FCMB group announces N16.3bn profit before tax for the half-year 2016

 

FCMB Group Plc has reported a profit before tax of N16.3 billion for the six-months ended 30 June 2016. This represents an increase of 70 per cent from N9.6 billion recorded in the comparative period of 2015. FCMB Group Plc which consists of First City Monument Bank (FCMB) Limited, FCMB Capital Markets Limited, CSL Stockbrokers Limited and CSL Trustees Limited partly attributed the development to foreign exchange revaluation gains, following the recent implementation of the flexible exchange rate policy by the Central Bank of Nigeria (CBN)

From the details of its Unaudited Results announced on the floor of the Nigerian Stock Exchange (NSE), FCMB Group Plc’s gross revenue for the six months increased by 14 per cent to N88.3 billion, compared to N77.4 billion for the same period in the previous year. In addition, Non-Interest Income surged by 110 per cent to N26.0 billion versus N12.4 billion recorded at the end of June 2015.

Customer confidence in FCMB remained strong, as deposits were up 5 per cent quarter on quarter to N689.4 billion in June 2016, compared to N657.2 billion at the end of the first quarter of 2016.

In addition, total assets increased by 13 per cent quarter on quarter to N1.3 trillion in June 2016 versus N1.1 trillion in March 2016. The Group’s Loans and Advances, also grew by 17 per cent quarter on quarter to N657.0 billion in June 2016, compared to N561.6 billion at the end of first quarter 2016.

FCMB Group Plc’s half year 2016 results also showed a decline in operating expenses by 3 per cent year on year to N32.7 billion, in spite of a rise in inflation, while Non-Performing Loans (NPLs) to total loans ratio was marginally down to 4.7 per cent from 4.8 per cent for first quarter 2016.

Earnings per share witnessed a significant increase from 33 kobo at the end of the first quarter 2016 to 283 kobo as at 30 June 2016.

Commenting on the results, the Managing Director of FCMB Group Plc, Mr. Peter Obaseki, said, “Our group’s half year 2016 profit before tax came in at N16.3 billion, up 70 per cent on same period in 2015 and driven largely by treasury upsides, cost optimisation and sustained momentum in the commercial and retail banking group.

In the second quarter, revaluation gains on realised foreign currency investments, at group-level, translated to slightly over N2 billion in revenue. The investment banking business continued to face challenges arising from the sustained lull in both equity and debt capital markets while the wealth management businesses showed consistency and resilience over the last two quarters.

Key prudential and soundness ratios, including liquidity ratio of 35.9 per cent and capital adequacy of 16.1 per cent continue to hold-up; we expect capital to strengthen through internal capitalisation of profits in due course and other measures in line with our capital plan.

We see more headwinds in the second half of the year, as we enter a high inflation and interest rate environment with implications for consumers and borrowers; our overall stance will therefore be conservative while we drive up execution in the low-risk segments of the portfolio.”

The Group Managing Director of FCMB Limited, Mr. Ladi Balogun also commented on the results, stating “The bank witnessed improved operating performance in spite of the multiple challenges faced by the economy and banking sector. The most significant driver of earnings growth was the N9.1bn exchange gains from our dollar balance sheet. In addition our personal and SME banking segments have exhibited resilient profit growth (in excess of 442 per cent or N7.4 billion, year on year) driven by electronic banking revenue and strong customer acquisition, now at 60,000 a month. Greater cost discipline has also resulted in improved operating efficiency. Performance was otherwise dampened by a year on year increase of N9.2 billion provisions for non-performing loans and other known losses.

We expect that loan impairments will remain elevated in the second half of the year but will be cushioned by continued momentum in revenues and efficiency gains from cost optimisation measures taken earlier in the year.”