August 25, (THEWILL) – FCMB Group, a foremost financial services holding company, posted impressive results for its half year 2024 operations. The remarkable performance, which reflects a positive trajectory towards a triple-digit growth in the recapitalization environment, underscores its robust commitment to digital transformation.
The 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.
Nigerian banks have intensified competition in e-banking channels raising the profession to a level that only a clear cut superior service delivery makes the difference among the operators through which they reap huge income.
It is on record that they have embarked on various avenues to expand their e-banking channels for maximum performance and enhanced revenue generation, which has created a stiff competition among them.
The e-banking income includes revenue from electronic platforms, such as mobile applications, USSD channels, internet banking, ATM, POS as well as other debit and credit card transactions.
An analysis of the FY 2023 financial statements of the Tier-1 group revealed that the Big Five generated a total of N385.85 billion in e-banking revenue as against N277.14 billion in 2022, representing a 40 percent increase.
The measure has strengthened the earnings capacities of the banks through increased non-interest income. For FCMB, the Group’s non-interest income saw a crank upon the committed implementation of the bank’s digital programme towards enhanced service delivery in line with the Group’s vision.
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.
According to the 2024 half year financial statement presented to the Nigerian Exchange (NGX), the impressive growth in gross earnings of N374.49 billion against N238.18 billion in H1 2023, an increase of 57.2 percent, contributed to a Year-on-Year (YoY) increase of 38 percent in Profit Before Tax (PBT) from NN38,23 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 on H1 2024 billion from N35.40 billion in the preceding year
The increase in gross earnings is primarily due to 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 in gains 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 increased 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.
The Management of First City Monument Bank (FCMB) has disclosed plans to raise N150 billion between now and September 2024. The Chief Executive Officer (CEO) of FCMB Group Plc, Ladi Balogun, stated this on the sidelines of the company’s Annual General Meeting (AGM) in Lagos during an interview with journalists. According to him, the company has devised a variety of means to meet the Central Bank of Nigeria (CBN)’s new capital requirements.
He stated, “Our plans during this period will be raising N150 billion through a series of structures. It’s not going to be one straight offer obviously and, that, we expect will be concluded by the end of September.
“We have a number of options, and we can achieve our objectives through any combination of the options we have. We are fortunate that as a group we have eight companies beyond just the bank. So, it’s just the bank that we have to capitalize on. “We also have people speaking to us on potential merger and acquisition (M&A) partnership, but there is no conclusive plan at this stage. However, if there is an opportunity that is accretive to our shareholders from an earnings perspective, we will consider such things.”
Furthermore, Mr. Balogun commented 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. On the rise of the bank’s loan impairment in the face of high-interest rate levels, the CEO stated that the bank will be supportive and ensure its actions will be in partnership with customers to prevent harming them in any way. The CBN, in March 2024, announced a new banking recapitalization exercise aimed at supporting the $1 trillion economy target of President Bola Tinubu’s administration.
According to the CBN, 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.
FCMB held a Facts Behind the Offer (FBO) session recently at the Nigerian Exchange (NGX) as part of its recapitalization drive aimed at raising N110.9 billion. The session highlighted the Group’s robust financial performance and underscored why it presents a compelling investment opportunity.
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, adding that in addition to it, the Group has adopted a phased approach to raise up to N397 billion additional capital to drive its diversification plans.
He stated: FCMB is growing at approximately two million customers a year, and we believe that growth rate will accelerate. In banking, we are about number seven in net assets and among the top five Pension Fund Administrators (PFA) in the country. “Our goal is to sustain and grow earnings per share for our investors despite our additional share issuance. The proceeds from this capital raise will primarily drive business growth, focusing on lending to key sectors such as agriculture, SMEs, and non-oil exports, which we believe are vital for Nigeria’s development,” he said.
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.
