FCMB’s gross earnings rise 54% on net trading income

FCMB Group Plc reported a 54 percent surge in its gross earnings, driven largely by a strong performance in net trading income.

Data obtained from the Nigerian Exchange Group (NGX) revealed the bank’s gross earnings grew to N794 billion in 2024 compared to N516 billion in 2023, while its net trading income for the period surged to N60.8 billion from N9.1 billion.

The NGX data also shows that the bank generated the sum of N19.3 billion from trading in foreign exchange, N35.6 billion from trading in FG bonds, and N5.9 billion from treasury bills.

The Central Bank of Nigeria in 2024 increased its monetary interest rate five consecutive times by 850 basis points from 18.75 percent in January 2024 to 27.50 percent in November thereby increasing the interest charged by banks on loans.

As a result, FCMB further added to its revenue stream by reporting a 75 percent growth in interest income to N621 billion from N354 billion, with interests earned on loans and advances to customers accounting for N433 billion of the total interest income reported.

“Despite the increase in interest income, Net Interest Income grew by a modest 27.7 percent to N225.4 billion, reflecting the impact of elevated funding cost pressures,” analysts at CardinalStone Research disclosed.

Its interest expense also grew by 122 percent to N396 billion from N178 billion on the back of a 100.8 percent increase in interest generated from customers’ accounts and a 354.5 percent increase in interest from accounts from other banks.

However, CardinalStone said the bank’s non-interest income (NIR) increased by 9.1 percent, driven by an 8.2x surge in foreign exchange trading income and a 3.2x rise in trading income from FGN bonds.

This growth more than offset the impact of an N53.6 billion decline in foreign exchange gains as FCMB adjusted to comply with the NOP limit.

Fees and commission revenue reported by the bank during the period grew by 20 percent to N74.5 billion from N62 billion, while fees and commission expenses declined by 9 percent to N15.2 billion from N16.8 billion.

Read also: FCMB lists 19.8bn shares on NGX after oversubscribed public offer

As the cost of doing business in Nigeria increases due to energy supply disruptions and rising inflation, operating expenses (OPEX) grew by 43.2 percent to N228 billion from N157 billion.

The expansion in OPEX was driven by personnel expenses by 60 percent, IT & IS expenses by 55.5 percent and AMCON Levy by 40.0 percent. Meanwhile, the moderation in impairment charges was driven by lower loan loss provisions of 21.3 percent as the group had initially set aside 72.0 percent of its FY’23 FX revaluation gain of N78.3 billion for anticipated impairment charges.

As a result, the absence of substantial loan provisioning in FY’24 contributed to the 36.7 percent decline in net impairment charges compared to the previous year.

Consequently, profit after tax increased by 16 percent to N107 billion from N93 billion. However, despite FCMB reporting profit growth during the period, data from the NGX reveals that the bank’s business activities are not generating cash, as net cash flow from operating activities amounted to a negative N34 billion, down from a positive N356 billion.

Its net cash flow from investing activities for the period was negative amounting to N101.5 billion due to cash spent for the acquisition of investment securities.

During the year, the group paid dividends totaling N9.9 billion, repaid borrowings, and lease payments of N52 billion and N644 million respectively.

It also received proceeds from borrowings amounting to N209 billion, thereby bringing net cash flow from financing activities to N135 billion from N5.8 billion.

Consequently, cash and cash equivalents for the period, increased by 37 percent to N797 billion in 2024 from N579 billion in 2023.