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% 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% to N84.2billion over 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% to N715 billion, aided by 21.1% 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% of total deposits, which saw a reduction in the bank’s cost of funds during the year in spite of the fact that interest rates remained high throughout 2013.
Loans and advances also grew 26% 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% of total deposits, 32% of risk assets and 19% 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%) and robust capital base (capital adequacy ratio of 18%), that protects against downside risks and supports future business growth, without immediate need for capital raising. 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.
Speaking of these results, Mr. Peter Obaseki, Managing Director of FCMB Group Plc, had this to say:
“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% and 16.6%, 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% 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% 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%, 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. The Euromoney award for ‘Project Finance Deal of the Year’ signified the end of a productive year for the company.”
Mr. 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% growth in retail loans, 22% growth in current and savings account balances and acquire over 400,000 new customers.
Cost of risk is also trending steadily downwards at 1.2% of total loans, whilst the net interest margin trend of 22% improvement indicates the effectiveness of the retail strategy we are pursuing.
Our focus in 2014 will be to improve operating efficiency by sweating the acquired branches, consolidating our leadership position in retail lending, whilst also growing corporate and commercial banking volumes in strategic sectors of the economy.”