By Philemon Adedeji
First City Monument Bank (FCMB), in its unaudited financial statement for the period ended September 30th, 2022, submitted to the Nigerian Exchange Limited (NGX), delivered all-round impressive performance across its major business line, such as gross Earnings, Profit After Tax (PAT), Profit Before Tax (PBT), Assets, amid macroeconomic headwinds.
Specifically, according to the analysis of the results, the group gross earnings recorded grew significantly by a remarkable 34 per cent year -on-year (Y-o-Y) to N200 billion in nine months of 2022 from N149.5 billion achieved as of end of September 2021, the growth was mainly driven by significant improvement in non-interest income and net interest margin due to loans and advances and supported by the higher interest rate environment.
Interest Income grew nearly 33.12 per cent (Y-o-Y) benefitting from strong loan growth and a higher yield environment to N154.083 billion in nine months of 2022 from N115.750 billion the corresponding period of 2021
Interest Income from loans and advances to customers grew by 24.09 per cent to N123.013 billion in 2022 from N99.132 billion in 2021. The income from loans and advances had a 79.83 per cent contribution to the interest income for the period.
The group Non-Interest Income (NII) grew by 36 per cent year-on-year (Y-o-Y) which was largely driven by growth in services and commission from LCs and trading income despite a decline in foreign exchange revenue.
Fees and commission income grew marginally by a decent 34.9 per cent to N34.587 billion in the third quarter of 2022 from N25.622 billion in 2021 on the back of a rise in credit-related fees and income, electronic banking income, and trade transaction income amongst others.
From the released statement on the Nigerian Exchange Limited (NGX), The group recorded strong growth in Profit Before Tax (PBT) from N15.741 billion in nine months of 2021 to N26.504 billion in nine months of 2022, reflecting a growth of 68.37 per cent, while Profit After Tax (PAT) grew by a decent 66.03 per cent to N22.920 billion in 2022 from N13.804 billion in 2021.
Net interest income rose by 42.31 per cent to N93.055 billion from N66.391 billion in 2021.
Net impairment loss on financial instruments grew by 292 per cent to N18.704 billion from N4.765 billion in 2021.
Other operating expenses grew by 4 per cent quarter-on-quarter to N21.210 billion nine months of 2022 from N20.388 billion in nine months of 2021, it however grew by 10 per cent year-on-year (Y-o-Y) due to increase in regulatory costs, high inflation environment, currency devaluation and IT maintenance cost, Risk Assets rose by 6 per cent quarter-on-quarter and 22 per cent year-on-year Y-o-Y, as additional funding was provided to production sectors of the economy.
Cash and cash equivalent reported by the group depreciated by 16.2 per cent in nine months of 2022 to N303.810 billion from N362.700 billion in the corresponding period of 2022.
During the period under review, the group Earnings Per Share(EPS) up by 65.7 per cent to N1.16 in third quarter of 2022 from N0.7 in third quarter of 2021.
The Executive Vice president of Highcap Securities Limited, David Andori, said third quarter results of FCMB is an impressive performance, All financial indicators in Q3 appreciated massively, therefore shareholders will earn good dividend.
BALANCE SHEET EMERGED STRONGER
In the unaudited financial results, First City Monument Bank recorded strong total assets which appreciated by 17.7 per cent to N2.934 trillion in nine months of 2022 from N2.493 trillion achieved in 2021 audited results and accounts for the period ended December 31, 2021.
Total liabilities gained a 18.6 per cent to N2.671 trillion as of end of September 2022 from N2.249 trillion accounted in full year 2021.
In addition, the group Shareholders fund remained well structured which stood at N263.5 billion in nine months of 2022 from N243.8 billion in FY 2021,representing an increase of 8.1 per cent.
Cash and cash equivalents reported went down by 16.2 per cent to N303.810 billion in third quarter (Q3) of 2022 from N362.700 billion in FY 2021.
PROFITABILITY RATIOS
According to the analysis, it revealed that First City Monument Bank recorded profitability across all its business segment for the third quarter Q3 results for the period ended September 30, 2022, Absolutely, when compared with the preceding year results, almost all the business line gained momentum.
In the first instance, Profit Margin of the bank is appreciating by 13.3 per cent in nine months of 2022 from N10.5 per cent in nine months of 2021, this can be better explained that for every N100 earned by the bank in the course of the year N13.30 of it can be translated in to profit more than N10.50 of the prior-year.
Likewise, Return on Average EQUITY (ROAE) for the quarter increased by 26 per cent to (indiscernible) Cost to Income Ratio (CIR) trended downwards from 67 per cent to 54 per cent at the end of September 2022, this was due to growth in revenue for the period.
The Group Chief Executive Officer (CEO), Ladi Balogun commented that “we can see that the business has performed fairly well across all indices with the exception of an uptic in our non-performing loan ratio.
“The balance sheet has risen by 25 per cent to N2.9 trillion, we notice that our profile before tax has been announced is up at nine months by 68 per cent to N26.5 billion
“Few other highlights to pick up is a significant improvement of our cost-to-income ratio to 65 per cent and at 970 basis points.
“We are steadily seeing our ROE pick up, it is now at 12.1 per cent and we expect by the end of the year will improve further.
“Outside of the banking area, we see Asset Management recording a strong Year-on-Year performance as well with Assets under management rising by 48 per cent to N756 billion. Our customers base grew year-on-year by 16 per cent to stand now at 10.4 million customers.
“Our unique group structure reflects the ecosystem that we are trying to build, but this extends beyond our companies within the group to cover the various platforms, investment Banking, Investment management and new technology platforms that we are building that are now on either in pilot or private visa or they are actually launched.
“In terms of capital, we try to deploy both our capital which is balance sheet as well as third party capital through either DFIs, development finance solution that we partner with or through over investment banking business towards supporting the customers within our ecosystem
“We have been working throughout the course of the year on developing two technology platforms. The is a borderless banking platform out of the U.K. embedded within in the U.K. which is focused on the African diaspora. This is currently in private beta and it will be moving to public beta imminently, we are confident that this will be accretive to earnings by the year 2024 and then potentially very significant beyond that.
“The second platform is banking as a service platform which we have also been developing over the course of the year where leverage over technology as well as the various licenses we have within the group, regulatory licenses as banking and so on to enable technology companies provide banking services.
“We are starting here with virtual accounts, wallets and payment APIs, we will begin to give some of the indication of the performance of the financial impact of our bank as a service business from 2023. However that business has commenced and has currently been incubated with the Nigerian bank.
“From a customer perspective, we grew our customer base by 1.2 million and just a quick summary of what we are seeing across our products saw 140 per cent year -on-year Y-o-Y growth to N70.3 billion and this contributed significantly to the 55 per cent year -on-year Y-o-Y growth in brokerage commission. In terms of financial advisory and capital rising, we saw 88 per cent increase in the fees that we earned Year -on-Year to be at N678 million at 9 months.
The Managing Director, Yemisi Edun also commented on the third quarter Q3 results that deposits grew Year -on-Year by 29 per cent and 11 per cent quarter -on-quarter to N1.82 trillion. The growth was the result of the execution of the retail strategy in the shape of a challenging operation environment and increased competition.
Gross net loans grew 23 by per cent year-on-year to N1.16 trillion, while third quarter growth was 6 per cent. The cost of risk grew 8 per cent quarter-on-quarter, closing at 1.3 per cent. This was due to increase impairment on the loan book, most especially in the power and energy, commerce and government sectors. Revenue witnessed a 34 per cent year -on-year Y-o-Y growth and 11 per cent quarter-on-quarter growth. This was driven by increase in our non-interest income and net interest margin due to growth in loan and advances. Return on average equity for the quarter increased by 26 per cent quarter-on-quarter to (Indiscernible) cost to Income Ratio trend downward from 67 per cent to 54 per cent at the end of 9 months 2022. This was due to growth in revenue period.
Profit Before Tax (PBT) grew from N10.9 billion to N19.2 billion Year -on-Year amounting to a 75 per cent increase and a 17 per cent growth quarter-on-quarter amid challenging macroeconomic environments.
This growth was largely due to significant performance recorded in net interest income and non-interest income not especially in corporate SME and treasury and financial market segment, net interest income improved by 3 per cent quarter-on-quarter and 47 Year-on-Year.