FCMB Group (NSE Ticker: FCMB), in a presentation to Investors on Tuesday, announced plans to restructure 50% of its loans as part of action plans and mitigating strategies to address the impact of the coronavirus pandemic and the crash in crude oil price.
“The portfolio which will be restructured includes the 7% representing intervention fund exposures while others are mainly exposures to Oil & Gas, Power, SME and Consumer”.
The presentation document seen and reviewed by Investogist shows that the loan contribution by these sectors are as follows;
- Oil & Gas Sector: N240.226 billion (29.8%)
- Power & Energy: N52.240 billion (6.5%)
- SME & Consumer: N119.953 billion (14.8%)
The restructure terms will constitute on the average 6-12 months moratorium on Principal repayments and 1-2 year tenure extension.
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The bank also presented that the 37% of the foreign currency loan book has receivables in naira, and hence remained exposed to foreign exchange risk.
As a mitigating strategy for this risk, the bank has started the conversion of these foreign currency loans to naira, and the exercise is expected to make significant progress before year end.
The bank is setting aside additional collective impairment to offset losses in its unhedged Oil and Gas Upstream portfolio. 30% of the portfolio remains unhedged at the time of the presentation.
Impairment charges in the first quarter 2020 financial report surged 61% to N3.7 billion, and its loans in the same period rose 7% to N764.3 billion from the same period last year.
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FCMB Group had in Q1 2020, reported a N49.195 billion Revenue, a 12.1% growth YoY, and 26.5% growth in Profit Before Tax to N5.434 billion (1Q2019: N 4.296 billion), with Profit After Tax growing by 30.5% YoY to N4.722 billion (1Q2019: N3.618 billion).
FCMB Group’s Commercial & Retail Banking which includes FCMB Bank Ltd contributed 106.4% (N5.781 billion) of the Group’s Profit Before Tax in the first quarter, while the Corporate Investment Banking which include the Corporate Banking Division of the Bank, CSL Stockbrokers and FCMB Capital Markets Ltd contributed -19.2% (-N1.044 billion).
The bank’s overall Non Performing Loans for the period ended 31st March 2020, stood at 3.5%, below the regulatory requirement of 5.0%.
The drop in crude oil prices have been a blow to the Nigeria Economy, and the outbreak of the Coronavirus had seen businesses closed and movement of people restricted to contain the spread of the disease.
The Central Bank of Nigeria in March, technically devalued the value of the naira against the dollar and are under pressure to weaken the naira even further amid a shortage of foreign currency and lower export revenues.
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