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FCMB plans N7.5bn tier-II debt issue, grosses N140.7bn in Q3

First City Monument Bank Limited (FCMB) is currently perfecting plans to raise 7.5 billion naira ($25 million) in Tier-II supplementary debt by year-end to strengthen its capital base.

This is as it grossed N140.7 billion in earnings for the third quarter ended September 2016, 29 per cent above N109.3 billion recorded in the same period prior year.

The group non-interest income stood at N44.8 billion, for Q3 2016, an increase of 128 per cent Year-on-Year (YoY), from N19.6 billion for the same period prior year.

Details secured from the bank Friday showed that the bank will get the nod of shareholders for the deal to raise liquidity.

The bank had said in August it will raise between 10 to 15 billion naira of Tier II capital, targeting retail investors for the offering.

On Friday FCMB also posted a rise in pre-tax profits to 14.18 billion naira in the first nine months of the year, up from 2.56 billion naira in the same period last year.

The bank intended to be cautious on increasing its lending and would focus on smaller ticket loans to farmers and small businesses, management said in a presentation to analysts.

FCMB, like several Nigerian lenders have to adapt their business models at short notice after the slump in crude prices since mid-2014 put pressure on the once lucrative oil and gas loan book.

Experts who were upbeat on the performance said the impressive results impacted positively on profit before tax (PBT) that gained 453 per cent to N14.2 billion in Q3 2016 from N11.9 billion in Q3 2015.

Managing Director of FCMB Group Plc, Mr. Peter Obaseki,  said, “The audited nine months results for the period ended September 2016, reflects our focus on key soundness ratios and the need to maintain buffers against a sustained adverse operating environment.

“Accordingly, capital adequacy and liquidity ratios have held up at 17.6per cent and 36.8per cent, respectively.

“Underlying revenue momentum remains strong while cost optimisation programme led to a two per cent YoY drop in operating expenses, despite inflationary spiral.

“Overall, profit before tax came in at N14.2billion, a 453 per cent growth, translating to an EPS of 87 kobo, up 30.6per cent, YoY, respectively.

“The macro economic conditions in the final quarter remain challenging; we will keep up a conservative stance.”

Also, Group Managing Director of FCMB Limited, Mr. Ladi Balogun, said “The audited results of the bank reveal that the extraordinary performance of Q2 2016 offset the loss recorded in Q3 of N2.4 billion, thereby resulting in strong year on year profit growth of 913per cent. In order to avoid an unsustainable, non-cash, spike in earnings from further revaluation gains in Q3, the bank also significantly stepped up its loan loss provisions.

“The macroeconomic climate is taking a significant toll on the bank’s borrowing customers across all segments. Accordingly, the bank will maintain high provision coverage ratios (currently 131per cent), continue to strengthen our capital adequacy ratio (currently 16.9per cent) and our liquidity ratio (currently 36.8per cent). While our prudential ratios should continue to strengthen into Q4 (modestly buoyed by a tier 2 capital injection of N7.5billion in November), we do not anticipate improvement in the fourth quarter earnings.

“Nonetheless, we are pleased with the gains we continue to record in growing our business in areas such as retail banking (with a 315per cent YoY growth in profitability) and increasing our share of banking activities in the agricultural sector.