Kayode Tokede
On the backdrop of growing gross earnings and effective management of operational expenses, FCMB Group Plc emerged stronger in unaudited half year (H1) financial statement for period ended June 30, 2022 in profits and Earning Per Share (EPS).
The Group reported 73 per cent Year-on-Tear (YoY) increase in profit before tax to N15.4billion in H1 2022 from N8.9billion reported in H1 2021, while Profit after tax grew by 80.8per cent to N13.66billion in H1 2022 from N7.55billion in H1 2021.
The Banking Group contributed 71per cent of Group profits, whilst other non-banking subsidiaries contributed 29per cent (Consumer Finance 14per cent, Investment Management 11 per cent, and Investment Banking four per cent).
As indicated in profit & loss figures, key drivers to double-digit growth in profits include significant increase in gross earnings, sharp rise in net Interest Income, on-Interest Income, and the effective management of Operating expenses.
With the increase in profit, EPS closed H1 2022 at N0.69 from N0.38 per share.
In the period under review, the Group reported N121.16billion gross earnings, representing an increase of 22.8 per cent from N90.55billion reported in H1 2021.
Net Interest Income closed H1 2022 at N60.17billion, representing an increase of N42.99billion in H1 2021, driven 35per cent increase in interest income to N98.09billion in H1 2022 from N72.67 billion in H1 2021, as loan book grew by 22per cent YoY.
Also, interest expenses stood at N37.92billion in H1 2022, from N29.67billion reported in H1 2021.
The group’s Non interest income also grew by 29per cent YoY to N23.07billion in H1 2022 from N17.88billion in H1 2021, largely driven by growth in service fees and commissions and trading income despite a decline in Foreign Exchange revenues.
In addition, trading income grew 132per cent YoY to N6.13billion in H1 2022 from N2.64billion in H1 2021 over higher volumes of fixed income instrument trades during the year.
Operating expenses increased 19.1per cent YoY to N57.11billion in H1 2022, due to increased regulatory costs, investments in technology, and general inflationary pressures.
The group, thus closed H1 2022 with impairment charges of 167per cent YoY to N10.7billon in H1 2022 from N4.01billion in H1 2021, on the back of increased provisions on risk assets as evidenced by the growth balance sheet.
The Group hinted that its four operational platforms are gaining traction and profit growth. (Banking
84per cent, Consumer Finance 42per cent, Investment Banking 254per cent and Asset & Wealth Management 42per cent
On Technology Platforms (TP1), it maintained that a borderless banking platform focused on inbound remittances, investments and payments serving the African diaspora and Global citizens in Nigeria.
Balance Sheet Drives H1 2022
The group closed June 30, 2022 with N2.65trillion in total assets from N2.49trillion reported in full year ended December 31, 2021, driven by loans & advances to customers and Deposits from customers.
As at June 30, 2022, FCMG group reported N1.12trillion loans & advances to customers from N1.06trillion in 2021, while deposits from customers rose by 5.3 per cent to N1.64trillion as at June 30, 2022 from N1.55trillion reported in 2021.
According to the bank, lending to agric. Sector rose to N87.9billion in as at June 2022 from N53.6billion in previous year.
The bank said it deployed N6.3 billion loans to over 52,000 MSMEs at an average ticket size of N99,000, 77per cent of which were women.
The group added that it acquired over 900,000 customers in H1 2022, a 2x growth above H1 2021 with Group customer base crossing the 10 million mark.
Key ratios maintain positive trajectory
In the period under review, key ratios of FCMB group maintained positive outcome, above the threshold of the regulating body.
For instance, Capital Adequacy Ratio closed H1 2022 at 15.1 per cent from 17.1 per cent reported in H1 2021, while liquidity ratio was at 30.7 per cent in H1 2022 from 35.7per cent reported in H1 2021.
The group recorded strong Q2 RoAE of 13.5per cent, bringing its H1 2022 RoAE to 11.1per cent as a direct result of our growth in profitability.
FCMB Group’s net Interest margin increased by 7.2per cent and 8.0% QoQ and YoY respectively driven by a growth in earning assets yield.
In addition, Cost to Income ratio also improved by 10.1per cent and 12.9 per cent QoQ and YoY respectively.
Digital banking performance
The group generated N17.3billion from digital payments and lending activities in H1 2022, a 51per cent growth from for H1 2021. It now accounts for 14 of gross earnings driven by lending and payments
On digital loans, the bank disclosed that over N114billion was disbursed to 455,000 customers as at H1 2022, while total portfolio size (N74.0billoon) grew by 111per cent from H1 2021.
Digital lending now accounts for 61per cent of digital revenues and it has 8.3 million digital customers up 15.3per cent from 7.2 million (June. 2021).
Outlook for 2022
Commenting on the 2022 outlook, the Group Chief Executive, FCMB Group, Mr. Ladi Balogun in a presentation to investors/analysts, stated that the Group is revising its YoY PBT growth target from 25per cent to 40per cent driven by the following Increase in digital revenues by over 30per cent YoY from digital lending & payments.
“At our current run rate digital revenues are projected to exceed N34 billion for 2022 FY. A growth of over N8 billion from the N26.2 billion delivered in 2021.”
On investment management, he said, “Growth in AUM by 47per cent YoY and associated asset management fees, driven by our PFA acquisition and increased market share in the Pensions business.
“Stronger profitability in H2 2022 due to lower regulatory costs in Q4, as the Banking subsidiary conducts its annual 9M interim audit.”
