FCMB’s profit rises 453 per cent on FX gains

25 Nov 2016
Financial Nigeria


The company said pre-tax profit rose to N14.2 billion from N2.6 billion posted in a similar period of last year.

Ladi Balogun, Group Managing Director, FCMB Limited

FCMB Group, a Nigerian banking group, reported today that its pre-tax profit for the nine-month period ended on September 30th rose by 453 per cent due mainly to foreign exchange gains. The company said pre-tax profit rose to N14.2 billion from N2.6 billion posted in a similar period of last year.

“The audited results of the bank reveal that the extraordinary performance of Q2 2016 offset the loss recorded in Q3 of N2.4 billion, thereby resulting in strong year on year profit growth of 913 per cent,” said Ladi Balogun, Group Managing Director, FCMB Limited. “In order to avoid an unsustainable, non-cash, spike in earnings from further revaluation gains in Q3, the bank also significantly stepped up its loan loss provisions.”

Gross revenue rose by 29 per cent to N140.7 billion from N109.3 billion posted a year earlier, driven mainly by a 602 per cent increase in FX income from N5 billion to N35.3 billion.

FCMB said its net impairment charges on loans rose 206 per cent to N31.3 billion from N10.2 billion recorded a year earlier primarily due to oil and gas exposures and delayed salary payments. The banks said its non-performing loan ratio fell to 3.4 per cent from 5.8 per cent posted a year earlier.

Driven by higher loans and advances, FCMB said its total assets rose by 7.1 per cent to N1.24 trillion in September 2016 as against N1.16 trillion reported in December 2015.

“The macroeconomic climate is taking a significant toll on the bank’s borrowing customers across all segments,” Balogun said. “Accordingly, the bank will maintain high provision coverage ratios, continue to strengthen our capital adequacy ratio and our liquidity ratio. While our prudential ratios should continue to strengthen into Q4 (modestly buoyed by a tier 2 capital injection of N7.5 billion in November), we do not anticipate improvement in the fourth quarter earnings.”

For the period under review, FCMB said its basic earnings per share fell to 54 kobo from N1.30 posted a year earlier. The bank’s stock closed at N1.05 on Friday, up 0.95 per cent from the previous day’s close.

“We are pleased with the gains we continue to record in growing our business in areas such as retail banking and increasing our share of banking activities in the agricultural sector,” Balogun said. In spite of the fact that we have seen several revenue lines diminish due to external factors - as we build a more resilient balance sheet, we will be well positioned for a strong rebound in core earnings in the medium term.”

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