First City Monument Bank (FCMB) recorded losses in the financial year ended Dec. 31, 2011 but gave its shareholders a bonus of three shares to every 20 held. However, the bank did not declare dividends, stating that it wrote off toxic assets in the 2011 financial year. The Chairman of the board, Mr Jonathan Long, said at the bank’s 29th annual general meeting on Monday in Lagos that the bank issued the bonus instead of recapitalising N1.22 billion from the share premium account.
He said that the development was to demonstrate the appreciation of the board and management to shareholders. Long added that the bank believed that shareholders had every reasons to expect better returns on their investment after 2011. He said that the bank would also ensure the provision of adequate return on investments in the future.
“The board is well aware of the concern of our shareholders over the bank’s performance in 2011. On behalf of all directors, I will like to assure you that the board is committed to ensuring a quick return of FCMB to profitability in 2012,” the chairman said.
Mr Ladi Balogun, the Managing Director of the bank, said that the year ended Dec. 31, 2011 was a year of mixed results in which the group exhibited strong operational performance. He said that the level of write-downs (bad debts) resulted in a loss after tax of N9.9 billion compared to a profit of N7.9 billion in the previous year. He described the performance as a temporary setback, adding that the details of the results demonstrated strong business fundamentals.
Balogun said the bank expected a reversal of the position in 2012 but that the result for the year under review showed improved performance in key areas. The bank’s net revenues grew from N40 billion to N54 billion making the increase to stand at N14 billion between 2010 and 2011, representing 35 per cent. He said that the increase was driven by 46 per cent and 21 per cent in interest income and non-interest income respectively.
The managing director said that the bank’s operating expenditure was curtailed “as it exhibited an increase of 4 per cent below the inflation rate of 12 per cent’’. He said that the performance, in spite of the volatile interest rate and monetary policy environment, saw cash reserve requirement and liquidity ratios raised from 1 per cent to 8 per cent and from 25 per cent to 30 per cent respectively.
