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FCMB Group Sustains Growth



  • FCMB Group Sustains Growth

Some stakeholders who had expressed concerns that FCMB Group, comprising First City Monument Bank (FCMB) Limited, FCMB Capital Markets Limited, CSL Stockbrokers Limited and CSL Trustees Limited, delayed the release of its 2016 nine months results were delighted last week when the Group released the audited results, which showed improved performance.

Other banks had announced their results showing mixed performance. While some recorded improved bottom-lines, some witnessed declined in profitability.

However, FCMB Group, in its audited results for nine months made available last week, posted improved results, thereby raising hopes of shareholders to smile home at the end of the current financial year.

Nine months financial performance

FCMB Group Plc recorded gross earnings of N140.7 billion up by 28 per cent from N109 billion in the corresponding period of 2015. Interest income fell marginally by 1.2 per cent to N93.2 billion from N94.4 billion in 2015, while Interest expenses also fell by 9.8 per cent to N40 billion, from N44 billion. FCMB ended the period with net interest income of N53.2 billion in 2016, showing an increase of 6.3 per cent from N50 billion in 2015.

Net fee and commission income rose by 2.6 per cent from N10.4 billion to N10.6 billion, while total net non-Net interest income rose by 9.2 per cent from N48.7 billion to N53.2 billion. Total net non-interest income rose by 128 per cent from N19.6 billion to N44.8 billion resulting from a 612 per cent increase in foreign exchange (FX) income, from N5.0 billion in 2015, to N35.3 billion in 2016.

Net impairment loss on financial assets soared by 125 per cent to N34.4 billion, from N15.2 billion in 2015.

The group reported a profit before tax (PBT) of N14.2billion, showing a jump of 453 per cent from N2.563 billion recorded in the comparative period of 2015, while profit after tax (PAT) recorded higher growth of 595 per cent to N12.9 billion from N1.866 billion. FCMB Group grew its total assets to N1.241 trillion, from N1.159 trillion in 2015.

Management’s comments

Commenting on the results, Managing Director of FCMB Group Plc, Mr. Peter Obaseki, said: “The audited nine months results for the period ended September 2016, reflects our focus on key soundness ratios and the need to maintain buffers against a sustained adverse operating environment. Accordingly, capital adequacy and liquidity ratios have held up at 17.6 per cent and 36.8 per cent, respectively.

Overall, PBT came in at N14.2 billion, a 453 per cent growth, translating to earnings per share (EPS) of 87 kobo, up 30.6 underlying revenue momentum remains strong while cost optimisation programme led to a two per cent drop in operating expenses, despite inflationary spiral respectively.

The macro economic conditions in the final quarter remain challenging; we will keep up a conservative stance.”

Also speaking on the performance, Group Managing Director of FCMB Limited, Mr. Ladi Balogun said: “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.

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.”

He added that the macroeconomic climate is taking a significant toll on the bank’s borrowing customers across all segments.

“Accordingly, the bank will maintain high provision coverage ratios (currently 131 per cent), continue to strengthen our capital adequacy ratio (currently 16.9 per cent) and our liquidity ratio (currently 36.8 per cent),” he said.

Balogun said while the bank’s prudential ratios should continue to strengthen into Q4 (modestly buoyed by a tier 2 capital injection of N7.5bn in November), the bank does not anticipate improvement in the fourth quarter earnings.

“Nonetheless, we are pleased with the gains we continue to record in growing our business in areas such as retail banking (with a 315 per cent growth in profitability) and increasing our share of banking activities in the agricultural sector. 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,” he said.

The CEO assured that FCMB would to continue to distinguish itself by delivering exceptional services, while enhancing the growth and achievement of the personal and business aspirations of its customers and all stakeholders.

Analysts’ Assessment

Assessing the results, analysts at FBN Quest, said although profit before provisions grew by a healthy 57 per cent year on year( y/y), the expansion in loan impairment charges proved more significant.

“To put the magnitude of the impairments taken in Q3 into context, it is around 212 per cent higher than the average quarterly provision run rate of N6.7 billion for H1 2016. Returning to pre-provision profits, the other income line which grew by 168 per cent y/y to N18.8 billion (on the back of fx gains) was the key driver. Although funding income also grew, its impact was modest. Sequentially, the pre-tax and after tax losses compare with PBT and PAT of N14.1 billion and N16.6 billion respectively in Q2 2016. The earnings also surprised negatively relative to our PBT and PAT forecasts of N8.6 billion and N7.3 billion.

Similar to the y/y trends, the wide variance between our PBT forecast and actual was due to the negative surprise in loan loss provisions which came in around 218 per cent higher than what we were modelling.

Above the provisions line, profit-before-provisions beat our forecast by 10 per cent because of the positive surprise in other income,” they said.

FBN Quest explained that the spike in impairments was primarily due to oil & gas exposures (particularly downstream) which already accounted for around 22.3 per cent of non-performing loans (NPL’s) in Q2 2016.

“Since most of these loans are denominated in foreign currency, the prevailing exchange rate of N315 per United States dollar versus around N200 previously most likely necessitated the marked increase in impairments. State governments’ loans, which accounted for around 25 per cent of the bank’s loan book, may also have contributed.

The impairment charge for nine months 2016 implies a cost-of risk of 7.5 per cent. Management had stated on its Q2 2016 conference call that it expects to restructure around 25 per cent of its loan book, resulting in tenor extensions of between 1-2 years,” the analysts said.

They said they believe that restructurings and write-off of NPLs most likely explain the improvement in the NPL ratio to 3.4 per cent (4.7 per cent as at Q2 2016).

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Stanbic IBTC Appoints Mrs. Sola David-Borha as Non-Executive Director



Stanbic IBTC Bank

Mrs. Sola David-Borha is Stanbic IBTC Non-Executive Director

Stanbic IBTC board on Thursday announced the appointment of Mrs. Sola David-Borha as a non-executive director effective from 24 September 2020.

The lender disclosed this in a statement released through the Nigerian Stock Exchange.

In the statement signed by Chidi Okezie, Company Secretary, Stanbic IBTC, the lender said the appointment is subject to regulatory approvals.

According to the bank, “Mrs. David- Borha is currently the Chief Executive, Standard Bank (Africa Regions). Prior to that, she served as Chief Executive of Stanbic IBTC Holdings PLC (2012-2017) as well as the Bank (2011-2012), after holding various executive positions in Corporate Banking; Corporate & Investment Banking; and Investment Banking Coverage for Africa (excluding South Africa). She is also an Independent Non-Executive Director on the Board of CocaCola Hellenic Bottling Company.

“Mrs. David-Borha has had an extensive career in the financial services industry, which has spanned over 30 years. Her executive educational experience includes the Advanced Management Program of Harvard Business School and the Global CEO Program of CEIBS, Wharton and IESE. She is an Honorary Senior Member of the Chartered Institute of Bankers of Nigeria and winner of the CNBC African Woman of the Year Award for 2016.

“The Board is pleased to welcome Mrs. David-Borha back to the Board of the Company and will undoubtedly continue to benefit immensely from her wealth of experience.”

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Lagos Introduces Fuel Station on Inland Waterways to Enhance Ferry Operations



Lagos State Waterways Intrdouces Fuel Station for Ferries Operators

The Lagos State Waterways Authority (LASWA) on Tuesday said it has introduced the first-ever fuel state on the Lagos inland waterways.

The fuel station was introduced to boost activities across Lagos waterways and increase transportation activities, according to a statement released by Nkechi Ajayi, the Public Relations Officer, LASWA.

Speaking at the five cowries terminal in Lagos during an event, Mr. Oluwadamilola Emmanuel, the General manager, LASWA, lauded the fueling station project, adding that it would boost ferry operators’ activities and help them expand.

Emmanuel was quoted as saying “This project is significant to us at LASWA being a responsible agency of government.

“We are concerned about the hardship and occasional harassment usually faced by ferry operators while using jerry cans to get fuel from filling stations to run their boats.

“With the opening of this fuel pump unit to serve both commercial and private boat owners, the safety of lives and property on the Lagos waterways will be greatly enhanced.

“To further promote the safety of all waterways users, we urge boat operators to desist from moving fuel with kegs.

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Why N-power Beneficiaries Should be Retained Permanently




N-power Beneficiaries Must and Should be Retained Permanently

Poorly paid with little to zero job securities and economic provisions, thousands of Nigerian graduates and non-graduates continue to enroll for the social investment program, N-power, established by the Federal Government in 2016 to alleviate poverty and support the vulnerable.

However, two years later the program is experiencing a downturn with the government planning to throw beneficiaries (batches A and B) of the program back into the street despite the nation’s unemployment rate at a record high of 27.1 percent.

Participants, proudly referred to as beneficiaries by the government and its agents, have had to endure delays in inhumane stipends that can barely meet their daily needs to undefined or uncertain exit package plans for the participants of the program.

Despite all the limitations faced by volunteers, supervisors in schools and other places of assignments have said N-power beneficiaries played key roles in addressing a lot of their existing challenges and on numerous occasions and they have occasioned a new growth direction.

According to a Senior Special Adviser to the President on job creation, “What we have found out is that they are filling a lot of gaps in some places like schools, where they do not have enough teachers.In some schools where the N-Power are posted to, you discovered that it is only the principal and some NYSC members that are teaching students, the Npower teachers have helped to compliment their efforts.”

In Ekiti, a 34-year-old veteran teacher explained that “If not all of them, a majority of the N-Power teachers have mastery of the subject matter. They have not been found wanting also in the theoretical aspect of teaching. Especially the way they make use of teaching aid in classes; and that is actually very impressive.

“There is one of them who is a Physics teacher now, we have to keep deploying from one class to the other just because we don’t have adequate teachers to cover those classes.

“The one that is taking Christian Religious Knowledge is a born teacher, who is very efficient and very punctual in her classes.”

Another principal of Government Secondary School in Daurawa, Kano, Haliru Inuwa, said the eight N-power teachers posted to his school since December 2016 have been saving grace for both himself and the students.

He said “We have eight beneficiaries of N-Power posted to my school here.” 

“Most of them are handling core science subjects which most of the schools in Kano state are lacking generally. Yes, subjects like Mathematics, English etc. To our surprise, and against the earlier concern raised that they might not perform well in teaching, the N-Power volunteer teachers are not only committed to their teaching, but are also punctual,” he added.

These much were achieved in spite of the poor salary and working conditions. Graduates and non-graduates of the N-power program have exceeded expectations and raised the bar of dedication and service to the people.

The Nigerian government, just like the private sector operators, continues to take advantage of the high unemployment rate it created to exploit supposed high demand services. What does one expect? when they have been undermined from the onset as ‘privileged beneficiaries’ even with the pivotal role they played in the economy.

N-power volunteers, Batch A and B, as promised are to be absorbed into permanent job positions and their salaries and working conditions reviewed to further enhance their commitments and impacts across the board.

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