FCMB: A story of resilience, evolution and growth

First City Monument Bank (FCMB) is one of Nigeria’s surviving old-generation banks, with over 30 years of banking operations in Nigeria. While others crumbled during the N25bn recapitalization and consolidation exercise that led to the emergence of 25 banks in 2005, FCMB emerged stronger, even listed among top eight lenders in the country. And it still ranks among the leading money deposit banks, ODUNEWU SEGUN writes

AS one of the top-eight lenders with subsidiaries that are market leaders in their respective segments, First City Monument Bank (FCMB) is a story of phenomenal growth based on resilience and managerial foresightedness.

The bank, which has a subsidiary in the United Kingdom (FCMB UK) and a representative office in the Republic of South Africa, has a total assets of N1.3 trillion, customer deposits of N689.4 billion and over 270 branches in Nigeria to cater for its growing list of customers.

FCMB, in spite of the multiple challenges faced by the economy and banking sector in the last two years, has remained solid, growing its assets by 13 per cent in just three months, from N1.1 trillion in March 2016 to N1.3 trillion as at June, 2016. It also grew its customer deposits by 5 per cent between March-June, 2016, from N561.6 billion to N657.2 billion.

Similarly, FCMB group’s half year profit before tax in 2016 also increased by 70 per cent to N16.3 billion, compare to 2015 results. According to its Managing Director, Mr. Peter Obaseki, the feat was driven largely by treasury upsides, cost optimization and sustained momentum in the commercial and retail banking group.

He said with more headwinds in the coming months, especially with the country technically in recession, and high interest rate environment with implications for consumers and borrowers, FCMB overall stance would be conservative while it drives up execution in the low-risk segments of the portfolio.

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For the man at the extreme top, Ladi Balogun, the Group Managing Director of FCMB Plc, the most significant driver of earnings growth was the N9.1bn exchange gains from our dollar balance sheet. “In addition to our personal and SME banking segments have exhibited resilient profit growth (in excess of 442% or N7.4bn, year on year) driven by electronic banking revenue and strong customer acquisition, now at 60,000 a month,” he said while commenting on the bank’s half year results in 2016.

He said greater cost discipline has resulted in improved operating efficiency, although performance was otherwise dampened by a YoY increase of N9.2bn provisions for non-performing loans and other known losses.

According to the founder, Otunba Micheal Subomi Balogun, FCMB is a monument of a young man’s determination to succeed and prove that given the opportunity, Nigerians have the capacity to attain a commanding height in the management of financial institutions.

FCMB emerged from the success story of City Securities Limited, a stockbroking and issuing house established by Otunba Subomi in 1977. It later metamorphosed to First City Merchant bank, and was incorporated as a private liability company on the 20th of April 1982.

It began operations as a licensed deposit taker and merchant bank on 11 August 1983, assuming the corporate finance and issuing house activities of CSL and becoming the first Nigerian merchant bank to be established without government or international support.

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First City Merchant Bank Limited soon became a leading merchant bank in Nigeria, as measured by profitability, and, in 2000, the first and only merchant bank to achieve N1 billion profit.

With the advent of universal banking in 2001, First City Merchant Bank Limited converted into a universal bank. It changed its name to First City Monument Bank Limited and commenced commercial banking activities, while its corporate finance activities were spun-off into a new subsidiary FCMB Capital Markets Limited.

In 2004, the bank changed status from a private limited liability company to a public limited liability company, and was listed on the NSE in December of that year. In 2010, the Central Bank of Nigeria (CBN) issued Regulation 3 (Scope of Banking Activities and Ancillary Matters, No. 3, 2010), which required banks to divest their non-banking businesses or retain them under a CBN-approved financial group structure.

As a result of this reorganization, the newly created FCMB Group Plc became the holding company, with First City Monument Bank Plc (FCMB Plc), CSL Stockbrokers Limited (CSLS) and FCMB Capital Markets Limited (FCMB-CM) as direct subsidiaries. Shareholders of FCMB Plc were also migrated to FCMB Group Plc via a one-for-one share exchange between FCMB Group Plc and FCMB Plc.

FCMB Plc, the bank, was thereafter re-registered as a limited liability company, becoming First City Monument Bank Limited (FCMB Limited). In 2014, CSL Trustees Limited also became a direct subsidiary of FCMB Group Plc.

It completed the acquisition of FinBank Plc in February 2012 and subsequently merged with FinBank in October 2012. As a result of the merger, FCMB Group now has 2 million customers, 275 branches and cash-centres spread across every state of the Federal Republic of Nigeria and a presence in the United Kingdom (through its FSA-authorised investment banking subsidiary, FCMB UK) and a representative office in the Republic of South Africa.