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FCMB records 77 per cent drop in profit

Category: Capital Market

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FCMB records 77 per cent drop in profit


First CityMonument Bank Plc has recorded a 77 per cent drop in its profit before taxation, according to the audited result for the financial year ended April 30, 2009.


A statement on Friday said the bank released its financials for the year ended April 30, 2009, and two subsequent quarters up to October 31, 2009 declaring profit before taxation of N4.8bn for the financial year ended April 30, 2009, and a year to date loss of N479m for the six months ended October 2009.


According to the statement, ”The result showed a 36 per cent growth in gross earnings at N71.66bn. However, profit before tax fell by 77per cent to N4.77bn compared with N20.52bn achieved in the preceding year.


”The major contributing factor to this was the significant loan loss provision of N21.9bn. This amount was a result of the N7.9bn provisions as determined by the bank and additional provisions of N14bn, representing 58 per cent of the amount advised by the Central Bank of Nigeria’s stress test on the bank‘s loan portfolio as at June 30, 2009.”


The statement added that the total provisions from the CBN exercise was N24bn while the balance of N10bn was recognised in Q1 (ended July 2009) of the current financial year.


For the full financial year, total assets grew by 10 per cent from N467.34bn to N515.60bn. Deposits grew by 28 per cent in the year from N251.22bn to N321.22bn while loans grew by 45 per cent, from N189bn to N273bn. Non-performing loans rose to 10 per cent of total loans as a result of the stress test.


The bank also simultaneously released Q1 (July 31, 2009) and Q2 (October 30, 2009) results. The latter showed that whilst the balances of the provisions of N10bn were made in July 2009, recoveries of provisions totalling N5.2bn have been made between September 1 and October 30.


Year-to-date loss was N479m, which suggests that barring any unforeseen circumstances, the eight months period ending December 31, 2009, should close on a positive note. Management also expects that further recoveries will be recorded in the remaining months of the year.


For the six months period, gross earnings were down by 13 per cent, while operating income was down by 28 per cent from the same period of the year. This is largely attributable to the slowdown and suspension of interest income on non-performing loans.


Nonetheless, capital adequacy remains extremely buoyant at 31 per cent. With the special audit and provisions now behind the bank, the bank will continue its recovery drive on provisioned accounts, which is expected to yield further positive results and resume profitable volume growth in 2010.


The bank also explained that appropriation of profit for the financial year ended April 2009, whether to cash dividend, bonus or transfer to reserves, will be communicated as soon as the CBN approval is received on this item. This is as management has scheduled conducting an investor conference call next week to discuss the results.



(Source: Punch)

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