FCMB Holding Improve on 2016 Nine Months Performance

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Despite the delay in reporting its third quarter result for the period ended September 30, 2016, First City Monument Bank Holding (FCMB) Group Plc, surprised the market as they management were able to improve on their earnings performance. According to the nine months financial statement, the group, gross earnings stood at N140.7 billion which is above N109.3 billion that was recorded same period in 2015, an increase of 29 percent.

The group non-interest income stood at N44.8 billion, an increase of 128 per cent from N19.6 billion that was reported in the previous quarter. The increase according the group was was mainly driven by a 612 per cent year on year increase in foreign exchange income, from N5 billion in 2015 to N35.3 billion in in the period under review.

Net impairment on loans was up by 206 per cent year on year to N31.3 billion for third quarter 2016, from N10.2 billion for the same period in 2015, primarily due to oil and gas exposures and delayed salary payments. The results impacted positively on profit before tax that went up by 453 per cent to N14.2 billion in 2016 from N11.9 billion in 2015.

Commenting on the financial performance, Group Managing Director of FCMB Group Plc, Mr. Peter Obaseki, said, The audited nine months results for the period ended September 2016, reflects our focus on key soundness ratios and the need to maintain buffers against a sustained adverse operating environment.

Accordingly, capital adequacy and liquidity ratios have held up at 17.6 per cent and 36.8 per cent, respectively. Underlying revenue momentum remains strong while cost optimization programme led to a two per cent year on year drop in operating expenses, despite inflationary spiral.

Overall, profit before tax came in at N14.2 billion, a 453 per cent growth, translating to an EPS of 87 kobo, up 30.6 per cent, year on year, respectively. The macro economic conditions in the final quarter remain challenging; we will keep up a conservative stance. On his part, Managing Director of FCMB Limited, Mr. Ladi Balogun, said The audited results of the bank reveal that the extraordinary performance of second quarter of 2016 offset the loss recorded in third quarter of N2.4 billion, thereby resulting in strong year on year profit growth of 913 per cent. In order to avoid an unsustainable, non-cash, spike in earnings from further revaluation gains in third quarter, the bank also significantly stepped up its loan loss provisions.

The macroeconomic climate is taking a significant toll on the bank borrowing customers across all segments. Accordingly, the bank will maintain high provision coverage ratios (currently 131 per cent), continue to strengthen our capital adequacy ratio (currently 16.9 per cent) and our liquidity ratio (currently 36.8 per cent). While our prudential ratios should continue to strengthen into Q4 (modestly buoyed by a tier 2 capital injection of N7.5 billion in November), we do not anticipate improvement in the fourth quarter earnings.

Nonetheless, we are pleased with the gains we continue to record in growing our business in areas such as retail banking (with a 315 per cent year on year growth in profitability) and increasing our share of banking activities in the agricultural sector. In spite of the fact that we have seen several revenue lines diminish due to external factors“ as we build a more resilient balance sheet, we will be well positioned for a strong rebound in core earnings in the medium term.  He said.

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