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Q3 2016: FCMB Makes N14.2b Profit As Customers’ Deposits Fall By 4%

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By Modupe Gbadeyanka

FCMB Group Plc has finally released its unaudited group results for the nine-months ended September 30, 2016 as earlier promised.

It would be recalled that FCMB could not submit its results earlier as expected due to the bank’s interim audit, but promised to make the results available before the end of November 30, 2016.

In the released report, FCMB recorded a gross revenue of N140.7 billion for the period under review, indicating an increase of 29 percent from N109.3 billion for the same period prior year.

It also recorded a profit before tax of N14.2 billion for the nine-months ended September 30, 2016, a 453 percent rise from N2.6 billion for the nine-months ended September 2015.

Its non-interest income was N44.8 billion, an increase of 128 percent Year-on-Year (YoY) from N19.6 billion for the same period prior year.

FCMB explained that this increase was mainly driven by a 612 percent YoY increase in FX income, from N5.0 billion for the nine-months ended September 2015, to N35.3 billion for the nine-months ended September 2016.

Also, its net impairment on loans up 206 percent YoY to N31.3 billion for the nine-months ended September 2016, from N10.2 billion for the same period prior year, primarily due to oil and gas exposures and delayed salary payments, while its operating expenses were down 2 percent YoY to N49.3 billion, for the nine-months ended September 2016.

Also, loans and advances were flat Quarter-on-Quarter (QoQ) to N657.1 billion in September 2016 (N657.0 billion in June 2016), while the total assets was down 4 percent QoQ to N1.2 trillion in September 2016 (N1.3 trillion in June 2016).

It was also disclosed in the report that customer deposits shrank by 4 percent QoQ to N664.3 billion in September 2016 (N689.3 billion in June 2016).

Commenting on the results, Managing Director of FCMB Group Plc, Mr Peter Obaseki, noted that, “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% and 36.8 percent, respectively.

“Underlying revenue momentum remains strong while cost optimisation programme led to a 2 percent YoY drop in operating expenses, despite inflationary spiral. Overall, profit before tax came in at N14.2bn, a 453 percent growth, translating to an EPS of 87 kobo, up 30.6 percent, YoY, respectively.

“The macro economic conditions in the final quarter remain challenging; we will keep up a conservative stance.”

Also, the Group Managing Director of FCMB Ltd, Mr Ladi Balogun, disclosed that, “The audited results of the bank reveal that the extraordinary performance of Q2 2016 offset the loss recorded in Q3 of N2.4 billion, thereby resulting in strong year on year profit growth of 913 percent.

“In order to avoid an unsustainable, non-cash, spike in earnings from further revaluation gains in Q3, the bank also significantly stepped up its loan loss provisions. The macroeconomic climate is taking a significant toll on the bank’s borrowing customers across all segments.

“Accordingly, the bank will maintain high provision coverage ratios (currently 131 percent), continue to strengthen our capital adequacy ratio (currently 16.9%) and our liquidity ratio (currently 36.8 percent).

“While our prudential ratios should continue to strengthen into Q4 (modestly buoyed by a tier 2 capital injection of N7.5bn 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 percent YoY 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.”

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Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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