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First City Monument Bank Group Plc posted a record half-year profit that signals the lender has ridden out the storm and poised to deliver a higher return to shareholders in the form of bumper dividend as it gained from higher interest income.
A trend analysis by MoneyCentral shows this quarter’s earnings surpasses the 2016 one when a precipitously drop in crude oil price of mid-2014 that tipped the country in 2016 exposed banks to rising non-performing loans.
For the first six months through June 2023, FCMB Group profit surged by 159.22 percent to N35.40 billion from N13.66 billion as at June 2022.
Interestingly, the upsurge dwarfs N15.68 billion profit recorded in 2016, N3.08 billion in 2017, as that year was so torrid for lenders who had a lot of bad debts to write off.
Of course, one bitten twice shy, FCMB Group and its peer rivals learned a lot of lessons from the 2016 downturn as they intensified their excellent risk management policies and efficient portfolio allocation that is yielding fruits.
The mid-sized lender also benefitted rising interest that led to a jump in net interest income (NIM) as the central bank has been hiking interest rates to tame red-hot inflation.
FCMB’s gross earnings spiked by 88.71 percent to N238.18 billion in June 2023 from N126.22 billion the previous year.
Net interest income followed the same growth trajectory as it increased by 20.91 percent to N72.31 billion in June 2023 from N60.16 billion as at June 2022.
Net Interest Income (NII) is the difference between the interest income earned on loans, investments, and other interest-earning assets, and the interest paid on deposits and other interest-bearing liabilities, such as borrowings.
It is a measure of a financial institution’s profitability from its core business of lending and borrowing money.