By Goddy Egene
High demand for the shares of First City Monument Bank Plc following expectation of impressive 2012 full-year result, benefits from acquisition of Finbank Plc and holding company structure have helped in driving up the equity price by 24.5 per cent within the few days of the year.
THISDAY analysis of the equity performance showed that it had outperformed the NSE Banking Index by 14.2 per cent considering the fact that the sectoral index has recorded a growth of 10.3 per cent so far in the year.
FCMB’s share price opened for the year at N3.75 closed at N4.67 last Friday, translating into a capital gain of 24.5 per cent.
A stockbroker and Managing Director of Crane Securities Limited, Mike Ezeh, said the high demand was resulting from two major factors.
“Investors are expecting that the bank would declare dividend for 2012 given its third quarter(Q3) result which was impressive. Besides, investors also believe the bank will benefit from its new HoldCo structure that was approved by the shareholders last month. The approval for the HoldCo structure came shortly after the bank concluded its merger with Finland Bank Plc,” Ezeh said.
FCMB posted a profit before tax of N12.1 billion, showing an increase of 23 per cent above the 2011 performance. Annualised return on equity (ROE) was up by 45 per cent September 2012 to 11 per cent from 7.6 per cent in 2011.
The bank's capital adequacy and liquidity ratios remained strong, in spite of risk asset growth, at 22 per cent and 56 per cent respectively.
Risk assets grew by 10 per cent QoQ, from N330billion to N363 billion, arising from continued retail loan growth and trade finance growth, while the Non-performing Loans (NPL) ratio fell from 6.4 per cent in June to 4.9 per cent in September in 2012.
The Group Managing Director/Chief Executive Officer of FCMB, Mr. Ladi Balogun, had said shareholders should expect more impressive performance considering the fact that the acquisition of FinBank had been concluded.
Balogu said: "2012’s main activity has been the FinBank acquisition and merger. The FinBank acquisition and subsequent merger has added 30 per cent to the balance sheet and transformed the bank's liquidity profile. It has taken the loan-to-deposit ratio from 87 per cent to 59 per cent and the liquidity ratio from 50 per cent to 56 per cent 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.”
He added that the enlarged single entity was 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," he said.