Economy
FCMB Sustains New Strengths in Q2
First City Monument Bank (FCMB) sustained new strengths in operations in the second quarter despite the challenges of the COVID-19 economic lockdown. The bank kept all the growth levers up from the closing levels in 2019.
The addition of new strengths and retention of some key capabilities of the preceding year constitutes the operating advantage for the bank this year. It is maintaining the elevated revenue outlook seen in the first quarter, which is happening for the first time since 2017.
Both interest and non-interest incomes are contributing to revenue improvement but non-interest earnings keep leading the way. Against a drop of 11 per cent in 2019, non-interest income grew by 13 per cent year-on-year at half-year ended June 2020.
Interest income is still accelerating from 4 per cent at the end of last year to 8 per cent at half-year though slowing down from 15 per cent growth in the first quarter. This remains the highest growth rate in interest income for the bank at any time since 2014.
The good behaviour of interest expenses seen in the first quarter improved to better in the second quarter. From a moderated growth of 4 per cent in the first quarter, interest expenses proceeded to a 3 per cent decline year-on-year at half-year.
Accelerating interest income and a decline in interest expenses enabled an increase of 17 per cent in net interest income from less than 5 per cent improvement at the end of 2019.
This marks the first reasonable improvement in revenue the bank is seeing since 2017. Last year ended with only a 2 per cent increase in gross income to a little over N181 billion. Revenue growth at half-year represents the highest in four years.
The retained strength in revenue is keeping the bottom line on the upbeat at which the bank began the year in the first quarter.
Profit improvement remains quite good at 29 per cent year-on-year for FCMB at half-year – still one of the best growth records in the banking sector. This is an accelerating growth from the 16 per cent profit improvement at the end of 2019.
The ability to convert revenue into profit improved both on a year-on-year basis and from the 2019 closing mark.
At the end of half-year, the net profit margin stretched out from 8.4 per cent in the same period last year and from 9.5 per cent at the end of 2019 to 10 per cent.
This is a step back, however, from 11 per cent in the first quarter but yet remains the highest net profit margin for the bank since 2015.
The bank’s operating strength for the 2020 financial year is anchored on growing revenue and improving profit margin. The strength to grow profit more than two and a half times as fast as revenue at half-year points to a reasonable cost saving achieved by management. This came from a decline in interest expenses and a moderated operating cost during the period.
The loss in the first quarter of a key strength of last year – which is a drop in net loan impairment expenses for the third straight year, remained in place at half-year.
Loan loss expenses rose by close to 41 per cent to N7.8 billion at the end of June 2020. The increase follows an increase of 13 per cent in the loan portfolio last year and by another 10 per cent over the first half of the current financial year to N795 billion.
Half-year operations ended with gross earnings of slightly over N98 billion for FCMB, an accelerated growth from 2.3 per cent at the end of 2019 to 9 per cent year-on-year. This marks the first reasonable improvement in revenue since 2017.
An improvement of 8 per cent in interest income to over N76 billion is one of the new strengths for FCMB in 2020.
This reflects the expansion of earning assets with loans and advances growing by N80 billion over the 2019 closing figure of N715 billion and investments rising by N60 billion to N300 billion over the same period. The second is a rebound in non-interest earnings that were a drag for the bank last year to N22 billion at the end of half-year.
At slightly N30.8 billion, interest expenses improved further its disciplined behaviour – declining by 3 per cent against an increase of 4 per cent in the first quarter. The share of interest income devoted to interest expenses went down from 45 per cent to 40 per cent over the review period. The result is an increase of 17 per cent in net interest income to over N45 billion at half-year.
FCMB closed the half-year operations in June 2020 with an after-tax profit of N9.7 billion, an increase of 29 per cent year-on-year. The bank is maintaining the path of growing profit for the third consecutive year since it lost 40 per cent of profit in 2017.
Earnings per share amounted to 49 kobo at the end of half-year operations, improving from 38 kobo per share in the same period last year.
The ability to maintain an elevated performance in earnings through the economic lockdown in the second quarter is a bullish point for FCMB going forward to the second half.
The bank is expected to retain the key strengths of growing revenue, moderating interest expenses, and improving profit margin to stay the course of rebuilding profit for the third straight year in 2020.
By Aduragbemi Omiyale
The presidential candidate of the Labour Party in the 2023 general elections, Mr Peter Obi, has expressed worry over plans by the administration of President Bola Tinubu to spend about $11.6 billion on debt servicing.
In a post on his social media platform on Monday, the opposition politician criticised this move, saying it is not good for the country.
He also said this action “should concern anyone interested in the country’s economic future and long-term development.”
The former Governor of Anambra State kicked against the penchant of the government to borrow from various sources without anything to show for it.
“There is nothing inherently wrong with borrowing when it is guided by prudence and directed toward productive investment, he noted, stressing that countries such as Japan, the United Kingdom, the United States, the United Arab Emirates, Singapore, and Indonesia are all heavily indebted, yet their borrowings are largely channelled into education, healthcare, infrastructure, and innovation – sectors that generate long-term economic returns and sustain repayment capacity.”
According to him, “despite high debt levels, their obligations remain more manageable because they are tied to measurable productivity.”
He said, “Nigeria’s situation, however, is markedly different. A huge proportion of past borrowing has been directed toward consumption, with limited visible or sustainable developmental outcomes to justify the scale of indebtedness.”
“It is also important to note that a huge portion of the debt currently being serviced was accumulated under the Tinubu administration itself, while borrowing has continued at a significant pace. The administration’s recent external borrowing alone includes about $6 billion (from First Abu Dhabi Bank in the UAE—$5 billion, and UK Export Finance via Citibank London—$1 billion), a further $1.25 billion under consideration from the World Bank, and an additional $516 million arranged through Deutsche Bank, bringing the latest known external loan commitments to roughly $7.8 billion. In addition, domestic borrowing through monthly bond issuances continues to add to the overall debt stock,” the businessman also stated.
“Against this backdrop, Nigeria’s 2026 budget shows that health is N2.46 trillion, education is N2.56 trillion, and poverty alleviation is N865 billion, giving a combined total of about N5.885 trillion for these three critical sectors.
“By comparison, debt servicing at about $11.6 billion (approximately N17–N18 trillion, depending on exchange rate assumptions) is almost three times higher than the total allocation to health, education, and social protection combined. This imbalance highlights a troubling fiscal reality in which debt obligations increasingly crowd out investment in human capital and poverty reduction.
“Moreover, even within the limited allocations to these sectors, funds may not be fully released, and a significant portion of what is eventually released could be misappropriated,” he further stated.
Mr Obi said, “The central issue is not borrowing itself, but whether borrowed funds are being converted into measurable productivity, inclusive growth, and improved living standards. Without this, debt servicing shifts from being a temporary fiscal obligation to a long-term structural burden that constrains development and deepens economic vulnerability.”
By Adedapo Adesanya
Pathway Advisors Limited, an issuing house and financial advisory firm, has announced the successful completion of the Series 2 Commercial Paper issuance for Veritasi Homes & Properties Plc.
The Series 2 offer, issued under Veritasi Homes’ newly registered N20.00 billion Commercial Paper Programme, raised N16.76 billion, significantly above its initial N12.00 billion target on the back of strong institutional demand.
This issuance builds on the company’s track record in the Nigerian debt capital market and follows the recently concluded N10 billion 3-year 20 per cent Series 1 Fixed Rate Bond Issuance, further reinforcing investor confidence in Veritasi Homes’ strong credit profile.
The 364-day tenor instrument attracted robust participation from a diverse pool of institutional investors, underscoring sustained confidence in the Company’s financial strength, operating model, and governance standards.
Commenting on the deal, the Founder/CEO of Pathway Advisors Limited, Mr Adekunle Alade (MBA, FCA, M.CIod), noted that the outcome further validates investor appetite for well-structured transactions in the Nigerian capital market.
“The strong oversubscription speaks to the market’s confidence in Veritasi Homes’ performance, governance, and repayment track record. We are pleased to continue supporting issuers with strong fundamentals in accessing efficient funding.’’
He further highlighted that Veritasi Homes’ consistent market activities since 2022, including successful issuances and full redemption of matured obligations, continue to strengthen its reputation among institutional investors.
“Pathway Advisors Limited remains committed to maintaining its leadership position within Nigeria’s capital markets through the origination and execution of transformative, value-driven, and commercially viable transactions by deploying innovative financial solutions and facilitating strategic capital formation across critical sectors.
“We are committed to supporting credible corporates in accessing efficient short-term and long-term financing solutions within the Nigerian capital market,” he said in a statement on Monday.
Speaking on the transaction, the Managing Director/CEO of Veritasi Homes & Properties Plc, Mr Nola Adetola, described the outcome as a strong endorsement of the company’s fundamentals.
“This result reflects the resilience of our business model, our growing market reputation, and the continued trust of the investment community. We are grateful to all institutional investors for their confidence in Veritasi Homes.”
He added that the proceeds from the issuance will be deployed to support the company’s working capital requirements, enhance liquidity, and complete the ongoing development activities across its real estate portfolio.
Mr Adetola also commended Pathway Advisors Limited for its advisory and arranging role in the successful execution of the transaction.
By Aduragbemi Omiyale
The Securities and Exchange Commission (SEC) has approved the transition to the T+1 settlement cycle for capital market transactions from June 1, 2026.
This is coming some months after Nigeria moved from the T+3 settlement cycle to the T+2 settlement cycle.
The T+ settlement cycle is the number of working days required to complete a capital market transaction, such as the trading of securities, shares, and others, from the first day the trade was executed by an investor.
In a notice on Monday, the SEC, which is the apex capital market regulator in Nigeria, said it was authorising the new system to “promote an efficient, fair, and transparent capital market.”
Under the new arrangement, equities and commodities traded by investors at the market would be cleared and settled by the Central Securities Clearing System (CSCS) within one day.
The agency noted that the migration to a T+1 settlement cycle forms part of its ongoing market modernisation initiatives aimed at enhancing market efficiency and strengthening risk management. reducing counterparty exposure, improving liquidity, and aligning the Nigerian capital market with international standards and global best practices.
“Accordingly, all eligible trades executed in the Nigerian capital market shall settle one business day after the trade date (T+1),” a part of the statement noted.
It was stressed that “Friday, May 29, 2026, shall be the final trading day under the existing T+2 settlement cycle. Trades executed on Friday, May 29, 2026, and Monday, June 1, 2026, shall both settle on Tuesday, June 2, 2026. All trades executed from Monday, June 1, 2026, onward shall be subject to the T+1 settlement cycle.”
SEC tasked all capital market operators, securities exchanges, clearing and settlement infrastructure providers, custodians, registrars, issuers, and other relevant stakeholders to take all necessary measures to ensure full operational readiness and compliance with the new settlement framework.
“Market participants are expected to review and align their systems, processes, controls, and operational workflows ahead of the implementation date,” it further stated, promising to continue to engage stakeholders and monitor the implementation process to ensure an orderly and seamless transition.
The regulator said it remains committed to strengthening market integrity, enhancing investor confidence, and fostering the development of a modern. resilient and globally competitive Nigerian capital market.
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