FCMB records third quarter spurt in earnings

First City Monument Bank plc (FCMB) recorded third quarter (Q3) spurt in earnings as the Nigerian lender continues to spread its footprint across Africa.

For the first nine months through September 2014, the bank’s profit after tax (PAT) increased by 11 percent to N14.22 billion from N12.78 billion the same period of the corresponding period (Q3) 2013.

Despite the Central Bank of Nigeria’s hike in interest rate, the bank was able to increase interest income by 12 percent to N84.50 billion, which helped drive growth in gross earnings by 10 percent to N106.70 billion in the period under review.

In order to boost consumer lending and fund infrastructure in Africa largest economy and to finance Small and Medium Scale enterprises (SMEs), FCMB secured a $300 million loan facility, a strategy analysts say will place the Nigerian lender on a growth trajectory.

“A large part of the facility will be used to support critical areas of the Nigerian economy,” said Ladi Balogun, the group managing director/chief executive of the bank, in October, noted, saying “this is in line with our commitment to always provide veritable source of funding for the businesses of our customers, while also adding value to our shareholders.’’

Hitherto, one of the bank’s organic growth strategy is to increase its loan book by 20 percent to N540 billion.

Based on BusinessDay analysis, FCMB has surpassed the aforementioned target as loans and advances spiked by 25.42 percent to N565.09 billion from N450.53 billion the preceding year.

Loan to deposit ratio jumped to 78.21 percent in Q3 2014, from 63 percent the previous year, signifying aggressive lending on the part of the lender.

Deposits to customer rose slightly by 1.08 percent to N722.47 billion in Q3 2014, compared with N715.21 billion last year.

Operating expenses were by 11.62 percent to N48.88 billion as against N43.79 billion as of Q3 2013, which analysts attribute to the CBN’s regulatory induced cost like AMCON levy.

Net margin, a measure of the profitability and efficiency, remained flattish at 13.32 percent, while loan loss expense reduced by 30 percent to N3.91 billion. The lender acquired FinBank in 2011, one of eight banks bailed out by the CBN during a debt crisis in 2009.

It also plans to increase its customers to 4 million by 2016, from 2.5 million. It also recorded a return on average equity (ROEa) and return on average assets of 12.8 percent and 1.4 percent, respectively.

The bank’s share price closed at N3.9 on the floor of the NSE, while market capitalisation was N79.21 billion.

Source : BusinessDay

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