Results Show Ladi Balogun Led FCMB Enjoying Customers Confidence – Report

A recent report made available to societynowng.com shows financial institution led by publicity shy professional Ladi Balogun still enjoying customers confidence day in, day out.

The full report is produced as provided

Amid stiff competition in the banking sector, FCMB Group recorded revenue growth and increased its deposit base, an indication of customers’ confidence in the bank.
The earnings season is on with listed companies announcing their results for the half year (H1) ended June 30, 2015. Given the state of the economy characterised by many headwinds, investors have expected moderate performances from companies.

Apprehensions among investors in banking sector have been high considering the Ladi Balogun

tightened regulation of the sector, which has continued to reduce bottom-line of many financial institutions. However, the results of some of the banks have brought relief to many stakeholders. The banks have defied the difficult operating environment to record improvement in performance indicators.

For instance, FCMB Group Plc reported its HI results, posting growth in revenue, customers’ deposits, loans and advances among others. Although the bank ended the period with a profit of N9.6 billion, which was 14 per cent lower than N11.1 billion in the corresponding period of 2014, FCMB attracted more patronage as indicated by the growth in customers’ deposits. FCMB Group Plc recorded a growth of 11 per cent in revenue for the half year ended June 30, rising from N69.6 billion to N77.4 billion. Net income interest grew by six per cent from N32.3 billion to N34.4 billion. Profit before tax (PBT) fell from N11.1 billion to N9.5 billion, while profit after tax (PAT) declined from N9.6 billion to N8.3 billion.

Despite the decline in bottom-line, which resulted from challenging operating environment. Customer’s confidence in FCMB remained strong, as deposits grew four per cent during the period to N785.8 billion. The diversification of FCMB across commercial banking, investment banking and wealth management, provided some cushion as earnings from non-banking activities proved more resilient.

The commercial and retail banking subsidiary of FCMB Group, First City Monument Bank Limited, continued to validate its increased drive into retail. Its retail group contributed 21 per cent (N1.2 billion) of FCMB Limited PBT. The retail group also grew deposits 21 per cent to N431.2 billion, or 54 per cent of total deposits. The bank acquired 260,000 customers in the first half of this year. The bank continued its drive of inclusive lending, granting just over 9,100 new loans to micro-enterprises. FCMB’s credit card offering saw increased patronage, with over 17,000 cards issued in the first half of this year.

The investment banking group of FCMB Group Plc – comprising of financial advisory (FCMB Capital Markets Ltd (FCMB-CM)) and stockbroking (CSL Stockbrokers Ltd (CSLS)) – delivered a per cent increase in Profit After Tax (PAT) of N414 million driven by financial advisory, equity capital raising and asset management fees. On the operating side, FCMB-CM had notable accomplishments, including winning lead adviser and structure mandate to a $445 million term facility for a key gas provider. Also, FCMB-CM was mandated as adviser and arranger of debt facilities, with an aggregate value of over $520 million for clients, in the oil & gas and power sectors. Additionally, FCMB-CM was mandated as financial adviser to raise an aggregate value of $30 million equity finance on behalf of clients in the health and agro- allied sectors and, on a scheme of merger by a client in the fast-moving consumer goods sector.

Commenting on the results, Managing Director of FCMB Group Plc, Mr. Peter Obaseki said “The economy has entered a higher risk level with inflation climbing to 9.2 per cent , fiscal and trade deficits, as well as, declining GDP growth rate below four per cent as at Q1 2015 from 5.94 per cent as at Q4 2014; broad money supply (MM2) contracted by N380 billion in June, from N19.19 trillion in May, to N18.81 trillion. The group results for H1 2015 reflects a deliberate conservative stance aimed at maintaining robust capital buffers in the face of a tough macro-economic and regulatory environment. Capital adequacy ratio remains strong at 19.8 per cent despite proactive jump in non-performing loan ratio from 3.6 per cent as at FY14 to 5.2 per cent at the end of H1; gross revenue went up 11 per cent on H1 2014 and return on average equity slowed down to 10.3 per cent. The underlying retail franchise is getting stronger, while capacity exists to take on sizeable pipe-line transactions in H2.”

Speaking in the same vein, Group Managing Director/ CEO of FCMB Limited, Mr. Ladi Balogun, said “H1 2015 was characterised by significant macro-economic and policy headwinds. Limited supply of foreign exchange had a major impact on the commercial & retail banking group’s (CRBG) trade finance and foreign exchange trading income. The harmonisation of the cash reserve requirement to 31 per cent led to a significant rise in our restricted reserves and consequently constrained lending and put pressure on net interest margins.

Asset quality was adversely affected by the effect of declining government revenue on contractors and employees, which saw our NPL ratio climb to 5.2 per cent compared to 3.6 per cent at the end of FY14. In spite of the inflationary pressures , operating expenses saw a modest rise of five per cent in the CRBG, thanks to our ongoing channel optimisation programme. Also encouraging is the steady migration of customers towards card-based and digital channel transactions. The business is on a sound footing and is increasingly diversified. The foundations for a strong rebound are in place as the country adapts to a lower oil price environment and we look forward to a more sustainable macro-economic and monetary policy environment.”

The growing customers’ confidence in the FCMB’s brand got validated recently KPMG, a leading international consulting firm, rated the bank as the fourth most customer-focused bank in Small and Medium Enterprises (SME) with a score of 74.94 percent and fifth in retail banking with 73.16 per cent by bank customers surveyed nationwide.

The rating, which came four years after the bank transformed to become a retail and commercial banking-led lender, is an improvement when compared to 2014 where the bank occupied the eight and seventh position in the SMEs segment and retail banking space, respectively.

The rating, as contained in the 2015 report of the KPMG Banking Industry Customer Satisfaction Survey (BICSS), was on the basis of Customer Satisfaction Index (CSI), which took into account convenience, product/service offering, executional excellence, and value for money and customer care. The KPMG BICSS survey was launched in 2007 to heighten the consciousness of service delivery among Nigerian Banks. The survey has evolved over the years and in 2015, the scope covered over 23,000 retail customers, 2,800 SMEs and 400 corporate/commercial organisations across the country.

The research highlighted quality of service experience as a major reason customers maintain or switch banking relationships, followed by financial stability before image and reputation. It was also stated that banks that customers perceive as offering high quality online and mobile capabilities recorded high overall customer satisfaction scores. These are factors that contributed to the leap in rating by FCMB.

Speaking on the rating, Mr. Balogun said ‘’it shows that we are on the right path towards achieving our goal of attaining the highest levels of customer advocacy in the industry. It is a demonstration that the various initiatives we are driving in the areas of service, products offering and operations to enhance customer experience are yielding the desired results and our customers appreciate them’’.

“We will utilize this information to get better and provide you with value added products and services. We will continue to invest in our infrastructure, providing you with platforms that are reliable, easy to use and convenient. It is important to us that we meet you right where it matters. At the core, our customers want us to understand and provide products and services that adapt and in some cases enhance their lifestyle. We are committed to doing just that,” he said.

In order for FCMB to strengthen its capital base, enhance its capital adequacy ratio, expanding its distribution channels and infrastructure and growing its risk assets with a view to enhancing its income, the bank recently raised N26 billion debt under its N100 billion debt issuance programme. The N26billion Series 1, 7-Year 14.25 per cent Fixed Rate Unsecured Bond the year 2021, was listed on the FMDQ OTC last month.