FCMB Group’s outstanding profit growth of 56 per cent to N32.6 billion in the 2022 financial year was powered by a combination of an upswing in revenue and some cost savings throughout the year.
It represents an additional N11.6 billion raked into the bottom line in the year from the N21 billion figure the bank reported at the end of 2021. It is also the strongest profit improvement for the bank in five years, beating its existing net profit peak of over N22 billion registered as far back as 2014.
Accelerated growth in revenue provided much of the strength for the impressive profit performance in the year. There was an all-around improvement in revenue lines in the year that enabled an increase of almost 33 per cent in gross earnings to roughly N282 billion at full year.
This marks the highest revenue improvement for FCMB since 2013. It is a major acceleration from 6.9 per cent growth in gross earnings to N212 billion in 2021.
Leading the outstanding revenue growth is other income which grew by close to 38 per cent to close at about N7 billion at the end of the year.
Closely following the high growth margin is net trading income which rose by 37 per cent to stand at N12.8 billion.
Next is interest income – the main revenue line of the bank, which rose by 34.5 per cent to N218 billion, marking the strongest growth record in interest earnings for the bank in many years.
Fee and commission income was not left out in the all-around revenue improvement the bank achieved in 2022. It grew by about 24 per cent to N44 billion at the end of the year.
Reinforcing the gains in revenue are some cost savings that helped to improve margins and propel profit growth.
These include personnel expenses, which moderated at an increase of 14 percent to N35.7 billion at the end of the year.
Administrative expenses also slowed down at an increase of 21 percent to N43 billion. Cost saving was also extracted from other operating expenses that slowed down relative to revenue at an increase of 10.7 per cent to N23.5 billion.
The bank’s management however could not contain revenue-consuming cost increases in interest expenses and loan impairment charges in the year.
Interest expenses scurried up in the final quarter, rising by as high as 76 per cent quarter-on-quarter to N36.6 billion for the quarter. That pushed the full year figure to top record growth of 37 per cent to N97.6 billion.
While interest expenses grew ahead of the 34.5 per cent increase in interest earnings, the outstanding growth in income provided a strong cushion to minimise the impact on the bottom line.
This explains an impressive growth of 32.4 percent or close to N30 billion in net interest income to over N120 billion at the end of the year.
Net impairment losses on financial assets also recorded an outstanding increase of 63.7 per cent to about N25 billion in the year thereby claiming an increased proportion of the earnings.
The cost increases were however more than compensated by the outstanding growth on the side of income and savings on the side of costs. The outcome is an increase in net profit margin from 9.8 per cent at the end of 2021 to 11.6 per cent in 2022.
The high growth in revenue with a gain in profit margin is the critical factor in the outstanding earnings story of FCMB in 2022.
The bank earned N1.64 per share at the end of the 2022 financial year, improving from N1.05 per share in 2021. It has declared a cash dividend of 25 kobo per share to shareholders, up from 20 kobo per share paid for its 2021 operations.
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