Africa-Press – Eswatini. FINCORP is boasting a near threefold increase in profit after tax reports which is a 257 per cent jump in profitability, rising from E5.7 million to E20.6 million.
According to FINCORP’s annual report, the factors used to estimate expected credit losses (ECL) were related to the Russia-Ukraine war.
These stresses, which factored in a more difficult economic situation, were not reapplied in the current year, according to the report. FINCORP, therefore, reported that the ECL expense for the year decreased to E20.6 million from E23.0 million the prior year.
The report for the 2023/24 financial year indicates that Finsure Assurance Limited, a FINCORP subsidiary, played a significant role by contributing E3.6 million in profit. While profitability is a key metric, FINCORP highlighted their responsible lending practices.
The gross loan book expanded by six per cent, reaching E1.5 billion this year compared to E1.4 billion previously. The report indicates that a majority of new loans were granted to existing clients for expansion or refinancing. The report notes that income for the group increased by seven per cent to E250.4 million. Despite the surge in profits, FINCORP’s return-on -equity (ROE) dropped significantly from two to 7 per cent.
“The company’s balance sheet increased by two 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,” reads the report. Minister of Finance Neal Rijkenberg said during the year under review, FINCORP achieved the second highest level of profitability since inception by posting a sum of E28.6 million before tax. “This demonstrates reasonable levels of institutional and financial sustainability.” He further acknowledged FINCORP’s successful use of external funding, leading to increased gearing levels (debt-to- equity ratio), but emphasised that these levels remain within acceptable limits. “The government, as a shareholder, remains committed to ensuring FINCORP maintains a healthy balance sheet,” said the minister. Managing Director Dumisani Msibi emphasised that after the improved Credit Loss Allowance (CLA), the organisation recorded the second highest annual level of profitability since inception of E20.8 million compared to E12.8 million in the year 2022.
Msibi highlighted an increase in loan approvals, rising from E1.02 billion to E1.113 billion, with a focus on supporting existing clients for expansion or refinancing.
Tibiyo Taka Ngwane challenges FINCORP to expand decentralisation of its services
Tibiyo Taka Ngwane Managing Director Dr. Absalom Themba Dlamini has called upon Eswatini Development Finance Corporation to further expand the decentralisation drive of its offices.
Tibiyo Taka Ngwane played a pivotal role in the formation of FINCORP, contributing a sum of E8.0 million towards the initial seed capital.
This partnership with the Government of Eswatini has resulted in Tibiyo holding a 20 per cent shareholding, while the Government holds 80 per cent.
In the 2023 Annual Report for FINCORP, Tibiyo Taka Ngwane MD commended FINCORP for its remarkable achievements in fulfilling its mandate of providing access to finance to thousands of Micro, Small, and Medium Enterprises (MSMEs) across various economic sectors in Eswatini. He praised FINCORP for its expanded outreach and scope of product offerings, which have positioned it as a formidable force in the country’s financial services sector.
“We have observed with commendation the efforts made by FINCORP in decentralizing its offices, bringing financial services closer to the communities they serve,” stated Dr. Dlamini.
“We encourage the institution to continue this approach and expand its presence to profitable and cost-effective new locations.
This will ensure greater accessibility and inclusivity for all Emaswati.”
He noted that despite the challenges faced in the development finance sector, FINCORP has remained financially and institutionally strong over the years.
“The organisation has successfully attracted funding from both domestic and international institutions, further solidifying its position as a key player in Eswatini’s financial landscape.
Tibiyo Taka Ngwane stands ready to support and collaborate with FINCORP in achieving this shared vision.”
In this regard, FINCORP Board Chairman, Meshack Kunene said as the company continued to roll out its corporate strategy, which seeks to digitize operations to improve service delivery and customer experience, remote access to its services will make it possible for clients to cut the costs of doing business with the organisation, but most importantly be easily accessible to the nation.
FINCORP’s informal traders guarantee fund disbursements rise to E1.3 million
The Informal Traders Guarantee Fund, an initiative aimed at empowering grassroots entrepreneurs, has witnessed a consistent uptake in loans, with an impressive E558 625 advanced to 109 individuals during Eswatini Development Finance Corporation (FINCORP) 2023 financial year.
Since its inception in 2019, the scheme has successfully provided a total of E1.3 million to deserving clients, benefiting approximately 200 traders and indirectly impacting about 1 000 individuals, thus making significant strides towards poverty alleviation.
Speaking about the fund’s progress, FINCORP Group Managing Director, Dumisani Msibi said, “We are delighted to see the Informal Traders Guarantee Fund making a positive impact on the lives of individuals at the grassroots level. The steady growth in loans disbursed demonstrates the trust and confidence that our informal traders’ clients have in this initiative.”
Meanwhile, according to the report, only 19 applications were received under the Small-Scale Enterprise Loan Guarantee Scheme (SSELGS).
The scheme was established in the early 1990s by the Government of Eswatini under the Ministry of Commence, Industry and Trade, and was placed at the Central Bank of Eswatini for administrative purposes together with the Export Credit Guarantee Scheme (ECGS). It is used to mitigate the lack of adequate collateral to cover risks associated with SME business loans.
FINCORP is one of the SSELGS participating lending institutions that have recently been endorsed by the Central Bank and the company began lending under this scheme in February 2022.
In the report, the company noted a slower uptake of the scheme, as highlighted by the receipt of only 19 applications during the year as vendors were still grappling with debts arising from the destabilization of their businesses by COVID-19 and the civil unrest said Msibi.
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