First City Monument Bank ( FCMB) has recorded a jump in profit in the first nine months of the year as interest income surged. FCMB’S profit jumped 30 percent to N13.9 billion in the first nine months of the year compared to N10.9 billion in the same period last year.
The bank’s share closed 0.31 percent lower at N3.25, Friday. Gross earnings grew 7.8 percent to N146.4 billion in the nine months period from N135.8 billion in the same period last year. Net interest income grew by 21.4 percent to N68 billion from N56 billion in the previous year as interest income grew and interest expense declined.
Interest and discount income was also up by 10.4 percent to 112 billion the period under review from N101.8 billion in the same period last year. Unlike other banks that saw their interest income dip during the period as a result of the low yields on treasury bills and other money market instruments, FCMB has seen a surge in interest income.
“FCMB has other subsidiaries apart from the bank, they have a diversified interest income base which includes consumer credits and this supported interest income” Ayorinde Akinloye, an Equity Research analyst at CSL Stock Brokers said.
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In line with this, Gbolahun Ologunro, a research analyst at Lagos-based CSL Stockbrokers noted that the good structure of FCMB bank allowed them to diversify their products and earnings and serve as a buffer even in downtimes.
“The AUM unit of their Asset management business grew by over 20 percent for the first 9-months of 2020 on a year-onyear basis, indicating that fee income was supported by noninterest income”, said Ologunro. Also, Ologunro stated that “the corporate and investment banking division was able to thrive because the low- yield environment enabled the corporates to leverage on the debt market to raise funds.”
This was evidenced by issuances of commercial papers from the likes of Dangote among other corporate investors. Akinloye also noted that FCMB was able to grow loans significantly during the period and this was sufficient to cover for the fall in yields.
Loans and advances to customers grew 11.8 percent to N77.6 billion in the first nine months compared to N69.4 billion in the same period last year. Interest expense, the cost incurred by an entity for borrowed funds declined by 3.7 percent to N44 billion in 9M’20 compared to N45.7 billion in September 2019.
The bank’s Fees and commission income jumped 2.3 percent to N22.2 billion compared to N21.7 billion in the first 9 months of last year. Although, the Fees and commission expense surged N14 percent to N7.3 billion as against N6.4 billion in 9M’19. As a result of the increase in expense, Net Fees and Commission income plunged 2.6 percent to N14.9 billion in 9M’20 compared to N15.3 billion in the same period last year.
Net trading income grew 18 percent to N5.7 billion in the period under review compared to N4.8 billion last year as trading income on FGN bonds and trading income surged. Foreign exchange trading income surged 13 percent to N297 million from N263 million recorded last year.
FGN bonds trading income also jumped to N2.26 billion from as low as N201 billion recorded in the nine months period of 2019. Treasury bills trading income plunged 27 percent to N3.1 billion in the first nine months compared to N4.3 billion in the same period a year ago. Options & Equities trading income also declined by 6.3 percent to N36.7 million from N39.2 million recorded in the same period last year.
Net income from financial instruments mandatorily measured at fair value through profit or loss was down by 27 percent to N19.3 million compared to N24.5 million recorded last year. Dividends on unquoted equity securities stood at N515.5 million in the first nine-month from N527.7 million last year.
This amount represents dividend received from unquoted equity securities held for strategic purposes and for which the Group has elected to present the fair value gain and loss in other comprehensive income. The bank also seemed to have gained from the Naira devaluation as the Foreign exchange trading gain surged 152.8 percent to N4.4 billion from N1.7 billion in the same period last year.
FCMB made gains on the sale of property and equipment, a gain of N68.2 million was recorded, 33 percent higher than N51.2 million as at last year. Depreciation and amortisation also jumped 12.5 percent to N4.8 billion from N5.4 Billion in the nine months period of 2019.
The bank’s expense on Wages and Salaries declined 0.57 percent to N17.3 billion from N17.2 billion last year. Impairment losses on financial instruments rose to N13.3 billion compared to N7.8 billion in the first nine month of 2019. General and administrative expenses fell 1.7 percent to N23 billion in the period compared to N23.4 billion a year ago. Other operating expenses grew 30 percent to N16.1 billion from N13.2 period last year.
Earnings per share rose 29.6 percent to N0.70 per share in the first nine month of the year from N0.54 per share last year. Profit before minimum tax and income tax also rose 23.4 percent to N15.5 billion from N12.8 billion in the first nine months of 2019. Income tax fell 3.81 percent to N1.26 billion in the nine months period from N1.31 billion in the previous year.
Minimum tax also dropped 3 percent to N679.1 million compared to N700.8 million last year. FCMB’S performance in Q3 (June-september) FCMB made N4.2 billion profit Q3’20, up from N3.6 billion recorded in the same period last year. Gross earnings rose 4.7 percent to N48.2 billion from N46 billion recorded in Q3’19. Interest and discount income in the third quarter surged 14.3 percent to N35.9 billion from N31.4 billion in the same period last year.
Interest expense dipped 67 percent to N13.2 billion in Q3’20 compared to N14 billion in the third quarter of 2019. Earnings per share rose 16.6 percent to N0.21 per share Q3’20 from N0.18 per share in the third quarter of 2019.
Profit before minimum tax and income tax also rose 9.3 percent to N4.7 billion from N4.3 billion in the first nine months of 2019. Income tax fell to N250 million in the nine months period from N229 billion in the previous year. Minimum tax also dropped to 347 million compared to N474 million recorded last year. Net trading income grew 38.4 percent to N1.8 billion in the period under review compared to N1.3 billion last year.
