First City Monument Bank (FCMB) is planning to expand in two African countries as the drop in oil prices continue to reduce opportunities and income for banks operating in Nigeria.
While declining to identify the nations as the information is confidential, the FCMB’s Chief Financial Officer Patrick Iyamabo gave this information in an interview with Bloomberg:
“We have identified a key market in East Africa and another key market in West Africa.”
“While Nigeria is having trying times, the other markets can be doing great.” The expansion, which is planned over the next three to five years, will enable FCMB to “smooth revenue and profit volatility,” he said. With a return on equity that compares or exceeds what you have in Nigeria, “greater value can be created for shareholders,” Iyamabo said.
The article suggest FCMB will shift its focus from upstream and construction business where it has incurred losses to retail as well as industries focused on exports.
Iyamabo added:
“Because of the inability to access foreign exchange, the cash flow circle of businesses has been negatively impacted, which has implications on their abilities to pay their loans,” or do more transactions from which banks can earn fees and commissions, he said.
Shortcomings by the government to meet some of its obligations to contractors and the difficulties businesses have accessing dollars “means fewer transactions and increased risk for banks,” Iyamabo said.
FCMB issued a profit warning in the final quarter of 2015 and confirmed that with a 9 months results that saw profits drop by about 86% year on year. Analysts believe the company look set to post a loss when it releases its full year results.
