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FCMB Group reports N18.2bn PBT in 2013, up 12% from prior year

FCMB-Building

FCMB Group Plc has released its financials for the year ended December 31, 2013, reporting a profit before tax (PBT) of N18.2billion, up 12 percent from prior year.

The Group also returned to dividend payment, with proposed dividend of 30kobo/share.

The Group reported improved earnings growth in 2013, in spite of the challenging regulatory environment. Net revenue rose 16 percent to N84.2billion over the prior year.

Successful execution of retail strategy, growth of bancassurance and FinBank merger synergies provided necessary revenue growth impetus.

The Group also reported a number of significant developments in key operating areas. In 2013, deposits grew 11 percent to N715 billion, aided by 21.1 percent growth in current and savings accounts, while fixed deposits declined during the year.

Consequently, the bank’s funding mix has improved, with current and savings accounts now accounting for 73.9 percent of total deposits, which saw a reduction in the banks cost of funds during the year in spite of the fact that interest rates remained high throughout 2013.

Loans and advances also grew 26 percent to N451billion, retail lending, oil and gas and power sector financing were the largest contributors to this growth.

FCMB Plc’s total assets (excluding contingencies) now stand above N1trillion. Individual and SME banking combined, now accounts for 44 percent of total deposits, 32 percent of risk assets and 19 percent of profits.

FCMB Limited, the banking subsidiary, continues to improve the soundness of its balance sheet and credit standing. In the recently released 2013 financial statements, the bank exhibited abundant liquidity (liquidity ratio of 47 percent) and robust capital base (capital adequacy ratio of 18 percent), that protects against downside risks and supports future business growth, without immediate need for raising capital.

The banking group subsidiary has also become one of the leading retail loan originators in the country. This has resulted in an increasingly diversified loan book and continually declining loan loss provisions over the last 3 years.

During the year, the UK subsidiary, FCMB (UK) Ltd, was granted approval by the Bank of England’s Prudential Regulatory Authority (PRA) to commence deposit taking activities for businesses and corporate organization, expanding its existing stock broking and corporate finance activities.

Peter Obaseki, Managing Director of FCMB Group Plc, said:“2013 saw the Group being able to record appreciable growth in profits and resume dividend payments. Returns on average equity and average assets fell by 4.3 percent and 16.6 percent, respectively, over the 2012 full year level, as a result of higher tax. The Group’s non-banking subsidiaries, CSL Stockbrokers (CSLS) and FCMB Capital Markets (FCMB CM), while contributing only 2 percent of group profits, not only enabled the bank grow its customer wallet share, but also won new customers through advisory services that eventually led to transaction banking relationships. These businesses also consolidated their market positions. CSLS maintained its position as third largest broker, whilst increasing its market share. CSLS also saw a 100 percent growth in volumes traded on the Nigerian Stock Exchange (NSE). “

Key highlights from FCMB CM’s year included deal flows of approximately N378 billion and net operating earnings growth of 206 percent, enabled by project and structured finance advisory and arrangement activities. FCMB CM also actively participated in buy-side advisory and capital-raising mandates in the Power sector’s privatisation and acted as the sole local advisor on the first Greenfield International Power Producer project financing, under the new tariff regime.

Ladi Balogun, Group Managing Director/CEO of FCMB Limited, commented on the results thus:“In spite of the challenging regulatory environment which moderated profit growth, 2013 saw our commercial and retail banking activities benefit greatly from the merger that was concluded in 2012. Specifically, the improved liquidity profile of the bank provided an adequate buffer against the cash reserve withdrawals, and the enlarged branch network enabled us to achieve over 66 percent growth in retail loans, 22 percent growth in current and savings account balances and acquire over 400,000 new customers.”

FCMB’s focus in 2014 will be to improve operating efficiency, consolidating its position in retail lending, whilst also growing corporate and commercial banking volumes in strategic sectors of the economy, according to Balogun.