FCMB Group plc, the lender that acquired bailed-out FinBank plc, ended 2014 full year with a stellar performance as profits surged 38 percent despite increased risk to earnings the uncertain macro environment.
The 2014 audited financial statement showed FCMB’s net income surged by 38 percent to N22.13 billion from N16 billion in the same period of the corresponding year (FY) 2013.
The banks earnings per share (EPS) increased by 38 percent to 112k in 2014 from 81k in 2013.
Return on average equity (ROAE) increased to 14.58 percent in 2014 from 11.61 percent in 2013, while the return on average assets (ROAA) jumped to 2.05 percent in 2014 from 1.67 in 2013.
The ROAE and the ROAA measures how well a firm is able to ultilise shareholders’ resources in generating profit.
This impressive result is coming amid continuous hike in interest rate by the CBN and the devaluation of the naira due to declining crude oil price, which has fallen by half since 2014.
The apex bank devalued the naira in November 2014, raised the benchmark interest rate to a record 13 percent and banned the use of dollars purchased at its twice-weekly auctions for the import of items such as electronics, telecommunication equipment and generators.
As a result of the macroeconomic challenges, some companies are planning their cash flows ahead of time.
Despite the increased interest rate environment, FCMB interest expense remained flattish at N45 billion, while interest income and net interest income increased by 14 percent and 26 percent, respectively.
Gross earnings were up by 13 percent to N148.63 billion in the review period compared with N140 billion as of December 2013.
The lender was able to use IT infrastructure to drive efficiency as cost to income ratio reduced to 65.76 percent in 2014, as against 69 percent last year.
Operating expenses however jumped by 14 percent to N65.76 billion in the review period compared with N58.15 billion in 2013.
FCMB is also aggressive about lending as its loans to deposit ratio spiked to 83.67 percent in FY 2014, from 63 percent in 2013.
Loans to customers surged by 37 percent to N617.98 billion in FY 2014, from N450.53 billion in 2013, while deposit to customers increased by 3 percent to N733.80 billion the preceding year.
The loan and deposit growth means FCMB is targeting loans to small- and medium-sized businesses, manufacturing companies, and the agriculture and energy industries.
The Nigerian lender plans to increase its customers to 4 million by 2016 from 2.5 million.
FCMB declared a dividend of 25k, which represents a payout of 22 percent down 37 percent FY2013 and a dividend indicated gross yield of 11.45 percent.
The lender acquired FinBank in 2011, one of eight banks bailed out by the CBN during a debt crisis in 2009.
FCMB’s share price closed at N2.60 on the floor of the exchange, while market capitalisation was N51.88 billion.
BALA AUGIE
