FCMB Group plc, a Nigerian lender, recorded single-digit profit growth in half year (H1) 2014, as it continues to grapple with the Central Bank of Nigeria’s (CBN) tightening policy.
For the first six months of the year, the Nigerian lender’s gross earnings rose by 10 percent to N69.62 billion from N63.29 billion, compared with the corresponding period of the prior year HY 2013.
FCMB posted a profit before tax (PBT) of N11.14 billion, which represents a 5 percent increase from N10.64 billion as of HY 2013.
Profit after tax (PAT) in the period under review moved slightly by 3 percent to N9.57 billion, compared with N9.27 billion as of HY 2013.
The slow growth in the FCMB’s bottom-line level is peculiar to the other Nigerian lenders as they have had profits eaten by regulatory induced costs, such as the AMCON charge combined with the apex bank’s non movement to loosen its tightening policy.
The banking sector regulation fund otherwise known as the sinking fund was created by the AMCON Act 2010, and mandates banks to contribute 0.5 percent of their total assets to it on a yearly basis. The initial contribution was 0.3 percent in August 2013; it was raised to 0.5 percent.
The bank is aggressive about lending as loan-to-deposit ratio spiked to 73.3 percent in HY 2014, from 63 percent as of HY 2013.
Loans and advances to customers were up 23 percent to N555.33 billion in HY 2014, compared to N450.33 billion as of HY13.
FCMB is aggressively planning on expanding loan book as it intends to raise $300 million to boost customer lending and fund infrastructure in Africa’s largest economy Nigeria.
The bank is targeting a return on equity of 15 percent this year and 20 percent in 2016, compared with 13 percent in 2013.
Based on BusinessDay’s analysis, the bank’s return on equity was 10.73 percent in the first quarter of 2014, while return on assets was 1.57 percent in the same period.
Total assets were up by 5.87 percent to N1.06 trillion, compared with N1.0 trillion as of HY 2013.
The bank’s share price closed at N4.20 on the floor of the Nigerian Stock Exchange, while market capitalisation was N83.37 billion.
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