Business
FCMB Group posts 90% surge in half-year profit
FCMB Group deployed a mix of strategies, including top-line expansion and cost management, to deliver a 90.5 per cent increase in net profit for the six months to June, compared with a year earlier, the latest accounts of the bank holding company published on Monday showed.
Gross earnings climbed to N676.2 billion from N529.2 billion, with 88.8 per cent of it solely contributed by interest and discount income, setting the scene for the big earnings boost, which was partly driven by a reduction in some major expenses.
Cost-to-income ratio dropped to 41.4 per cent from 57 per cent one year prior, strengthening earnings.
FCMB Limited, the group’s commercial banking division, continued to dominate performance across key income streams and accounted for more than three-quarters of post-tax profit.
The other divisions, including Credit Direct, its consumer lending business that offers payroll-based loans to customers, are all currently profitable, contributing their share to the bottom line.
The financial institution managed to scale back interest expense by 2.7 per cent (N6.8 billion), even as interest and discount income rose by up to 31 per cent, attributable to an improved low-cost deposit mix and lower cost of funds.
That was a lever for a jump in net interest income from N207.4 billion to N356.3 billion.
In a separate statement on Monday, FCMB Group highlighted the role of its digital business – comprising payments, lending and wealth – in driving turnover growth. It noted that digital revenue, at N89.1 billion, added 13.2 per cent to gross earnings due to volume growth.
“Our first-half performance demonstrates the strength of our recapitalised and diversified business model,” said Ladi Balogun, the CEO.
“We delivered record profitability despite accelerating the normalisation of asset quality towards regulatory thresholds, reflecting our commitment to building a stronger balance sheet for long-term growth,” he added.
Net fee and commission improved by almost one-third, enabled by both a rise in fee and commission income and a drop in related expenses.
Net trading income took a blow from sharply weaker bond and treasury bills trading income, falling 65.7 per cent year on year.
READ ALSO: Aradel, NEM, FCMB Group top stock pick this week
Likewise, impairment losses quickened to N85.9 billion from N36.2 billion, as the provision for other losses, apart from those on loans and advances, surged 2,427.6 per cent to N48.1 billion.
Profit before tax roughly doubled to N157.3 billion, while profit for the period stood at N139.9 billion, up from N73.4 billion in the same period last year.
Mr Balogun assured that return on equity will surpass 25 per cent this year, compared with 21.1 per cent for the financial year 2025.
President Bola Tinubu has said 21 shared facilities established across 19 states and the Federal Capital Territory are supporting businesses and an estimated 650,000 jobs.
The facilities, established under the Federal Government’s National MSME Clinics initiative, provide entrepreneurs with access to equipment, electricity and production infrastructure without requiring them to bear the full cost of setting up such facilities themselves.
President Tinubu disclosed this in a statement on Monday while highlighting the government’s efforts to address infrastructure and equipment challenges facing micro, small and medium enterprises (MSMEs).
According to the President, many small businesses have the skills and ideas to expand but struggle to access the equipment and infrastructure needed to increase production.
He said the shared MSME hubs were designed to reduce some of those barriers by allowing entrepreneurs to use modern production facilities without making large upfront investments.
He cited tailors and food processors as examples of businesses that could benefit from the model.
“A tailor should not need millions of naira to buy industrial machinery before she can grow her business. A food processor should not have to build a factory before producing at scale,” he said.
The President said access to shared facilities could allow businesses to increase production while reducing their operating costs.
“When small businesses can produce more, at lower cost, they become more competitive. They grow. They employ more people. They create income and opportunity for Nigerian families.”
MSME support
The initiative comes as the Federal Government expands programmes aimed at improving access to finance, equipment, skills and markets for small businesses.
READ ALSO: Sowore’s AAC sues Tinubu, others over failure to transfer power to Shettima
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), which implements several government MSME support programmes, has previously identified access to finance, infrastructure and markets among the challenges confronting small businesses.
The government has also introduced other interventions aimed at improving access to credit. These include the National Credit Guarantee Company (NCGC), which provides guarantees to encourage financial institutions to lend to businesses and other eligible borrowers.
President Tinubu noted that the government’s approach was focused on removing barriers that prevent entrepreneurs from turning their skills and ideas into sustainable businesses.
“Our job is to remove those barriers,” he said.
He added that strengthening small businesses would help create employment, increase household incomes and expand economic activity.
“Giving Nigerian enterprise the tools to succeed is how we build prosperity from the ground up,” President Tinubu said.
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