FCMB Group Plc posts N9.6bn profit before tax in six months

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FCMB MDFCMB Group Plc has recorded a growth of  11 per cent in revenue for the half year ended June 30, 2015 and ended with a profit before tax (PBT) of N9.6 billion. FCMB recorded a revenue of N77.4 billion in 2015, while its  total assets growing  15 per cent to N1.22 trillion. Customer’s confidence in FCMB remained strong, as deposits grew four per cent  during the period to N785.8 billion. The diversification of FCMB across commercial banking, investment banking and wealth management, provided some cushion as earnings from non-banking activities proved more resilient.

The commercial and retail banking subsidiary of FCMB Group, First City Monument Bank Limited,  continued to validate its increased drive into retail. Its retail group contributed 21 per cent  (N1.2 billion) of FCMB Ltd’s PBT. The retail group also grew deposits 21 per cent  to N431.2 billion, or 54 per cent  of total deposits. The bank acquired 260,000 customers in the first half of this year. The bank continued its drive of inclusive lending, granting just over 9,100 new loans to micro-enterprises. FCMB’s credit card offering saw increased patronage, with over 17,000 cards issued in the first half of this year. Corporate banking activities were constrained by scarcity of foreign exchange and tight monetary policy, which affected trade finance, foreign exchange trading and lending activities. In the first half of 2015, the bank’s United Kingdom’s wholesale banking subsidiary, FCMB Bank (UK) Ltd, broke even after 14 months of operations as a deposit-taking institution. FCMB Bank (UK) Ltd’s profit contribution is expected to continue improving.

The investment banking group of FCMB Group Plc – comprising of financial advisory (FCMB Capital Markets Ltd (FCMB-CM)) and stockbroking (CSL Stockbrokers Ltd (CSLS)) – delivered a  per cent increase in Profit After Tax (PAT) of N414 million driven by financial advisory, equity capital raising and asset management fees. On the operating side, FCMB-CM had notable accomplishments, including winning lead adviser and structure mandate to a  $445 million term facility for a key gas provider. Also, FCMB-CM was mandated as adviser and arranger of debt facilities, with an aggregate value of over $520 million for clients, in the oil & gas and power sectors. Additionally, FCMB-CM was mandated as financial adviser to raise an aggregate value of  $30 million equity finance on behalf of clients in the health and agro- allied sectors and, on a scheme of merger by a client in the fast-moving consumer goods sector.

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Managing Director of FCMB Group Plc, Mr. Peter Obaseki said “The economy has entered a higher risk level with inflation climbing to 9.2 per cent , fiscal and trade deficits, as well as, declining GDP growth rate below four per cent  as at Q1 2015 from 5.94 per cent  as at Q4 2014; broad money supply (MM2) contracted by N380 billion in June, from N19.19 trillion in May, to N18.81 trillion.MThe group results for H1 2015 reflects a deliberate conservative stance aimed at maintaining robust capital buffers in the face of a tough macro-economic and regulatory environment. Capital adequacy ratio remains strong at 19.8 per cent  despite proactive jump in non-performing loan ratio from 3.6 per cent as at FY14 to 5.2 per cent  at the end of H1; gross revenue went up 11 per cent  on H1 2014 and return on average equity slowed down to 10.3 per cent. The underlying retail franchise is getting stronger, while capacity exists to take on sizeable pipe-line transactions in H2.”

Speaking in the same vein, Group Managing Director/ CEO of FCMB Ltd, Mr. Ladi Balogun, saidM“H1 2015 was characterised by significant macro-economic and policy headwinds. Limited supply of foreign exchange had a major impact on the commercial & retail banking group’s (CRBG) trade finance and foreign exchange trading income. The harmonisation of the cash reserve requirement to 31 per cent  led to a significant rise in our restricted reserves and consequently constrained lending and put pressure on net interest margins. Asset quality was adversely affected by the effect of declining government revenue on contractors and employees, which saw our NPL ratio climb to 5.2 per cent compared to 3.6 per cent at the end of FY14. In spite of the inflationary pressures , operating expenses saw a modest rise of five per cent  in the CRBG, thanks to our ongoing channel optimisation programme. Also encouraging is the steady migration of customers towards card-based and digital channel transactions. The business is on a sound footing and is increasingly diversified. The foundations for a strong rebound are in place as the country adapts to a lower oil price environment and we look forward to a more sustainable macro-economic and monetary policy environment.”