First City Monument Bank (FCMB)Plc has recorded significant improvements in its financial position for the first half (Q2) of the year ended 30 June 2012, with Group net revenues appreciating by 40 per cent Year on Year (YoY ) to N32.4 billion.
The unaudited International Finance Reporting Standard (IFRS)-compliant group results for the Q2 released on the floor to the Nigerian Stock Exchange (NSE) on Monday showed that operational expenses went up by 69 percent YoY.
According to a press statement signed by the Bank’s Group Head Corporate Communications, Mr. Kenny Aliu, the six months results shows that Profit Before Tax ( PBT )went up by 17 per cent YoY at N7.8 billion, while Annualised Return on Equity (ROE) rose 38 per cent in June 2012 to 10.2 per cent from 7.4 per cent for the corresponding period of 2011.
Further analysis of the unaudited results shows that the second quarter PBT was down by 23 per cent, Quarter-on-Quarter (QoQ) to N3.4 billion. This, the bank said was as a result of a 20 per cent one – time surge in expenses, occasioned primarily by the on-going consolidation of FinBank.
Similarly, Cost-to-Income Ratio (CIR) grew to 88.3 per cent in Q2, 2012 from 77.8 percent in first quarter 2012 driven by the consolidation of FinBank financials.
“It is expected that, when integration is completed in third quarter( Q3), 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 per cent and 3.2 per cent 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 per cent, QoQ, while Liquidity Ratio improved, YoY, by 28.7 per cent to 58.7 per ent in June 2012, compared to 45.6 per cent in June 2011. Capital adequacy ratio reduced to 25.1 per cent in Q2, 2012 from 26.4 per cent in Q1, 2012 due to large interbank placement position.
Net Interest Margin improved to 6.6 per cent in Q2, 2012 from 6.1 per cent 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”.