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First City Monument Bank (FCMB) Plc has utilized the resources of shareholders in generating higher profit as the lender continues to intensify its cost control mechanism.
For the first three months through March 2018, FCMB’s return on average equity (ROAE) increased to 5.70 percent from 3.50 percent the previous year.
The lender is efficient in keep cost to its barest minimum while boosting profit as cost to income ratio (CIR) improved to 68.68 percent in March 2018 from 70.30 percent the previous year.
Operating expenses fell by 8.93 percent to N17.68 billion in the period under review from N16.23 billion as at March 2017; thanks to investments in business improvement, digital transformation and process automation.
Net interest income (NIM) increased to 7.50 percent in March 2018 from 6.80 percent the previous year despite a low interest environment.
FCMB’s recorded a 63.25 percent jump in net income to N2.58 billion in the period under review from N1.58 billion the previous year.
The growth in profit was largely driven by a stronger net interest margin and a 1.78 percent surge and a 38.55 percent increase in trading income and fees and commission income to N1.0 billion and N4.78 billion respectively.
FCMB recently concluded the acquisition of an additional 60% stake in Legacy Pension Managers Limited, bringing its total stake in Legacy to 88.2% and thus making Legacy a subsidiary of FCMB. FCMB paid NGN6.96bn for the additional 60% stake, implying it valued the company at NGN11.56bn.
Analysts are of the view that the lender’s recent acquisitions will contribute to its earnings.
FCMB’S Loans and advances to customers dropped by 6 percent to N595.82 billion in March 2017 as against N649.79 billion the previous year.
The decline in loans was due to a reduction in FCY loan book and cautious growth the LCY loan book focusing on Agriculture, Manufacturing and Consumer Finance.
Total deposits grew by 8.83 percent to N747.69 billion in the period under review from N689.86 billion as at March 2018; driven by 9% YoY and 13% QoQ growth in CASA deposits as a result of our continued focus on retail banking. 1Q18 Low-Cost Deposit ratio is 70:30.
FCMB’s nonperforming loans (NPLs) increased to N33.92 billion in March 2018 from N29.52 billion the previous year. NPLs to gross loans increased to 5.30 percent in March 2018 from 4.30 percent as at March 2017.
Banks in Nigeria have seen NPLs rise on the back of the exposure to the oil and gas, aviation and 9 mobile (formerly Etisalat).
FCMB’s share price closed at N2.53 as of Tuesday, valuing it at N50.10 billion.
The stellar performance means the lender has not disappointed investors that have been awaiting the first quarter financial performance.
BALA AUGIE
