The FCMB Group Plc has released its financials for the first quarter ended 31 March, 2014, reporting a profit before tax (PBT) of N5.6 billion, a 15 per cent rise from N4.8 billion recorded for the same period last year.
The Group reported improved earnings growth in Q1 2014, in spite of the challenging regulatory environment, as net revenue rose by 16 per cent to N22.3 billion over prior year. The growth, according to the bank, was due to growth in earning assets, improved funding cost and the growing contribution of retail banking activities, which compensated for the decline in unit commissions on turnover.
In the first quarter of 2014, deposits grew by nine per cent year-on-year to N687.3 billion, aided by 22 per cent growth in current and savings accounts, while fixed deposits declined. Consequently, the bank’s funding mix has improved, with current and savings accounts now accounting for 75 per cent of total deposits, and resulting in reduction of cost of funds.
Loans and advances also grew by 50 per cent year-on-year to N493.7billion, the growth which it said was “supported by our retail business that witnessed a 90 per cent loan growth, from the same period in 2013, to N105.4 billion in 1Q 2014. The retail and business banking segments combined, now accounts for 33 per cent of total risk assets.
FCMB Limited, the banking subsidiary, continues to improve on its profitability and efficiency ratios. In the recently released Q1 2014 financial statements, the bank achieved a higher net Interest Margin of 8.8 per cent with a healthy loan to deposit ratio of 71.8 per cent as well as a more efficient cost-to-income ratio of 68.9 per cent, indicating steady improvement in profitability.
Peter Obaseki, Managing Director of FCMB Group Plc said that the Group reported positive developments in most of its key operating areas.
On the Group’s statement of comprehensive income, operating income rose by 16 per cent from N19.3 billion in the first quarter of 2013 to N22.3 billion in first quarter of 2014. Operating expenses also rose by 11 per cent from N14.0 billion in first quarter of 2013 to N15.5 billion in first quarter of 2014 and pre-tax profits rose 15 per cent to N5.6 billion.
“It is also noteworthy that the investment banking group’s contribution to the Group’s pre-tax profits increased in 1Q14. FCMB Capital Markets Limited and CSL Stockbrokers reported pre-tax profits of N198 million, 128 per cent higher than the same period in 2013,” Obaseki said.
Ladi Balogun, Group Managing Director/CEO of FCMB Limited said that The commercial and retail banking arm of the Group made a profit before tax of N5.5 billion up by 13 per cent from the profit of N4.8 billion in the first quarter of 2013.
“On our statement of financial position, total deposits increased by nine per cent, growing from N628.4 billion in 1Q13 to N687.3 billion in 1Q14, but fell by four per cent from the December 2013 figure of N717.4 billion due to expected reductions in wholesale deposits.
“Net interest margin continued to climb to 8.8 per cent on the back of the robust retail loan growth, whilst Return on Average Equity for the commercial and retail banking activities rose to 14.9 per cent. We expect margins, profitability and efficiency ratios to continue to improve in spite of the challenging regulatory environment,” Balogun said.
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