FCMB Group Plc (“FCMB”) on Monday released its financials for the full-year ended December 31, 2014, reporting a Profit Before Tax (PBT) of N23.9 billion, 32 per cent above N18.2 billion recorded for the full-year ended December 31, 2013.
The results reflect solid momentum in FCMB Group Plc’s profitability, enabled by harnessing the synergies between its corporate and investment banking entities, as well as the successful execution of its retail strategy.
The banking group’s prioritization of retail banking (i.e. banking of individuals) yielded positive results. The Retail Banking divisions of FCMB Ltd contributed a Profit Before Tax (PBT) of N4.1 billion or 18 per cent of FCMB Ltd’s total profits, up from N1.8 billion for the previous year.
Deposits received from individuals increased 14per cent Year-on-Year (YoY) to N166 billion, representing 22per cent, of the bank’s deposits, while loans issued to individuals increased 32per cent YoY to N126 billion, representing 20per cent of total bank credits. These enabled the continued increase in FCMB Ltd’s net interest margins to 9.14per cent in 2014.
The Group’s total assets grew 16per cent to N1.2 trillion, as at December 31, 2014. Additionally, the Group improved its operating performance, increasing Return on Average Equity (ROaE) YoY, from 11.6per cent as against 14.6 per cent in 2013.
Commenting on the results, Managing Director of FCMB Group Plc, Mr. Peter Obaseki said: “The results for full year 2014 reflect solid momentum in our businesses as our key earning metrics grew at double digits: profit before tax was N23.9 billion while profit after tax came in at N22.1billion with growth on 2013 full year of 32per cent and 38 per cent respectively.
“Net interest income grew by 26per cent to N72.6 billion. Our return on average equity is trending upwards at 14.6per cent compared to 11.6per cent for full year 2013; the investment banking business saw a PBT growth of 126per cent, mainly driven by debt structuring and financial advisory services.
He stated further that, “Based on these, a dividend of 25 kobo per share is proposed, translating into a dividend yield of 10.04per cent. The future outlook remains positive despite regulatory and macro-economic challenges, as our capital buffers remain strong, and we continue to intensify the contribution of non-banking businesses, especially in the wealth management space.”
Also commenting, Group Managing Director/ CEO of FCMB Ltd, Mr. Ladi Balogun, said: “Our commercial and retail banking activities continue to be the key driver of group performance, with 26 per cent growth in profit before tax.
“Specifically, the growth in our retail banking activities enabled us to not only attain industry leading margins but also deliver 37per cent loan growth. Furthermore, marketing and service excellence enabled us acquire 500,000 new retail customers in 2014.
He said, “Our modest deposit growth of three per cent bank-wide was attributable to a switch in our wholesale funding mix a the margin from deposits to stable long term borrowings. We successfully closed a N26 billion Tier 2 bond issue at a fixed rate of 14.25per cent for seven years and further grew bilateral and syndicated borrowings by N40 billion.
“The strong rally in earnings in the fourth quarter of 2014, coinciding with a significant fall in oil prices and government revenue, prompted us to take the prudent and preemptive measure of growing our loan loss provisions. An annual cost of risk of 1.8per cent from 1.4per cent in 2013 was recorded and this led to a non-performing loan ratio of 3.6per cent as against 3.9per cent in 2013.
“In spite of the significant loan growth, our capital adequacy ratio was enhanced in last quarter of 2014 to 19per cent as a result of the N26 billion Tier 2 Capital raise. 2015 promises to be another interesting year, albeit a challenging one, due to the macroeconomic uncertainties. We will remain focused on improving operating efficiency, whilst also continuing with our steady customer acquisition drive and migration to alternate service channels in order to provide a more consistent convenient customer experience. We will seek to moderate cost of risk by consolidating our risk acceptance criteria in an increasingly high-risk environment, while focusing on deposit growth. Overall, we are confident our progress will be sustained, as we continue to grow our market share, and improve our margins and efficiency ratios,” he added.
To help businesses manage their daily sales, the bank deployed 6,300 point of sale (POS) terminals across the country. The bank also rolled out 245 new ATMs and migrated more of its customers to lower cost alternate channels, particularly mobile banking, improving the banking convenience of its customers.
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