Imagine a beautiful Thursday evening spent by the poolside, in the midst of vibrant Nigerian professionals, rubbing minds together on how to invest right. That is exactly what happened on Thursday, February 27th, 2020, thanks to First City Monument Bank (FCMB) Nigeria.
The evening began with the arrival of guests at the Protea Hotel by Marriot in Lagos Island. A time to meet and greet allowed the guests to mingle and network, long before the main event began. And then at about 7 pm, FCMB Nigeria’s Executive Director in charge of Retail Banking, Mr Olu Akanmu, took the microphone and officially welcomed everybody. He said:
“One thing that is on every relatively affluent person’s mind is how to legitimately preserve their wealth. And that is what we are all gathered here to talk about.”
To help dissect that subject matter, the bank had invited Nairametrics’ very own Founder, Ugochukwu “Ugodre” Obichukwu as a guest speaker. Following his introduction to the audience, Ugodre delved right into the topic, albeit in the most interactive way.
What troubles you the most about the Nigerian economy?
That is the question Ugodre posed to members of the audience. As expected, there were varying responses to this question. Some people said they worried most about inflation. Others mentioned devaluation, unstable electricity, unpredictable government policies, and policy somersault. Of course, there were also concerns about how to multiply one’s income and guarantee returns on investment.
Inflation rate could rise above 14% by year-end
These are all legitimate concerns by the way, and each of them was addressed. Beginning with Nigeria’s inflation rate which recently climbed to 12.13%, Ugodre alarmed the audience by predicting that there could even be a further increase in the coming quarters. This is due to a number of factors which include:
- Nigeria’s land border closure;
- the recent increase in VAT which is continuing to push prices of goods up;
- the high possibility that the government will stop providing subsidy for electricity, thereby causing NERC to increase electricity tariff. If this happens, the inflation rate will rise further because people’s cost of living will increase;
- there is also a possibility that fuel subsidy may eventually be removed. If this happens, it has the potential to exacerbate inflation;
- something else that could trigger inflation is taxes. As you may well know, the government has recently been very aggressive in that regard; and
- he concluded by predicting again that 2020 might end with Nigeria’s inflation rate well above 14%.
Don’t panic over inflation, unless…
On whether the Central Bank of Nigeria is going to devalue the naira, Ugodre stated that this is most unlikely. However, there are some caveats. He said that Nigerians should keep their eyes focused on Nigeria’s external reserves. If the external reserves drop below $30 billion, then there is no gainsaying the fact that devaluation will become inevitable.
More so, if oil prices drop below $40 per barrel, then there is a serious problem and the CBN may have no choice but to devalue. Last week, Brent Crude traded below $50 per barrel as Nairametrics reported. And this is no thanks to the Coronavirus pandemic which has wrought both health and economic hazards across the world.
Moving on to the concerns about government policies, Ugodre stated that Nigerians should expect more regulatory onslaught. This prediction was based on recent happenings in the regulatory environment.
Meanwhile, as far as returns on investment are concerned, Ugodre told the audience that it depends mostly on the industry one is investing in. He said:
“Some people believe that the banking sector is good. But the CBN has been squeezing them recently. So, they too may soon be having issues with returns on investment. The breweries industry is already suffering, with all the top three brewers reporting negative performances in their annual financials. Maybe the telecoms sector may be able to guarantee returns on investment.”
Where else should you invest your money?
Real Estate: Ugodre also mentioned the real estate sector as a potential area that can guarantee investment returns. This he said with much optimism because the real estate sector is one of the best places to invest in when the economy is shaky. This is in spite of the fact that the Nigerian real sector is often overlooked by investors, a situation that has led to it not being quite as developed/organised as what obtains in most advanced countries. This has, unfortunately, resulted in “so much value being locked in” he said.
Note that yields in the Nigerian real estate are typically within the rates of 6-8%, he said. Interestingly, the value on a piece of real estate only keeps going up over time. He also advised potential investors to be strategic in choosing real estate in areas with significant commercial value.
Treasury Bills versus FGN Bonds: Return on investment in the Nigerian Treasury Bills market is not quite as high and lucrative as it was a couple of years ago. Ugodre explained why. According to him, CBN’s decision to restrict individuals from participating in OMO sales forced many people into the treasury bills market. Consequently, rates dropped, thereby making treasury bills a less interesting investment option. On the other hand, FGN Bonds is a good investment option in that it currently guarantees higher returns than treasury bills.
The stock market: This is also another relatively good investment option, although it can also be disappointingly risky. Regardless of the associates associated with it, Ugodre advised the audience to invest in stock because this is probably the best time to do so. However, he clarified that investors should not invest all of their money in stock as there is always the need to diversify one’s portfolio. Moreover, it is also important to ensure that investors avoid what he called “danfo stocks”.
Cryptocurrency is also another investment option that can guarantee high returns as much as 60%. The only downside is that it is not regulated in Nigeria, mainly because government regulators such as the CBN and the Securities and Exchange Commission do not support it.
Investors can also carefully consider agrotech schemes that are claiming to offer high returns, Ugodre stated that Mutual funds also make for good investments, mainly because it is good for passive investors who do not have the time or the technical know-how to constantly keep a tab on their investments. He also encouraged everyone to not only continue to invest in themselves but to always recognise opportunities around them and invest in those opportunities, including investing in people and startups. He said:
“One thing that I’ve learned from what the government is doing is that the government is basically telling us to invest in businesses instead of pursuing treasury bills. So, if you are somebody who has a deep pocket, look around you for relatives who may be needing someone to invest in their business ideas.”
Meanwhile, FCMB Group can help Nigerians to actualise their investment potentials
At the end of Ugodre’s keynote address, the Chief Marketing Officer of FCMB Pensions, Osarhieme Osaghae, took the stage to talk about how he and his team can help Nigerians to better manage their pension contributions in order to ensure a good retirement.
He, therefore, urged all FCMB customers whose pension accounts are not currently being managed by FCMB Pensions, to plan towards transferring their pensions to FCMB Pensions. According to him, the Pension Commission will, by July 1st, 2020, make it possible for pension fund contributors to be able to transfer their accounts from one Pension Funds Administrator to the other. Nigerians should take advantage of that and move to FCMB Pensions, the only PFA that is bank-backed, he said.
Moving on, the Managing Director of FCMB Assets Management, James Ilori, also took the stage to share some important tips on how to invest well in order to retire comfortably. Some of these tips can be seen in Steven R. Covey’s book “Five Habits of Highly Effective People”, as well as George .S. Clason’s “The Richest Man in Babylon”. See the tips below:
- Always have your investment end goal figured out from the onset. This enables you to determine whether your investment should be short-term, medium-term, or long-term.
- Always set aside small amounts on a regular basis. This is important to do because at the end of the day, the small amounts that have been set aside compounds to form a lot of money in the future.
- In line with the second tip, Ilori spoke about INEST, an FCMB Asset Management product that enables Nigerians to invest as little as N500 on a regular basis. Over time, the compounding effect along with the interest guarantees investors some level of financial security in the future.
Note that FCMB Assets Management also offers mutual fund services, portfolio management for both local and foreign currencies, credit-linked investment plans, and more.
The evening of investment talks ended on a pleasant note, with light meals served and more networking among the invited guests.
NAICOM revokes operational licence of UNIC Insurance, appoints Receiver/Liquidator
NAICOM stated that it had appointed Hadiza Baba Gimba as the Receiver/Liquidator to wind up the affairs of the company.
The National Insurance Commission (NAICOM) on Wednesday announced the withdrawal of the operational licence issued to UNIC Insurance Plc.
Although no official reason has been provided for the revocation of the insurance firm’s operating license, NAICOM, however, stated that the decision of the regulator was in the exercise of the powers conferred on it by the enabling laws.
According to a report from the News Agency of Nigeria (NAN), this disclosure is contained in a notice which was issued by the commission in Lagos to the general public and policyholders, where it noted that the revocation of the operational license, RIC 043, is with effect from March 25.
NAICOM, thereafter stated that it had appointed Hadiza Baba Gimba as the Receiver/Liquidator to wind up the affairs of the company.
NAICOM in its statement said, “The general public/policyholders are by this notice required to direct all inquiries and correspondence regarding UNIC Insurance to the receiver/liquidator.
The receiver/liquidator will be dealing with the company’s liabilities in accordance with the provision of Insurance Act 2003.’’
What you should know
- It can be recalled that NAICOM, for the third time in June 2020, gave insurance firms in the country a one-year extension to meet the recapitalisation obligation that was recently set for them apparently due to the coronavirus pandemic which had disrupted the activities of most insurance companies.
- Some insurance companies had been going through some bad patches with a good number of them struggling to meet up with their obligations and the recapitalization requirements.
- The recapitalisation programme requires life insurance firms to meet a minimum paid-up capital of N8.0 billion, up from N2.0 billion previously. In the same vein, general insurance companies are required to raise their minimum paid-up capital to N10.0 billion from N3.0 billion previously.
- The regulatory capital for composite insurance was raised to N18.0 billion from N5.0 billion previously while reinsurance businesses are now required to have a minimum capital of N20.0 billion from a previous N10.0 billion.
Shareholders applaud FCMB, approve dividend of N2.97bn at AGM
The virtual meeting is also in accordance with Section 254 of the Companies and Allied Matters Act 2020 and as approved by the CAC.
Shareholders of FCMB Group Plc (www.fcmbgroup.com) have restated their confidence in the financial institution to sustain its impressive performance and deliver more value. The shareholders gave the commendation at the 8th Annual General Meeting (AGM) of the Group held on April 21, 2021 at its corporate head office in Lagos. They also unanimously approved the payment of a dividend of N2.97 billion, translating to 15 kobo per ordinary share for the year ended December 31, 2020, as against 14 kobo per share the previous year.
The AGM was held virtually due to the prevailing COVID-19 (coronavirus) pandemic and streamed live via www.fcmb.com/AGM to shareholders of the financial institution. This is in conformity with government’s directives on physical distancing and the restriction on maximum number of people at every gathering due to the COVID-19 pandemic. The virtual meeting is also in accordance with Section 254 of the Companies and Allied Matters Act 2020 and as approved by the Corporate Affairs Commission.
FCMB Group is a holding company divided along three business groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Corporate & Investment Banking (The Corporate Banking Division of the Bank, FCMB Capital Markets Limited and CSL Stockbrokers Limited) and Investment Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).
The Chairman of FCMB Group, Mr. Oladipupo Jadesimi, along with the Group Chief Executive, Mr. Ladi Balogun; Company Secretary/General Counsel, Mrs. Funmi Adedibu; a Director of the Group, Mrs. Olapeju Sofowora; Executive Director, Corporate Banking & Investment Banking of the Group, Mr. Olufemi Badeji, representatives of the Central Bank of Nigeria, Securities and Exchange Commission as well as leaders of shareholder Associations, were present at the meeting.
Speaking at the AGM, the Co-ordinator of Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, praised the institution for efficiently running its affairs and the appreciable growth recorded in key operating areas.
According to him, “FCMB is a great institution and we are glad that its value is growing. The fact that it has been able to meet all its financial obligations to its creditors is a very good sign of strength. It also shows the seriousness of the management to remain worthy of doing business with. From the results, it is clear that the management has done its best to grow all the subsidiaries, thereby contributing significantly to profit and the overall performance of the Group. We appreciate the results and dividends declared by FCMB, while looking forward to many more years of prosperity”.
Also commenting, the National Co-ordinator of Pragmatic Shareholders Association of Nigeria Mrs. Bisi Bakare, stated that, “we are impressed by the digital transformation drive of FCMB which has impacted positively on customer service and financial inclusion. We commend FCMB for the introduction of paperless and cardless transactions at branches and other touch points. We are also happy that the Bank intervened to support the government and Nigerians to ease the problems caused by COVID-19 through various support. It is also a thing of joy to see the Bank carrying out several activities to grow businesses and empower Nigerians, especially youths. The 2020 results are a welcome development”.
The National Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said, “FCMB as a Group has done so well over the years in every aspect of business. The institution is growing rapidly with branches all over the country. It is also performing well in terms of innovation, technology and customer service. Profit and dividend are rapidly increasing going by the 2020 financial results. The dividend payment of 15k to shareholders is a very good one in the midst of the difficult situation caused by the COVID-19 pandemic. Overall, FCMB Group has done excellently well and we are optimistic of a brighter future”.
Presenting the report for the year ended December 31, 2020, the Chairman, Mr. Jadesimi, assured that FCMB Group is well-positioned to continue to succeed in the years to come, even in the face of the COVID-19 pandemic. He attributed the optimism to the decisions that the financial institution has made over the past few years, especially those around leveraging new digital technology, to expand access to financial transactions.
According to him, ‘’the Board of Directors has adopted a policy that seeks to provide investors with a stable and sustainable form of capital distribution, with consideration given to the growth and capital requirements of the business, thereby maximising long-term share value for shareholders’’.
On his part, the Group Chief Executive of FCMB Group Plc, Mr. Ladi Balogun, reported that in spite of the challenging macroeconomic environment, the Group grew profit after tax by 13.4% to N19.7billion. He added that this increase had a direct correlation with earnings per share, which grew from 87 kobo in 2019 to 98 kobo in 2020, while return on average equity also rose to 9.2% from 9%.
He stated that, “our businesses continue to improve with growth in other key indicators, such as loans and advances 14.9% and total assets 23.4%. Customer deposits grew by 33.3% to over N1.2 trillion with a large portion of the growth coming from current and savings accounts. Our customer base in the Group also increased from 6.8 million to 8.3 million. Our investment management businesses increased their assets by 23% to almost N500 billion at the end of the year’’.
Mr. Balogun further reported that, “across the Group, our digital transformation gathered momentum, with the total number of internet banking growing by 43% to 6.6 million. Transaction volumes from mobile banking (App and USSD) grew by 74% in 2020. Our digital loans grew from N14.5 billion in 2019 to N54.6 billion at the end of 2020. Innovation and efficiency gains will be the key pillars on which we seek to raise our game in the near future. We expect that in 2021, we will continue with the strides we have made with our digital initiatives, as our technology platforms and products continue to contribute to our performance and competitiveness. We will remain resilient and innovative in charting new avenues for growth. We will also remain committed to elevating the quality of life of all our stakeholders’’.
Speaking on the response of FCMB Group to the challenges of COVID-19, he disclosed that the financial institution contributed immensely to the efforts at combating the spread of the pandemic and alleviating the pains of the most vulnerable members of the society by donating N250 million to the CACOVID initiative.
The Group Chief Executive added that, “we also supported state governments across the country to provide testing, palliatives, various medical items, including Personal Protective Equipment and ambulances to assist them effectively equip and secure health workers. We also provided catalytic support for givefood.ng. Through this initiative, one million vulnerable Nigerians had access to meals during the height of the government lockdown’’.
FCMB Group and its subsidiaries have consistently proved their mettle as resilient institutions with significant improvement on all financial fundamentals over the years.
Among other results for the year 2020, the Group’s gross revenue increased to N199.4 billion, a 10% increase from N181.3 billion achieved in 2019. The results also showed enhanced customers confidence in FCMB, as deposits grew by 33% to N1.3trillion from N943.1billion in the previous year. Loans and advances surged by 15% to N822.8 billion as at December 2020. Total assets of the Group increased by 23% to N2.06 trillion last year. Moreover, FCMB Group’s net interest income was up by 20% to N90.8 billion for the full year 2020 from N76.0 billion in 2019. Non-interest income equally increased to N37.8 billion, representing a 9% growth, as against N34.8 billion prior year. The Group’s Assets Under Management (AUM) also sustained its growth trajectory by rising to N495.2 billion for the year ended December 2020, up by 23%.
Similarly, capital adequacy ratio remained stable at 17.7% for the retail and commercial banking subsidiary of the Group (that is, First City Monument Bank). The capital adequacy ratio of 17.7% is above the benchmark set by the Central Bank of Nigeria for deposit money Banks in the country. Liquidity ratio of the Bank stood at 34.2% as at the end of the financial year 2020, indicating that the financial institution is in a very healthy position. Non-performing loans to total loans ratio stood at a modest 3.3%.
Analysts have already expressed broadly positive views on FCMB’s 2020 financial results. An analyst described it as, “very encouraging”.
A financial expert stated that, “the 2020 results of the Group is a clear indication that the business is on a stronger pedestal with capacity to deliver more value to shareholders, the market and other stakeholders”.
FCMB Group is a frontline financial services institution in Nigeria with subsidiaries that are market leaders in their respective segments. Having successfully transformed to a retail banking and wealth management-led group, FCMB has continued to distinguish itself through innovation and the delivery of exceptional services.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- VFD Group set to raise additional capital of N9.01 billion through rights issue and private placement.
- GT Bank records a 9% dip in profit to N45.55 billion in Q1 2021.
- Secure Electronic Technology Plc records a 121% surge in Profit after tax in Q1 2021.
- Lafarge Africa Plc notifies stakeholders of 62nd Annual General Meeting.
- GlaxoSmithKline (GSK) announces Annual General Meeting.