987)	(193,923) (14,632)
(684,090) (249,731)	(684,090) (57,207)
345 450	345 97
(683,745) (249,281)	(683,745) (57,110)

ZWL000

(298,719) (128,814)

(7,145) (9,257)

(129,785) (38,535)

(91,828) (7,064)

(91,828) (7,064)

(193,921) (61,987)

(193,921) (684,090)

Normal tax - current year Total current tax

Deferred tax

Deferred tax (expense)/credit recognised in the current year

Total deferred tax

Total income tax charge recognised in the current year

12

Cash and bank balances Balances with central bank

Statutory reserve balance with central bank Cash on hand - foreign currency

Cash on hand - local currency Balances due from group companies Balances with Banks abroad

2022 ZWL000 2021 ZWL000 (2,396,265) (2,853,760)	2022 ZWL000 2021 ZWL000 (2,109,987) (653,896)
(2,396,265) (2,853,760)	(2,109,987) (653,896)
(1,137,611) 348,043	(613,637) 44,770
(1,137,611) 348,043	(613,637) 44,770
(3,533,876) (2,505,717)	(2,723,624) (609,126)

Inflation adjusted 2022

Cash and bank balances Expected credit losses

Net Cash and bank balances*

2022 ZWL000 2021 ZWL000 20,112,478 6,857,776 4,970,047 2,111,830 14,154,342 10,466,330 81,253 178,044 187,999 132,839 14,108,368 11,537,805	2022 ZWL000 20,112,478 4,970,047 2021 ZWL000 1,994,932 614,333 14,154,342 3,044,663 81,253 51,793 187,999 38,643 14,108,368 3,356,356
53,614,487 31,284,624	53,614,487 9,100,720
(5,178) (4,322)	(5,178) (1,257)
53,609,309 31,280,302	53,609,309 9,099,463

ZWL000

(1,137,611)

(2,396,265)

(2,396,265)

(1,137,611)

(5,178) 53,609,309

14,108,368 53,614,487

14,154,342 10,466,330

20,112,478 6,857,776

4,970,047 2,111,830

(398,340)

Historical
ZWL000	ZWL000
(298,719)	(27,708)
(7,145)	(439)
(129,785)	(8,772)
(398,340)	(40,889)
(91,828)	(1,686)
(91,828)	(1,686)
(193,923)	(14,632)
(193,923)	(14,632)
(684,090)	(57,207)
345	97
Historical
2022	2021
ZWL000	ZWL000
(2,109,987)	(653,896)
(2,109,987)	(653,896)
(613,637)	44,770
(613,637)	44,770
Inflation adjusted	Historical
ZWL000	ZWL000	ZWL000
20,112,478	1,994,932
4,970,047	614,333
14,154,342	3,044,663
81,253	51,793
187,999	38,643
14,108,368	3,356,356
53,614,487	9,100,720
(5,178)	(1,257)
53,609,309	9,099,463

Inflation adjusted

ZWL000

(180,680)

(61,987) (249,731)

345

450

2021

ZWL000

ZWL000

(2,853,760)

(2,853,760)

348,043

348,043

81,253 178,044

187,999 132,839

11,537,805 31,284,624

(4,322) 31,280,302

*Cash and bank balances include restricted amounts relating to Reserve Bank of Zimbabwe (card transaction cash security, ZWL1.6b (2021: ZWL 835m) and Statutory reserve for customer deposits, ZWL 5.0b (2021: ZWL 2.1b) and foreign bank security deposits (Crown Agency Bank, ZWL 3.4b (2021: ZWL 2.8b)

13

Derivative financial instruments

The Bank uses cross-currency swaps to manage the foreign currency risks arising from asset and deposit balances held which are denominated in foreign currencies. Forward exchange contracts are for trading and foreign currency risk management purposes.

Carrying amount

Inflation adjusted	Historical
ZWL000	ZWL000	ZWL000
7,373,339	4,464,412	82,886
2,917,602	643,152
7,382,014	726,038
206,569	202,255
(4,752)	(5,173)
92,311	17,671
348,123	55,863
642,251	270,616
ZWL000	ZWL000
(5,783,015)	(1,175,966)
(3,211,661)	(617,760)
(5,163,096)	(1,142,369)
(14,157,772)	(2,936,095)
2022	2021
ZWL000	ZWL000
(5,044,379)	(1,043,427)
(315,676)	(60,241)
(58,992)	(4,333)
(361,201)	(66,867)
(2,767)	(1,098)
(5,783,015)	(1,175,966)
520	491

The fair value of the derivative financial instruments represents the present value of the positive or negative cash flows, which would have occurred if the rights and obligations arising from that instrument were closed out in an orderly market place transaction at year end.

Contract amount

The gross notional amount is the sum of the absolute value of all bought and sold contracts. The amount cannot be used to assess the market risk associated with the position and should be used only as a means of assessing the Bank's participation in derivative contracts.

Foreign exchange derivatives - assets Foreign exchange swaps

Notional contract amount - Asset Notional contract amount - Liability Carrying amount

Foreign exchange derivatives - liabilities Foreign exchange spot trades

Notional contract amount - Asset Notional contract amount - Liability Carrying amount

2022 ZWL000 2021 ZWL000 1,210,160 (1,197,584) 5,951,807 (5,945,650)	2022 ZWL000 2021 ZWL000 1,210,160 (1,197,584) 1,731,385 (1,729,594)
12,576 6,157	12,576 1,791

Inflation adjusted	Historical
ZWL000	ZWL000	ZWL000
1,210,160	1,731,385
(1,197,584)	(1,729,594)
12,576	1,791
-	388,283
-	(389,555)
-	(1,272)
5

ZWL000

1,210,160 (1,197,584)

12,576

- - -

5,951,807 (5,945,650)

6,157

1,334,761 (1,339,134)

(4,373)