First City Monument Bank Nigeria (FCMB) Plc’s third quarter (Q3) profit beat analysts’ expectation as the lenders’ Non Performing loans (NPLs) are below the regulatory threshold.
FCMB posted year-on-year profit after tax of N5.46 billion in the nine months through September of the current year, the bank said in a stock exchange filing on Friday. The consensus estimates of analysts tracked by BusinessDay stood at N4.46 billion.
Interest income and similar charges increased by 3.26 percent to N96.27 billion in September 2017 as against N93.23 billion the previous year; thanks to growth in interest on loans and advances to customers.
FCMB’s risk management strategy has paid off as its 4.70 percent NPLs in the period under review, are lower than the Central Bank of Nigeria (CBN) 5 percent regulatory threshold.
On a quarter on quarter basis (QoQ) basis, the lender’s profit before tax surged by 64 percent, largely driven by the audited numbers of the bank.
Cost of risk reduced by 47 percent to N2.8 billion for the quarter, thanks to good asset quality and efficient allocation of portfolio across key sectors of the economy.
FCMB’s fees and commissions also rose by 20.5 percent compared to the last quarter, due to an increase in transaction related fees and activities.
The lender is optimistic that the recent acquisition of Legacy Pension Managers Limited will help accelerate and underpin group’s profitability, and add value to shareholders’ value.
FCMB announced on the floor of the bourse that it has received relevant regulatory approvals and concluded the acquisition of an additional 60 percent stake of Legacy Pension Managers Limited (“Legacy”). FCMB’s interest in Legacy is now 88.2 percent, thus making Legacy a subsidiary of FCMB.
The acquisition helps FCMB enhance the diversification of service offerings within the group and further optimises its holding company structure. FCMB believes that Legacy will contribute and accelerate the group’s sustained profitability as well as shareholder value. It will support and facilitate strategic initiatives that will position Legacy in the top-tier of its portfolio.
“Income from the investment banking and asset management activities were flat for the quarter, but showed a significant improvement when compared to prior year. We expect this trend to continue as markets recover and we continue to grow our asset management activities. In this regard, the recent acquisition of Legacy Pension Managers Ltd (“Legacy”) will be reflected in our 4Q17 numbers onwards,” said the lender on its website.
“We expect the business to have a positive impact on Q4 earnings. More importantly, it provides a high growth source of annuity non-interest income and revenue synergies with other members of the group,” said the lender.
BALA AUGIE & Ethel Watemi
