FCMB Group Plc anticipates that its United Kingdom subsidiary will return to profitability by 2027, driven by a strategic pivot to transaction banking and the completion of a comprehensive digital transformation programme.
FCMB Bank (UK) Limited is a fully independent company, wholly owned by First City Monument Bank Ltd (FCMB), and part of FCMB Group PLC, a top financial services group based in Nigeria.
Speaking at the company’s Annual General Meeting (AGM), Group Chief Executive Officer Ladi Balogun explained that the UK business slipped into a loss position in 2025 after incurring concentrated credit losses and significant write-offs.
Balogun noted that the UK subsidiary had previously generated substantial income by facilitating trade finance activities for Nigerian financial institutions, particularly during periods of severe foreign exchange liquidity constraints. The business benefited from elevated yields on dollar financing when access to foreign currency was restricted.
However, as Nigeria’s macroeconomic environment improved, and domestic banks experienced stronger liquidity; demand for such funding declined, causing yields on the trade finance portfolio to drop sharply. While revenue from the business has fallen, funding costs have remained high, compressing interest margins and impacting profitability.
To restore earnings, FCMB is repositioning its UK operation by focusing on transaction banking, a strategy designed to lower funding costs and create a more sustainable revenue base. This transformation is being supported by investments in digital technology to improve efficiency and expand customer offerings.
“We expect that by 2027, once the digital transformation is fully implemented and the transaction banking strategy takes effect at scale, we will return to healthy profitability,” Balogun stated.
The FCMB Group CEO also addressed concerns about the rising contribution of investment securities to the group’s earnings compared to loan growth. He explained that the group’s liquidity has been expanding faster than its ability to deploy funds as loans, leading the bank to invest surplus liquidity in treasury bills.
“The natural place for us to deploy excess liquidity is treasury bills. So, we are seeing increased income from treasury,” he said, emphasising that this approach is capital efficient, as investments in government securities do not carry the same capital requirements as loan assets.
Despite the higher income from treasury investments, Balogun reaffirmed FCMB’s commitment to expanding credit, especially in underserved sectors of the economy. He highlighted that the bank is prioritising lending to retail customers and small and medium-sized enterprises (SMEs), while boosting financing for agriculture and infrastructure—sectors vital to Nigeria’s economic development.
Although overall loan growth may remain moderate as some existing exposures are repaid, Balogun expects lending to the bank’s priority sectors to accelerate significantly in the coming years.
