The FCMB Group Plc has announced a profit before tax (PBT) of N16.8 billion, for its nine-month ended September 30, up by 14 per cent from N14.7 billion for the same period prior year.
The Group also posted a 10 per cent rise in gross revenue to N106.7 billion, compared to the prior period.
The Group said in a statement released at the weekend that First City Monument Bank Ltd (FCMB Ltd), the commercial banking subsidiary, was pivotal to this performance as strategic initiatives to improve service and customer experience, helped optimise its 274 branches & cash-centres serving 2.5 million customers, notably in the retail segment.
“Strong performance in fees also helped buoy revenues, as CSL Stockbrokers Ltd grew market share, consolidating its position as top-3 equity broker in West Africa.
“FCMB Ltd also leveraged the services of the investment banking business, FCMB Capital Markets, to generate record investment banking revenues,” the statement said.
The Group said that in line with its efforts to be supportive to its customers, FCMB Ltd extended credits to customers, growing its loans and advances 29 per cent to N565 billion, compared to the same period prior year.
“Consumers were key beneficiaries, with the consumer loan book growing fastest at 48 per cent Year-on-Year (YoY) to N116.1 billion over same period prior year. Loans accounted for 54 per cent of the Group’s total assets as against 45 per cent for the same period in the prior year, thereby improving the Group’s earning capacity.
“The quality of the loan book was sustained, with Non-Performing Loans to Total Loans at 2.7 per cent for both the current and prior periods. FCMB Capital Markets also supported the domestic economy by syndicating capital for clients, including key local corporates, to a value of N167 billion,” it said.
The group however acknowledged that the competition amongst commercial banks for the overbanked urban dwellers persisted during the quarter, but said that by improving service propositions and targeting underserved customers, with novel products such as ‘FCMB Nairawise’, FCMB was able to grow deposits five per cent to N724.4 billion over same period prior year.
The Group’s total assets grew six per cent to N1.04 trillion, from N979 billion same period prior year, while FCMB Ltd improved its operating performance, as Net Interest Margin increased to 8.5 per cent, resulting in increased profitability, while Return on Average Equity also improved YoY, from 12.8% to 13.6 per cent at September 2014.
In furtherance to efforts to continue to support the economy, FCMB announced book-building for its Tranche 1 bond program, to raise up to N30 billion. “Proceeds from the issue will be used to grow loans, without capital constraints. A third of the bond proceeds will be targeted at retail customers. FCMB Ltd estimates that the bond, which is a 7-year bond callable after five years, will price below 14 per cent.
Peter Obaseki, Managing Director of FCMB Group Plc, said that “across all of our businesses, during the period, the strategy we have been pursuing designed to create a business which can accommodate external pressures whilst still being able to deliver sustainable performance seems to have started paying off.
“Most notably, the investment banking group’s (made up of FCMB Capital Markets and CSL Stockbrokers) contribution to the Group’s profit before tax increased substantially, reporting pre-tax profits of N1.4 billion (for the nine-months 2014) and N775 million (for the third quarter 2014), representing increases of 218 per cent YoY and 99 per cent QoQ, respectively.”
Ladi Balogun, Group Managing Director/ CEO of FCMB Ltd, said that “The commercial & retail banking arm of FCMB Group Plc made a profit before tax of N15.7 billion up 20 per cent from the profit of N13.0 billion, for the same period prior year.
“On our statements of financial position, total deposits grew five per cent YoY, to N724.4 billion, but also declined five per cent QoQ. Our total loans increased 29 per cent YoY and two per cent QoQ, respectively, to N564.7 billion.
“We continue to switch our deposits and loans mix towards retail. Retail deposits increased 33 per cent YoY and two per cent QoQ to N362.9 billion, while retail loans increased 44 per cent YoY and nine per cent QoQ to N192.5 billion. This significantly influenced the continued increase in our net interest margins to 8.5 per cent, for the nine-months ended 30 September 2014.
“We continued with efforts to contain operating expenses while still managing risks and improving customer experience.
Operating expenses increased one per cent QoQ to N16.1 billion and 10 per cent YoY to N46.9 billion, as a result of investments in sales force, promotional expenses to drive customer acquisition and retail deposits mobilisation, risk assets origination, productivity and service delivery.
“Our Cost to Income ratio decreased by one per cent YoY and two per cent QoQ. As these promotional and sales-force investments yield dividends, we expect to see more significant reduction in the cost to income ratio.
For the rest of 2014, we will continue to focus on improving operating efficiency and net interest margins whilst also continuing with our steady customer acquisition drive and migration to alternate service and distribution channels.”