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FCMB offsets N3.9bn merger debt

Category: Corporate Earnings

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FCMB offsets N3.9bn merger debt

October 30, 2006/Sun




First City Monument Bank (FCMB) has written off a total of N3.878-billion, being the goodwill accrued from the bank’s acquisition of three banks, namely Cooperative Development Bank Plc (CDB), Nigerian-American Bank Limited and Midas Bank Limited.

Thus, FCMB becomes the first bank after consolidation, to perform this feat. Market analysts and investors have generally commended the approach. Despite the capital reduction, FCMB’s shareholders’ funds remain well above the stipulated minimum capital of N25 billion, which is a pointer to the bank’s superior financial strength.

The first quarter, 2006/2007 financial year results of First City Monument Bank (FCMB) just released showed the profit before tax of N3.640billion, compared to N1.09billion for the previous financial year. This is 18 per cent above the forecast of N3.058billion made by the bank last year.

Gross earnings were equally very impressive, jumping from N6.121billion to N10.965billion. After tax profit also went up by 265 per cent, rising from N797.795million in 2005 to N2.917billion in 2006.
The performance was achieved despite the writing off of N3.878billion, being the goodwill accrued from FCMB’s acquisition of the three banks. In spite of the goodwill set-off, the bank still declared dividend to its numerous shareholders.

The performance, according to Ladi Balogun, the managing director of the bank is based on a focused strategy built around an expanding retail platform, 23 years of operating experience and a committed management team.

A close look at the bank’s financials for the year under review shows extra-ordinary growth across all key indicators. Total assets also rose from N51.318billion to over N106billion, indicating a growth rate of 108 per cent. Cash and short-term funds increased by 60 per cent to N74.747billion, signaling a much stronger liquidity position for the bank, while deposits also went up significantly by 162 per cent to N70.297billion.
The shareholders of the bank smiled home with dividend in excess of N1.2billion already declared by the bank. This translates to 13k per share, which also exceeds the forecast of 12k per share in the prospectus issued during its IPO of 2005.

Speaking during the presentation of the company’s facts behind the figures recently at the floor of Nigerian Stock Exchange, Balogun said the “bank has moved from a modest branch network of 26 branches in 2004 to excess of 104 branches in 2006 and targets additional 20 branches before the end of its financial year. This makes FCMB one of the fastest growing banks by way of profit before tax (PBT), total assets and deposits top 12 in terms of profitability and rapidly approaching top 10\".

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