WorldStage Newsonline-- First City Monument Bank PLC (FCMB) has recorded significant improvements across major lines of the income statement and stronger growth in the overall financial position for the first half (Q2) of the year ended 30 June 2012.
Its unaudited IFRS-compliant group results for the Q2 released on the floor to the Nigerian Stock Exchange (NSE) on Monday which include the financials of its recently acquired entity, FinBank, a wholly owned subsidiary, shows a steady improvement in the bank’s year-on year (YoY) performance.
A press statement signed by the bank’s Group Head Corporate Communications, Mr. Kenny Aliu, shows that six months PBT as at June 2012 was up by 17 percent YoY at N7.8 billion, while Annualised ROE rose 38 percent in June 2012 to 10.2 percent from 7.4 percent for the corresponding period of 2011.
The statement also reported that Group Net Revenues appreciated by 40 percent YoY to N32.4 billion. Operational expenses were, however, up by 69 percent YoY.
Further analysis of the unaudited results shows that the second quarter PBT was down by 23 percent, Quarter-on-Quarter (QoQ) to N3.4 billion. This, the bank said was as a result of a 20 percent one - time surge in expenses, occasioned primarily by the on-going consolidation of FinBank. Similarly, Cost-to-Income Ratio (CIR) grew to 88.3 percent in Q2, 2012 from 77.8 percent in 1Q12, driven by the consolidation of FinBank financials.
“It is expected that, when integration is completed in 3Q, 2012, the synergy effects will offset restructuring costs and barring unforeseen circumstances lead to CIR reduction and PBT improvement” the bank said.
Also reported in the bank’s unaudited Q2 results is a modest Quarter-on-Quarter reduction in total deposits and loans by 3.7 percent and 3.2 percent respectively, as the bank unwound exposures to corporate clients in volatile sectors of the economy.
The results which manifested improving balance sheet and earnings potential also, recorded deposit mix improving marginally to 54 percent, QoQ, while Liquidity Ratio improved, YoY, by 28.7 percent to 58.7 percent in June 2012, compared to 45.6 percent in June 2011. Capital adequacy ratio reduced to 25.1 percent in Q2, 2012 from 26.4 percent in Q1, 2012 due to large interbank placement position.
Net Interest Margin improved to 6.6 percent in Q2, 2012 from 6.1 percent in Q1, 2012, in spite of rising interest rate regime, as the bank continued to shed expensive wholesale deposits. NPL temporarily rose to 6.4 percent in Q2, 2012 from 5.8 percent in Q1, 2012, as a result of loan book reduction and the consolidation of FinBank’s non-performing loans (fully provided for, but not yet written-off).
Commenting on the results, Mr. Ladi Balogun, Group Managing Director/ CEO of FCMB Plc, said “The Bank was marginally ahead of its forecast net revenue for the second quarter of 2012, in spite of the adverse interest rate environment, but profitability was dampened by the surge in expenses arising from the ongoing streamlining and consolidation of FinBank. With the delays in regulatory approval almost out of the way, we expect that the synergy benefits will not only be substantially realised in the fourth quarter of the year, but also still have a positive contribution to the 2012 financial year-end.”