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Shares in the financial services group rose 5.3%, placing it among the top 5 gainers in Lagos. Nigeria’s central bank altogether raised the interest rate by 750 basis points to 26.3% during the period in its dogged push to curb a cost-of-living crisis that is battering household income in the country and crippling growth
FCBM Group made capital out of the three upward reviews of the benchmark interest rate by monetary authorities in Nigeria between January and June. The development set the tone for a 68% increase in net profit, compared to the same period in 2022, and drove revenue.
Shares in the financial services group rose 5.3%, placing it among the top 5 gainers in Lagos. Nigeria’s central bank altogether raised the interest rate by 750 basis points to 26.3% during the period in its dogged push to curb a cost-of-living crisis that is battering household income in the country and crippling growth.
Gross earnings for FCMB Group climbed to N374.5 billion, 57.2% up from what was recorded a year ago. Interest and discount income, at N269.2 billion, improved by as much as four-fifths, but the bulk of that was drained by interest expense, which consumed about 61% of that sum.
Against the usual tendency for banks to witness increased loan defaults when interest rates are high, the lender rather reported a decline as evident in the cash it set aside to offset problem loans, which dwindled to N33 billion from N46.3 billion. The biggest spending that pressured pre-tax profit was personnel expenses, which accelerated by 70% year on year as wages and salaries soared.
FCMB Group continued to profit from the boom that a deep depreciation of the naira since the liberalization of Nigeria’s foreign exchange market last year has created for lenders holding assets in foreign currencies.
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Nigeria’s Senate passed a bill allowing for a 70% windfall tax to be slapped on such incomes by banks, with the Finance Act 2023 on course to be amended to accommodate the change. The parliament’s decision altered President Bola Tinubu’s initial proposal of 50%. Profit after tax climbed to N59.5 billion from N35.4 billion.
