August 14, (THEWILL) – FCMB Group’s half-year performance in 2022 was significantly impressive. It revealed a growth trajectory that derived from strong financial parameters well above the company’s peers. The Tier-2 financial services institution is also coasting away from the COVID-19-induced recession effects amid headwinds that evidently challenge the industry. This gives the company a good mileage ahead.
The Group’s revenue haul recorded a 34 percent jump to N126.22 billion from N94.22billion in the corresponding period (HY 2021). Revenues have been generally challenged by an increasingly harsh environment occasioned mainly by hyperinflation on the back of outrageous increase in the cost of diesel. Many banks have reduced their working hours drastically, or operate on alternate days in some branches to save cost.
FCMB’s robust turnover accounted for a post-tax profit rise of 81 percent year-on-year to N13.66 billion from N7.55 billion. Profit before tax was N15.42 billion as against N8.91 billion in the equivalent period – reflecting an increase of 73.8 percent. The elements that contributed to the rise in profit numbers came from major revenue windows: Interest and discount income, Fees and commission income, Electronic fees and commission and segregated interest income from Loans and advances.
Although FCMB’s income from Electronic fees and commission rose marginally from N6.68 billion in HY 2021 to N6.69 billion, other revenue windows performed impressively. Interest income from loans and advances rose to N78.74 billion from N63.07 billion, reflecting a rise of 25 percent. Interest and discount income grew significantly from N72.67 billion to N98.08 billion showing an increase of 35 percent.
The growing numbers showed a gradual but steady growth after the COVID-19-induced recession. To stem competition, FCMB embarked on strong innovative measures. It took bold steps to drive value-added digital banking solutions aimed to boost its operations and to promote financial inclusion. One of these was the introduction of paperless transactions within the Bank’s over 200 branches in Nigeria. The innovation came with added efficiency. It eliminated the use of deposit slips, withdrawal booklets, or cheque books for the customers to carry out over-the-counter transactions.
“In addition, FCMB customers now have the opportunity to enjoy cardless banking experience by just using their fingerprints to withdraw and deposit cash at 575 select biometric Automated Teller Machine (ATM) points of the Bank spread across the country and via biometric Point of Sales (PoS) terminals available within the Bank’s branches,” the bank announced in March 2021.
The bank had earlier upgraded its mobile App for mobile banking with added features and benefits that address dispute transactions, increase transaction and card limits, manage cards, to apply for a loan, start a target savings account and generate transaction receipts on the go without hassles.
According to the bank, the additional benefits complemented the existing ones, which included, funds transfer, account opening, account balance enquiry, airtime and data purchase, bills payment, wallet deposit and withdrawal, among other value-added services.
Its innovative products targeted at boosting deposit paid off, though marginally during the period as the bank’s Deposits from customers rose from N1.55 trillion in HY 2021 to N1.63 trillion, an increase of 5.2 percent. Loans and advances to customers climbed from N1.06 trillion to N1.12 trillion which shows a rise of 5.7 percent. These contributed to boost the assets, though moderately, from N2.49 trillion to N2.65 trillion – a growth of 6.5 percent.
Commenting on the half-year financial results, the Group Chief Executive of FCMB Group Plc, Mr Ladi Balogun, said: “We continue to leverage our unique group structure to enable a technology-driven ecosystem of platforms, customers, partners, talents, and capital to contribute to the sustainable and inclusive growth of the communities we serve. We believe that despite the challenging domestic and global environment, FCMB Group is well positioned to sustain its performance trend in financial and non-financial metrics”.
Additionally, FCMB through EasyAgents, its agency banking network and other channels, announced in June 2022 that it had successfully onboarded and empowered one million financially excluded Nigerians, “ensuring they have a better and more sustainable future through access to financial services. As part of its financial inclusion programme, the bank has provided microloans valued at N40 billion to over 300,000 beneficiaries comprising 200,000 women traders across the country who have accessed over US$51.28 million (N28.7 billion) of the total loan sum,” the Tier-2 financial services company said.
Analysis of the bank’s performance ratios showed a remarkable efficiency level in generating more profit from its revenue from 8 percent in HY 2021 to 10.82 percent in HY 2022. This indicates an increase in profit margin. Return on equity increased from 0.38 to 0.69 showing that the management is efficiently using the shareholders equity to generate profit.
FCMB Group’s performance in the second quarter indicated that it was embarking on a growth trajectory when compared with the preceding quarter, both of which culminated in the impressive HY 2022 performance. For instance, revenue rose from N58.305 billion in Q1 2022 to N67.91 billion in Q2 2022, an increase of 16.5 percent. Profit after tax spiked to N8.49 billion in Q2 2020 from N5.16 billion in the preceding period. Profit before tax increased to N9.40 billion from N6 billion reflecting a growth of 56.7 percent.
With the growth trajectory shown on the profit performance anchored on the surge in turnover, the shareholders can be sure of another impressive year as the earnings per share also increased (from 0.38 to 0.69). The bank paid a dividend of 15 kobo per share and 20 kobo per share in 2020 and 2021 respectively.
The National Co-ordinator, Pragmatic Shareholders Association of Nigeria (PSAN), Mrs Bisi Bakare, lauds the bank’s impressive performance amid a challenging operating environment that impacts the banking sector. She expressed optimism for the remaining quarters of the year and growth in shareholders’ returns through dividend.
“As an investor, I am delighted with the result despite the environment that’s not conducive for business in the country, especially for the banking sector. The cost of running a business is now outrageous. The government is not providing anything to support businesses in terms of good road network, energy and security, mainly.
“This has become a huge burden on banks and other business organisations. Therefore I commend and appreciate the board and the executive management of FCMB for the excellent half-year results. I hope the remaining two quarters will follow the same growth trend so that the shareholders would receive handsome dividends for the 2022 full year,” Bakare said in a note to THEWILL.
Commenting on the result, the Chairman, Ibadan Zone Shareholders Association, Mr. Eric Akindiro also applauded FCMB Group for its resilience in a difficult environment. He noted that the bank’s ability to turn challenges into opportunities reflected in bold and decisive steps that defied the headwinds.
“Another significant development is the customer deposits which rose by 21 percent during the period. This shows increased customer confidence in the bank. If this momentum is sustained it will translate to a robust bottom line and better dividend for shareholders this year,” he said.
There is adequate provision for Impairment losses which increased from N8.14 billion in HY 2021 to N9.80 billion in the review period. This puts the profit margins on a good footing. Loan-to-deposit ratio of 68.5 percent is above the 65 regulatory mark, suggesting that FCMB’s liquidity is equally sound. This was through increased investment in IT and capacity building.
IT expenses which rose from N3.6 billion to N4.88 billion, and Personnel expenses from N4 billion to N10.69 billion, point to the bank’s efforts to maximse opportunities in the industry. The bank’s share price closed at N3.11 at the Nigerian Exchange (NGX) on Friday, August 12, 2022.
About the Author
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.
