FCMB Group Plc records N23.9bn Profit before Tax, for the full-year ended 31 December 2014, up 32% from Prior Year

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Lagos, Nigeria – 23 March 2014: FCMB Group Plc (“FCMB”) today released its financials for the full-year ended 31 December 2014, reporting a profit before tax (PBT) of N23.9 billion, up 32% from N18.2 billion for the full-year ended 31 December 2013.
The results for the full-year 2014 reflect solid momentum in FCMB Group Plc’s profitability, enabled by harnessing the synergies between its corporate and investment banking entities, as well as the successful execution of its retail strategy.
The banking group’s prioritisation of Retail Banking (i.e. banking of individuals) yielded positive results. The Retail Banking divisions of FCMB Ltd contributed a Profit Before Tax (PBT) of N4.1 billion or 18% of FCMB Ltd’s total profits, up from N1.8 billion for the previous year. Deposits received from individuals increased 14% Year-on-Year (YoY) to N166 billion, representing 22%, of the bank’s deposits, while loans issued to individuals increased 32% YoY to N126 billion, representing 20% of total bank credits. These enabled the continued increase in FCMB Ltd’s net interest margins to 9.14% in 2014.
The bank also made significant progress in its non-financial goals. As FCMB Ltd’s franchise grew in acceptability in the retail market, it acquired over 500,000 new customers in 2014. It also supported over 278,518 borrowing customers during the year with consumer loan disbursements. Not only do these trends demonstrate the broad impact of FCMB Ltd on the economy, but also the fact that FCMB Ltd is increasingly the bank of choice for individuals and small businesses.
To help businesses manage their daily sales, the bank deployed 6,300 point of sale (POS) terminals across the country. The bank also rolled out 245 new ATMs and migrated more of its customers to lower cost alternate channels, particularly mobile banking, improving the banking convenience of its customers.
In 2014, CSL Stockbrokers Ltd (CSLS), the equity brokerage business, moved up the league table to second position, with 10% of the value of shares traded on the Nigerian Stock Exchange (NSE), as against a third position and 6% market share recorded in 2013. Also, the value of trades CSLS executed on the NSE increased 92% to N263bn in 2014, outperforming the 30% growth of the entire market.
FCMB Capital Market’s (FCMB CM), the investment banking entity within the FCMB group also had an impressive year. Debt advisory (including advising on and arranging debt finance), off the back of acquisition transactions in the energy sector and several significant project finance deals, propelled earnings growth in 2014. This was in line with FCMB CM’s expectation for the year, as capital market corporate issuances (debt and equity), remained flat in 2014 continuing the trend from 2013. In 2014, FCMB CM advised on, and completed deals worth N387 billion.
The Group’s total assets grew 16% to N1.2 trillion, as at 31 December 2014. Additionally, the Group improved its operating performance, increasing Return on Average Equity (ROaE) YoY, from 11.6% (Dec 2013) to 14.6%.
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Commentary:
Mr. Peter Obaseki, Managing Director of FCMB Group Plc, had this to say about the results:
“The results for full year 2014 reflect solid momentum in our businesses as our key earning metrics grew at double digits: profit before tax was N23.9 billion while profit after tax came in at N22.1billion with growth on 2013 full year of 32% and 38% respectively. Net interest income grew by 26% to N72.6 billion.
Our return on average equity is trending upwards at 14.6% compared to 11.6% for full year 2013; the investment banking business saw a PBT growth of 126%, mainly driven by debt structuring and financial advisory services. Based on these, a dividend of 25 kobo per share is proposed, translating into a dividend yield of 10.04%. The future outlook remains positive despite regulatory and macro-economic challenges, as our capital buffers remain strong, and we continue to intensify the contribution of non-banking businesses, especially in the wealth management space”.
Mr. Ladi Balogun, Group Managing Director/ CEO of FCMB Ltd, commented on the results thus:
“Our commercial and retail banking activities continue to be the key driver of group performance, with 26% growth in profit before tax. Specifically, the growth in our retail banking activities enabled us to not only attain industry leading margins but also deliver 37% loan growth. Furthermore, marketing and service excellence enabled us acquire 500,000 new retail customers in 2014. Our modest deposit growth of 3% bank-wide was attributable to a switch in our wholesale funding mix at the margin from deposits to stable long term borrowings. We successfully closed a N26 billion Tier 2 bond issue at a fixed rate of 14.25% for 7 years and further grew bilateral and syndicated borrowings by N40 billion.
The strong rally in earnings in the fourth quarter of 2014, coinciding with a significant fall in oil prices and government revenue, prompted us to take the prudent and pre-emptive measure of growing our loan loss provisions. An annual cost of risk of 1.8% (up from 1.4% in 2013) was recorded and this led to a non-performing loan ratio of 3.6% (2013: 3.9%). In spite of the significant loan growth, our capital adequacy ratio was enhanced in Q4 2014 to 19% as a result of the N26 billion Tier 2 Capital raise.
2015 promises to be another interesting year, albeit a challenging one, due to the macroeconomic uncertainties. We will remain focused on improving operating efficiency, whilst also continuing with our steady customer acquisition drive and migration to alternate service channels in order to provide a more consistent convenient customer experience. We will seek to moderate cost of risk by consolidating our risk acceptance criteria in an increasingly high-risk environment, while focusing on deposit growth. Overall, we are confident our progress will be sustained, as we continue to grow our market share, and improve our margins and efficiency ratios.”