Fortis Micro Finance Bank (Fortis MFB) Plc’s interest on the loan book is a major driver of gross income as the lender continues to take banking service to those in the hinterland that were before now excluded.
For the year ended December 2016, Fortis MFB’s gross income spiked by 19.17 percent to N4.35 billion from N3.65 billion as at December 2015.
The growth at the top line was driven by a 47.10 percent surge in interest on loans and advances to customers to N3.82 billion in the period under review.
The Bank has been leveraging on the Money Mobile License, through the Fortis Mobile Limited, to deepen financial inclusion while ensuring that the rural farmers are banked.
Fortis MFB has made a tremendous headway in women empowerment as it has granted loans to 300,000 women across the 19 states of the federation.
Empowering women as a vehicle of economic growth and development and poverty eradication cannot be overemphasized as the Nigerian government through the Government Enterprise and Empowerment Programme has set aside N1.6 billion exclusively for women.
Analysts however say microfinance banks in Africa’s most populous nation and largest oil producer have not delivered on their mandate of providing financial services to the poor given the high exclusion rate.
According to EFInA Access to Financial service in Nigeria 2014, only 2.6 million adults have microfinance bank account. Experts have identified the problems of microfinance banks to include severe undercapitalization, extremely high proportion of Non-Performing Loans (NPLs), insider lending, lack of transparency, inexperience and supervision, and high over costs.
One of the of the aforementioned morass, which is high operating costs has suppressed and eaten deep into Fortis (MFB)’s profit margins.
Cost to Income ratio, (CIR), a measure of efficiency, increased to 62.80 percent in December 2016 from 0.51 percent at December 2015.Total Operating expenses 53.04 percent to N1.41 billion in the period under review.
A lower CIR figure means a bank is efficient while increasing profit.
Fortis (FMB)’s net margin, another measure of efficiency, fell to 13.45 percent in December 2016 from 15.97 percent while net come remained flat at N585 million.
Analysts say regulator should increase the capital base of Micro finance banks in the country. Such a policy will strengthen the capital buffers of these lenders while giving them the leeway to give more uncollateralized loans to customers.
Fortis (MFB) total assets increased by 4.71 percent to N20.87 billion while sharehoders fund stood at N4.05 billion as at December 2016.
Further analysis of the financial statement of the lender shows that total loans and advances spiked by 21 percent to N16.83 billion while deposits from Customers dipped by 14.95 percent to N8.50 billion as at December 2015.
Fortis Micro Finance Bank became the first Microfinance Bank in the country, second in Africa and 16th in the world to secure the SMART Campaign revered Client Protection Principle (CPP) certification after a rigorous rating exercise by MicroRate, USA, according to its directors at the 2015 Annual General Meeting of the Bank in 2016.
BALA AUGIE
