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FCMB concludes merger of FinBank, announces nine-months Profit before Tax of N12.1bn

By on October 30, 2012

Managing Director, FCMB, Ladi Balogun

First City Monument Bank PLC has announced its unaudited IFRS-compliant group results, for the nine-months  ended 30 September 2012. The banking group has also concluded the merger of FinBank, a wholly owned subsidiary acquired on 9 February 2012.

Key Highlights:

 Steady improvement in Year-on-Year (YoY) performance:

 Nine-months PBT, as at September 2012, was up 23% YoY at N12.1bn;

 Annualised ROE rose 45% in September 2012 to 11.0% from 7.6% for the corresponding period of 2011, enabled by improved balance sheet leverage;

 Group Net revenues for the same period were up 42% YoY at N50.7bn;

 Operational expenses, year to date, were up 67% YoY.

 Operating Expenses’ YoY growth was due mainly to the consolidation of FinBank numbers for the first time in 2012. However, OPEX declined 7%  Quarter-on-Quarter (QoQ) coming primarily from the realisation of cost savings from the pre-merger rationalisation exercise conducted in the first half of the year.

 Net Revenue grew 12% QoQ coming from better margins that saw net interest income rising by 13% in 3Q12.

 Non-interest revenue was N6.6bn in 3Q12, indicating an 8% growth QoQ.

 Loan loss provisions were N1.3bn in 3Q12, against the write-back of N0.7bn in 2Q12, which came from recovery of previously-provisioned assets from both FinBank and FCMB.

 Improving balance sheet and earnings potential:

 The Bank’s capital adequacy and liquidity ratios remain strong, in spite of risk asset growth, at 22% and 56%, respectively;

 Low cost deposit mix was 58%, representing an improvement of 4%, YoY, and 14%, QoQ;

The growing liquidity position of the Bank was evidenced by the 14% QoQ growth in balances

with other banks to N126.4bn;

 Net Interest Margin improved to 7.6% in 3Q12 from 6.8% in 3Q11, enabled by a better deposit mix and continued growth in retail loans;

 Cost-to-Income Ratio (CIR) was 70%, for 3Q12, showing a QoQ improvement of 20%, though a YoY  deterioration of 11%, which was largely due to  FinBank’s  cost profile, which will be significantly lower post-merger.

 Risk assets grew 10% QoQ, from N330bn to N363bn, arising from continued retail loan growth and trade finance growth, while the Non-Performing Loans (NPL) ratio fell from 6.4% in 2Q12 to 4.9% in 3Q12.

Commenting on the results, Mr. Ladi Balogun, Group Managing Director/ CEO of FCMB Plc, said:

“2012’s main activity has been the FinBank acquisition and merger, which is now complete from a legal and regulatory perspective. The FinBank acquisition and subsequent merger has added 30% to the balance sheet and transformed the Bank’s liquidity profile. It has taken the Loan-to-Deposit ratio (LDR) from 87% to 59% and the liquidity ratio from 50% to 56% compared to this time last year and has also doubled our distribution capacity from 130 to 280 branches and 2 million customers. While the protracted merger process has been costly, the opportunity for sustainable, rapid, and profitable growth, particularly in the commercial and retail segments, remains significant.

With the culmination of the legal and regulatory processes, we are now able to integrate our operations fully and deliver the expected benefits to shareholders and customers. The enlarged single entity is well-positioned to compete in the consolidating banking landscape. Our customers will experience continued improvements in the customer experience, improved convenience, greater and quicker access to financial support, with simple processes, products and communication.  This is, indeed, a pivotal transaction for the Bank and one that will lead to significant and sustained increase in shareholder value.”