First City Monument Bank (FCMB) Group concluded the 2024 financial year with a robust Profit Before Tax (PBT) of N111.9 billion, representing a significant 71% surge compared to the previous year. This accomplishment, despite challenges such as a decline in revaluation income and a slight contraction in Net Interest Margin (NIM), underscores the bank’s resilient performance and strategic growth initiatives. The substantial growth in PBT indicates the efficacy of FCMB’s diversified business model and its ability to navigate a dynamic economic environment. The bank’s proactive approach to capital strengthening and focus on core banking operations played a crucial role in achieving this commendable financial outcome.
FCMB Group’s gross revenue experienced a notable upswing, reaching N794.4 billion, a 53.9% increase from the N516.4 billion recorded in 2023. This growth trajectory was primarily fueled by a substantial 75.2% increase in interest income, showcasing the bank’s success in optimizing its lending activities and capitalizing on prevailing market conditions. Non-interest income also contributed to the overall revenue growth, albeit at a more moderate pace of 8.7%, partially offset by a decline in other gains. The impressive growth in interest income reflects FCMB’s strong market position and its ability to effectively manage its asset portfolio.
Analyzing the components of FCMB’s financial performance reveals a nuanced picture of its strategic priorities. While net interest income demonstrated a healthy 27.6% growth, reaching N225.3 billion, the Net Interest Margin contracted by 1.9%. This contraction is attributable to a sharp 122% rise in funding costs, potentially reflecting the broader economic landscape and competitive pressures within the banking sector. Despite this, the improvement in yield on earning assets to 16.2% signifies the bank’s efforts to enhance profitability through strategic asset allocation and pricing strategies.
FCMB’s operating expenses witnessed a considerable increase of 45.7%, reaching N229.1 billion. This rise was primarily driven by escalating personnel costs, regulatory costs, and foreign currency-linked expenses, coupled with inflationary pressures. The cost-to-income ratio for the period closed at 59.9%, indicating the bank’s ongoing efforts to manage operational efficiency amidst rising costs. The increase in operating expenses highlights the challenges faced by financial institutions in navigating a high-inflation environment and complying with evolving regulatory requirements.
Despite the aforementioned cost pressures, FCMB demonstrated prudent risk management, evidenced by a 30.7% decrease in net impairment loss on financial assets. This reduction, from N59.5 billion to N41.2 billion, brought the cost of risk down to 1.8% from 3% in the previous year. This positive trend signifies the bank’s enhanced credit risk assessment processes and its focus on maintaining a healthy loan portfolio. The lower cost of risk contributes to the overall profitability and strengthens the bank’s financial position.
FCMB Group’s diverse business portfolio contributed significantly to its overall performance. While the banking group experienced a slight decline of 7.7%, the consumer finance and investment management divisions recorded impressive growth of 83.5% and 27.9% respectively. This diversification strategy, with non-bank subsidiaries contributing over 30% of profits, underscores FCMB’s commitment to building a resilient and multifaceted financial services group. The strong performance of the consumer finance and investment management divisions reflects the bank’s successful foray into these high-growth segments.
FCMB Group’s balance sheet further reflects a dynamic and expanding financial institution. Loans and advances grew by 28%, reaching N2.36 trillion, demonstrating the bank’s active role in supporting economic activity through lending. Total assets expanded significantly by 59.5% to N7.05 trillion, while customer deposits saw a healthy 39.4% increase to N4.30 trillion. These figures highlight FCMB’s growing market share and its ability to attract and retain customers.
In response to regulatory directives from the Central Bank of Nigeria (CBN), FCMB embarked on a capital strengthening program. The bank successfully completed the first phase, raising N144.6 billion through a public offer, doubling its issued shares. This capital injection enabled FCMB to secure its National Banking License and bolster its capital adequacy ratio to 18%, creating a buffer for future asset growth. Subsequent phases of the capital program are underway to ensure the bank meets the requirements for retaining its International Banking License.
The successful capital raising initiative demonstrates FCMB’s commitment to regulatory compliance and its proactive approach to fortifying its financial foundation. By exceeding the minimum capital requirements, the bank solidifies its position within the Nigerian banking sector and enhances its capacity to pursue strategic growth opportunities. The increased capital adequacy ratio provides a cushion against potential risks and reinforces confidence in the bank’s stability.
FCMB’s strategic focus extends beyond regulatory compliance to encompass broader market dynamics. The bank is actively pursuing asset creation in select segments, leveraging its enhanced capital position to support growth and expansion. This proactive stance positions FCMB to capitalize on emerging market opportunities and further solidify its presence in key sectors. The bank’s strategic allocation of capital demonstrates its commitment to long-term sustainable growth.
In summary, FCMB Group’s 2024 financial performance paints a picture of a dynamic and resilient financial institution. Despite facing challenges such as rising funding costs and inflationary pressures, the bank achieved substantial growth in PBT and gross revenue. The successful capital raising initiative, coupled with a diversified business portfolio and prudent risk management, positions FCMB for continued growth and success in the years to come. The bank’s commitment to regulatory compliance and its proactive approach to market opportunities underscore its ambition to remain a leading player in the Nigerian banking landscape.
