FCMB Group Seeks Shareholders Permission to Raise Additional N150 Billion in Capital

The FCMB Group recently announced its intention to ask shareholders for permission to raise an additional N150 billion in capital.

This was stated in the notice of this Wednesday's annual general meeting filed with the Nigerian Exchange Limited.

This is coming weeks after the CBN instructed Deposit Money Banks to recapitalise with banks with international licences to increase theirs to N500bn.

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The CBN offered the banking industry three options to comply with the requirement: mergers and acquisitions, the upgrading or downgrading of their respective licence category or authorisation, and the issuance of new common shares (through public offerings, rights issues, or private placements).

A number of banking groups, including Zenith Bank, United Bank for Africa, Guaranty Trust Holding Company Plc, Access Holdings, and FBN Holdings, have announced plans to raise capital from both domestic and foreign capital markets.

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The FCMB Group board noted in the notice of AGM that the N150 billion capital raise would need to be approved by shareholders.

Additionally, according to the report, shareholders would need to vote on the resolution to create and add 19,802,710,781 ordinary shares of N50 each to increase the group's issued share capital from N9.90 billion divided into 19,802,710,781 ordinary shares of N50 each to N19.80 billion divided into 39,605,421,562 ordinary shares of N50 each.

Also, establishing an Employee Share Option Program would be tabled before shareholders.

On the other hand, the banking group recently reported N104.4 billion in profit before tax, representing 186% year-over-year growth. The group's divisions recorded strong earnings growth, with the banking group reporting 212.6%, consumer finance reporting 67.3%, investment management reporting 40%, and investment banking reporting 89.7%. The banking group recently released its audited report for 2023.

The FCMB Group's gross revenue increased by 82.5% to N516.4 billion from N283 billion, primarily due to increased interest income of 61.7% and non-interest income of 154.4%.

FCMB Group's net interest increased by 44.8% from N122bn to N176.6bn last year, driven by growth in the yield on earning assets.

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Operating expenses for the banking group increased by 38% year over year to N157.2 billion due to increases in personnel costs, regulatory costs, technology-related costs, and overall inflationary pressures. 

In 2023, its digital revenue increased to N60.3 billion from N37.1 billion the year before, a 62.4% increase.

Back Story

FCMB Group Plc announced a 108% year-on-year (YoY) growth in profit before tax (PBT), which accounted for N55.1 billion for the first nine months, which ended September 30, 2023, when compared to the corresponding year, which settled at N26.5 billion.

The growth witnessed by the Group can be attributed to the collective positive results of diverse business segments. FCMB recorded a growth in earnings of 130.1%, while Consumer Finance recorded a positive growth of 32.6%. 

FCMB’s gross revenue rose by 75.7% to N351.5 billion as of September 2023, compared to N200.1 billion for the prior year. This was driven by a 55.1% growth in interest income and a 144.6% growth in non-interest revenue.

FCMB's net interest income rose by 29.5% to N120.5 billion from N93.1 billion in 2022. This was driven by an increase in the yield on revenue for the period ending September 2023.

FCMB's lending activities increased, providing loans and advances totaling N1.59 trillion, a 34.3% increase from the previous year. Additionally, the bank experienced a 39.1% YoY growth in customer deposits to N2.53 trillion, showcasing the unwavering trust of its customers.