September 09, (THEWILL) – First City Monument Bank (FCMB) Plc spent N1.17 billion on its directors in the first six months of the year (HY2024) according to its interim financial statement filed with the Nigerian Exchange (NGX). This figure represents a 43.8 percent increase compared to N813 million it recorded as Directors’ Remunerations and Expenses in the corresponding period of 2023,
The figure signals a continued trend that would define this category of the General and Administrative Expenses, at the end of the year, as the cost element had recorded an upward direction last year. A look at the FY 2023 report showed that Directors’ Remunerations and Expenses rose by N33 million during the year to N2.16 billion from N1.82 billion in 2022, constituting an 18.3 percent increase.
The increase in Directors’ Remunerations and Expenses contributed to a 42.83 percent jump in the General and Administrative Expenses of the profit and loss account from N25.13 billion in HY 2023 to N35.88 billion in the review period.
Major cost elements in the General and Administrative Expenses include Contract Service Expenses which climbed from N3.99 billion in HY 2023 to N5.18 billion in the review period translating to a 30 percent increase.
It followed IT & IS (Information Technology and Information System) which consumed N8,31 billion against N6.28 billion in the previous year, representing an increase of 32.3 percent. IT & IS represents the highest cost element in the General and Administrative Expenses.
Nigerian banks have intensified competition in IT & IS which sustained their e-banking channels thereby raising the profession to a level that only a clear-cut superior service delivery can make the difference among the operators through which they reap huge income.
FCMB Group recorded a quantum leap of 46.7 percent in e-banking revenue which surged to N10.86 billion in H1 2024 from N7.4 billion in the corresponding period of last year. The e-banking revenue boost accounted for 30 percent of the Gross Fee and Commission Income which rose to N36.19 billion during the review period, from N28.46 billion in H1 2023.
According to the Chief Executive Officer (CEO) of FCMB Group Plc, Ladi Balogun, the financial services institution is determined to drive the e-banking window to achieve the objectives of the recapitalization policy introduced by the Central Bank of Nigeria.
Mr Balogun, who stated this on the sidelines of the company’s Annual General Meeting (AGM) in Lagos during an interview with journalists last May, stressed on the bank’s plan to improve the non-interest income through leveraging digital products and services which would come fully on stream in the next two years.
These are solutions that help customers to receive payments from various e-channels platforms. Apart from cash deposits made in the branches, these products also enable electronic form of deposits from various electronic payment platforms. FCMB’s e-channels include EasyPay, POS/MPOS, PAYSTACK, NQOR, FERN, among others.
“The bank has measured up to expectations. The competition is fierce and only the ones with the capacity will survive this period of mad rush for wealth. FCMB has grown steadily to the satisfaction of the stakeholders and the customers,” said Maurice Akindele, a financial analyst.
Akindele added that the boost in directors’ pay and expenses reflect the growth in the bank’s topline and bottom line which yields the resources to invest in the IT and IS platforms to drive growth, enhance service delivery and equip for competition.
The Management of First City Monument Bank (FCMB) has disclosed plans to raise N150 billion between now and September 2024.
The CBN had in March 2024, announced a new banking recapitalization exercise aimed at supporting the $1 trillion economy target of President Bola Tinubu’s administration.
Under the policy, Tier-1 international banks are expected to have a minimum capital base of N500 billion — up from N25 billion set during the last exercise about 20 years ago. National banks are expected to have a minimum capital requirement of N200 billion while regional and merchant bank’s minimum capital base was set at N50 billion.
The CBN mandated banks to ensure that in meeting the new capital requirements, retained earnings should not be calculated. Rather, it should involve the injection of fresh capital. Also, it asked banks to submit a plan to meet the new capital requirements by the end of April 2024.
FCMB has a capital shortfall of N374.7 billion to meet the apex bank’s new capital requirement to retain its international bank status. Currently, the bank’s capital base stands at N125.3 billion.
The Group commenced its public offer of 15.197 billion shares at N7.30 per share, amounting to N110.9 billion, on July 29, 2024, and is expected to close on September 4, 2024.
Mr Ladi Balogun said the public offer is part of the bank’s comprehensive plan to meet the CBN capitalization requirements, noting that the Group has adopted a phased approach to raise up to N397 billion additional capital to drive its diversification plans.
FCMB held a Facts Behind the Offer (FBO) session recently at the Nigerian Exchange (NGX) as part of its recapitalization drive aimed at raising ₦110.9 billion. The session highlighted the Group’s robust financial performance and underscored why it presents a compelling investment opportunity.
According to the 2024 half year financial statement filed with the Nigerian Exchange (NGX), the Group recorded an impressive growth in gross earnings of N374.49 billion against N238.18 billion in H1 2023. This represents an increase of 57.2 percent, contributing to a Year-on-Year (YoY) increase of 38 percent in Profit Before Tax (PBT) from N38,23 billion in H1 2023 to N64.20 billion during the period.
Profit After Tax (PAT), followed the same growth trajectory, as the Tier-2 financial services institution recorded a 68 percent rise to N59.48 in H1 2024 from N35.40 billion in the preceding year
The increase in gross earnings was primarily due to the growth in interest and non-interest income. Interest and discount income increased by 80.6 percent from N149.02 billion in H1 2023 to N374.46 billion in H1 2024, while fees and commission income recorded a 26.8 percent increase to N36.19 billion from N26.86 billion in the corresponding period of 2023.
Growth in non-interest income was driven by significant trading gains and an increase from the revaluation of foreign currencies.
On the other hand, interest expense increased by 112.47 percent from N76.70 billion in H12023 to N162.97 billion in H1 2024 due to the high interest regime.
Total assets rose by 34.38 percent from N4.23 trillion in H1 2023 to N5.94 trillion in H1 2024, largely due to growth in total deposits and the revaluation of foreign currency deposits. Loan and advances to customers grew 35.3 percent from N1.84 trillion in H1 2023 to N2.42 trillion in the review period.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
