First City Monument Bank (FCMB) Plc has acquired an additional 60 per cent stake in Legacy Pension Managers Limited for N6.96 billion as analysts are betting that the new acquisition could underpin the lender’s future earnings. The Nigerian lender intends to leverage on its holdings of the subsidiary to diversify its earnings and increase profitability.
Analysts concur with the management of the bank as they’ve started making projections about the per cent increase in profit as a result of the new investment.
“FCMB recently completed 60 per cent acquisition in Legacy pension managers which brings its total stake to 88.2 per cent, thus making Legacy a subsidiary of FCMB. Given ~3 per cent contribution of legacy to FCMB’s PBT in H1 17, we think the acquisition is expected to improve FCMB’s earning with Legacy’s contribution to PBT expected to hit ~7 per cent,” said analysts at ARM Securities Limited.
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FCMB posted a 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 per cent 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 per cent NPLs in the period under review, are lower than the Central Bank of Nigeria (CBN) 5 per cent regulatory threshold. Breakdowns provided by FCMB shows its exposure to the O&G Downstream was (4.6x YoY), O&G Services (25.5x YoY) and Commerce (50.8% YoY).
FCMB posted a 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 per cent 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.
BALA AUGIE
