By Nkiruka Nnorom

FCMB Group Plc has warned of the possibility of recording decline in profitability in its interim financial report for the third quarter (Q3) ended September 2015.

This is contained in a notice filed with the Nigerian Stock Exchange (NSE) yesterday. The bank linked the delay to interim audit delay by its subsidiary – First City Monument Bank Ltd.

It therefore announced the fourth week in January for completion of the banking subsidiary’s interim audit, which should pave way for the release of the 3Q15 earnings results of FCMB Group Plc, before the end of January 2016.

According to the bank, a spike in impairments particularly in the energy sector and the significant reduction in trade finance-related revenues due to foreign exchange illiquidity is expected to lead to a weaker Q3-15 performance relative to Q3-14.

In his reaction, Peter Obaseki, the Managing Director, FCMB Group Plc, said: “ Q3,15 earnings as at September 2015, will be materially below earnings for the same period in 2014, due to two factors: a spike in impairments particularly in the energy sector and the significant reduction in trade finance-related revenues due to foreign exchange illiquidity.

“This trend continued in 4Q15 and largely emanated from wholesale banking activities, while retail banking showed greater resilience and earnings momentum. 2016 will be characterised by continued growth in retail contribution, stabilisation of wholesale banking revenues and increased focus on cost efficiencies (opex, funding and risk) in order to restore earnings levels”

Following the recent development, an investment bank and equity research firm, United Capital Plc, has put its rating and recommendations for FCMB under review.

FCMB Group had in October last year announced that its nine-months ended 30 September 2015 (3Q15) results will be delayed due to its interim audit.

It said: “FCMB Group Plc would like to inform the investment community of the commencement of the interim audit of First City Monument Bank Ltd as at 30 September 2015, by KPMG, the bank’s auditors. For this reason, the 3Q15 results will be delayed.

The audited results will be released on the Nigerian Stock Exchange and to the investment community upon conclusion of KPMG’s audit.”

The bank had in Q3 2014 posted profit before tax (PBT) of N16.8 billion, up 14 per cent from N14.7 billion for the same period in 2013. Net interest income of N49.1 billion was an increase of 19 per cent Year-on-Year (YoY), from N41.1 billion for the same period in 2013, while operating expenses went up 12 per cent YoY to N48.9 billion in Q3 2014, from N43.8 billion for the same period in 2013.