Almost every business management team becomes jittery during times of economic contraction as we are now in. This is because at such periods, business dynamics generally change and throw up stifling challenges to the existing organisations.

Though the strong and focused survive the waves, but in the final analysis they record reduced profit and earnings margins. Indeed, the sign of the times could be dictated in FCMB’s bold forecast for the second quarter 2021. In that forecast, the bank expects to rake in N43.252billion in the three months from April to June 2021. While it expects a profit before tax of N4.264billion and Profit after tax of N3.693billion, it is projecting to  record a net interest income of N24.062billion in the same period. In fact, the lender plans to harvest net operating income of N32.290billion, while operating expenses would come to N23.862billion as loan losses/write-backs will stand at N4.163billion. The above expectations are a little lower than what the bank achieved in the second quarter of 2020. Going by the lenders forecast for  instance, its gross earnings will drop by 11.7 per cent from N48.983billion in Q2 2020; profit before tax is expected to fall by 24.3 percent to N4.264billion; and profit after tax to drop by 25 per cent to N3,693billion. It is not unreasonable to think that the lender lowered her performance expectations because of the headwinds emanating from the adverse effect of Covid-19 among other challenges. It is actually very difficult for businesses to survive in a volatile environment where though, the price of crude has hit $70, the times are still tough. Analysts believe it has become hard for firms to fly in such weak economies as Nigeria: where the economy has just crawled out of recession by a straggling 0.11per cent; where inflation is hitting the roof tops at about 17.33 per cent; where the Naira has lost huge value and vigour; where the budget deficit stands at -3.64% of GDP; where the scourge of insecurity has literally halted business activities in some parts of Northern Nigeria; where unemployment remains very high at 33 per cent; where government is unstable; where economic policies are allegedly done to favour a section of the country and where the national debt has risen to a collosal N33trillion.

Recently, the government also hiked the prices of fuel and electricity for the masses of the country which has more than 82 per cent of its population in the poverty bracket.
‘’Who would expect companies to perform magic in a country where its citizens appear to have lost hope’’, a senior civil servant who would not want to be mentioned in print.

” A very challenging time to run a financial institution, however, it also offers a chance for those, who drive to showcase their big capacities”, an analysts who would not want his name mentioned in print said. This challenges notwithstanding, FCMB posted strong and impressive performance in the third quarter 2020 across all measurement indicators. While its results for December 31, 2020 are still awaited,
FCMB Group Plc posted a revenue increase of N48.3 billion for the third quarter of 2020 (Q3, 2020), while Year-To-Date earnings appreciated by +7.8% to hit N146.43 billion as at September 2020.

Further details reveal that pre-tax profit increased by 10.2 per cent to N4.8billion in 2020. While its  Profit After Tax (PAT) grew 16.4 per cent to  N4.2billion, Net interest income grew 30.03 per cent to N22.7billion. Poring through the bank’s books revealed that Net fee and commission income increased by 0.29 per cent to N5.2billion.
Similarly, Net trading income grew 39.4 per cent to N1.82billion. But the Personnel expenses declined -7.9 per cent to N6.9billion.
However, General and administrative expenses declined  7.52 per cent to N7.6billion,  while Earning Per Share increased to N0.21, +16.7% Y-o-Y.
Deposits from customers between December 2019 and September 2020 leapt by 26.7 per cent to a trillion mark, as it hits N1.2 trillion.

This is no mean performance for a second tier financial institution operating in a volatile environment where many businesses have been hobbled.

Also on record is that audited results for December 31, 2019 was strong and formed a strong base for the bank’s subsequent impressive results.
The Group’s gross revenue increased by 9 per cent to N188 billion compared to N177.2billion in 2018. The strong performance also manifested in profit before tax, which rose by 9 per cent to N20.1 billion. This gave rise to financial institution declaring a dividend of 14 kobo per share to shareholders.
FCMB Group is a holding company that is broken into three business groups.
These include Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited) as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and CSL Trustees Limited). Its income, deposits, total asset all grew substantially to support the total well being of the bank.

In the last five years from 2015 to 2019, the bank has exhibited strength. For instance, the holding company’s gross earnings grew 18.09 per cent from N152.507billion in 2015 to N180.102 billion in 2019. Profit before tax grew 159 per cent from N7.768billion in 2015 to N20.130billion in 2019. Similarly, profit after tax also jumped 264 per cent from N4.760billion in 2015 to N17.337billion in 2019 while earnings per share rose 262 per cent from 24kobo in 2015 to 87kobo in 2019.

There is a consensus that the economy is hardly favourable to positively nurture any business venture strongly. Many do not see the economic fundamentals changing over-night.

Not even the CBN’s policies favour deposit money banks now. This analysts reckon follows from the apex banks relaxation of the monetary policy rate, especially the interest rate which fell 12.5 per cent to 11.5 per cent in the most recent MPC meeting in Abuja.
The CBN Governor, Godwin Emefiele, disclosed these after the 277th Monetary Policy Committee (MPC) meeting which held in Abuja for two days.

“In summary, the MPC voted to retain the MPR at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the Cash Reserve Ratio at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent,” he said.
The new rate in fact, would reduce incomes of the banks from loans which the major plank through which they make substantial revenue.

This development many believe, would prompt more and more strategic sessions in the boardrooms of banks to craft policies and plans on the best way to survive.

‘’The primary business of banks is to lend money out and charge interest. When they also lend money to government, they collect interest so they invest in those government  securities instruments. You know last year from q2 CBN started to relax monetary policy which caused interest rate to fall. So when interest rate fell, it adversely affected the income of banks.’’ Said David Adonri of HighCap Securities ltd.

However, at the market capitalization of N56.6billion and stock price of N2.82 per share as at March 19, 2021, its P/E Ratio stood at 2.72. A good P/E ratio, but the bank is still grappling with image problem which arose from allegations related to its immediate past Managing Director’s affair with a female staff. Consequent upon that, the bank had replaced the man in the middle of the storm, Adam Nuru with Yemisi Edun, who is holding forth in the saddle as acting Managing Director.