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FCMB : The Challenges , The Hopes Before Yemisi Edun

With purpose, principles, credibility, confidence and astuteness ,Yemisi Edun , an unblemished professional , is set for FCMB’s turnaround .

Women make society. This is a time honored truth. But hard-healed male Chauvinists quickly add: “at the home front, not in commerce and industry”.

In truth, these Chauvinists are losing grips with emerging reality. They dream; and live in distance time past. Yes, in classical times, women were relegated to the backwaters. They were treated as second class citizens and leisure objects for the men folk. They were not generally esteemed. To call a man, a woman, in those days was apparently the worst insult one could offer any man.

 But  that thinking has changed tremendously . The appointment of Mrs Yemisi Edun as the Managing Director by the Board of Directors of First City Monument Bank (FCMB) Limited represents a significant milestone in bringing about a gender diverse workforce at the senior management and board levels in Nigerian banks.

In the light of FCMB’s bold move to appoint Mrs Yemisi Edun as its substantive MD/CEO after serving as acting MD of the bank for a few months, there is no gainsaying that the bank is committed to both promoting gender equality and women’s empowerment. The composition of its board of directors and its executive management reflects this.  

This development is currently generating  a lot optimism . Notably, a study by McKinsey & Company analysed more than 1,000 companies in 12 countries and concluded that gender-diverse companies are more likely to outperform their national industry average in terms of profitability. With three women on the most influential decision-making areas of FCMB , the future can only be rosy. Given the amount of information needed to understand and govern today’s complex business environment, a diverse and gender-balanced board appears to be the best guarantee for inclusive growth.

   However , this optimism is not without any reservation .   For  some analysts while the above  gesture is commendable ,  it  is not mere gender sentiment that matters but the capability to add values . Can Mrs Yemisi Edun live up to the stakeholders expectations ? In spite of the potentials the gender balance portends , it requires deep and strong intellectual energy to make the expected difference ; moreover as the development also comes with a lot of challenges   

  The current competitive status of FCMB remains modest  and any CEO that will make any tangible difference must buckle up .for  strong challenges . The operating environment itself is extremely challenging and very competitive.  Every bank has five major constituencies to satisfy in its day to day endeavors ; it has to satisfy the surplus units  , deficit units  , shareholders , regulatory authorities and the community at large .  And in all these,   FCMB  is not performing below expectations  .  In the  surplus units from which it borrows, the bank is not doing badly  with  maximum liquidity  that enables   depositors  to have their funds back when they want them or as agreed  .  As a mark confidence  FCMB  gathered  a total  deposit   of  N1,338,507,362 in the first half of 2021 compared to  N1,257,130,907 in the corresponding period in 2020 ;     in the  constituency  which borrows    from the bank, there is no disappointment  either .  –  Within the same period ,it  gave out  N 971,914,642 as loans  compared to  N869,283,265 in 2020   ; for  the shareholders who require maximum or adequate returns on their investments  , the bank remains profitable ;  its profit after tax was N7,556,876 .   The bank  equally satisfies    the regulatory authorities ,whose interest is to ensure that the bank does not undertake excessive risks and ensure it operates  prudently . Both the   bank asset quality as well as liquidity ratios   have remained within the regulatory minimum  . Finally ,    the bank has continued to  satisfy the community at large by being a  good corporate citizen ,capable of maximizing the exploitation of opportunities available and minimizing the threat in the environment .In terms of corporate social responsibility  and related issues , FCMB has never been found wanting .       .

   Despite these , no doubt ,  FCMB  currently needs a radical turnaround  and Yemisi Edun led management is expected to live up to this expectation. . First City Monument Bank Plc ,FCMB, was a model brand on arrival in 1982 ; when it was established by the banking legend and trailblazer ,Otunba Subomi Balogun , one of its core values was to pursue excellence. A fleet footed corporate organization, it was nurtured to make a difference with superior service delivery and impressive financial performance from its inception.

 But today , it is a different ball game .The bank has been overtaken by younger ones and presently it is a tier 2 bank . This, no doubt, is raising serious concerns and questions  signaling the massive challenges before the new leadership . This is not   arguing in favor of size  per se ,though ,it is an added advantage . However , just    as bigness without stretch and leverage is obesity, smallness without stretch and leverage is impotence. This bank  needs to   become  more competitive  ; it needs to change its tier 2 status , and this is where the new CEO can make the difference ; the new CEO will have to fight against managerial malfeasance, .

 No doubt , FCMB is richly endowed with resources  . But  only by foresight, stretch, and leverage that provide the energy and rationale for proactive advantage building and industry re-engineering can the bank be transformed

The new CEO has a lot of jobs to do to give the bank a better competitive edge . Within the inclement environment banks and other corporate organizations are  now fighting the battle of survival particularly with the economic recession taking a toll on their financial health . FCMB is not excluded .  Major highlights its Q2 2021  unaudited results for the period ended June 30th, 2021 are not that too impressive . Gross Earnings dropped by -4% to N94bn from N98bn in the previous quarter , Profit before tax declined by -20% to N8.9bn ,Profit after tax declined by -22% to N7.6bn while Net Assets grew by 3.2% from N227bn to N234bn.

 FCMB  needs better skills and competences in risk and cost control . The survival and competitiveness of any commercial bank rests on its ability to lend safely and profitably . When it is said that one is a good banker ,what ,in fact ,is meant is that one is shrewd lender , lending money safely and profitably . Its high cost to income ratio and high volume of loan impairments continue to impact negatively on the bottom line . Although ,its impairment on  loans came down to N4,008,684 from N7,741,829 ,this is still a big drawback on the bottom line in the first half of this year . The impacts of weak risk management and cost control are the visible handwritings   on its income mix , a reflection of the type of banking institution and the business lines it operates . The overall composition of its funding equally affects significantly its net interest margin . Its revenues are offset by high operating (non-interest) expenses, loan loss provisions, trading losses and tax expense.

A look at the FCMB sources of income in the first half of 2021 revealed its strength in fees and commissions which is the least challenging of all sources of income .

Fee and commission income moved up to N16,616,748 from N14,232,706 . Fee revenue is generated from the sale and provision of financial services to customers. The good thing about this source of income is that the  level of fees and commissions will be communicated in advance to customers. It is also attractive because it provides an opportunity for the bank to cross-sell new products and services to existing customers, and the provision of these services does not expose the bank to additional credit or market risk. Fee income represents diversification in a bank’s revenue base

But FCMB needs more muscles in the core banking businesses.his may not be farfetched . The traditional source of revenue for retail banks is where the management is confronted by the challenges of interest rate and credit risks , In the first six months of the ongoing financial year . Gross earnings of FCMB were down to N94,228,147 from N98,179,194

Interest and discount income dropped  to N72,670,503 from N 76,147,753 . In its battle of interest rate the succeeded in beating down its interest expense marginally to N29,672,656 from N30,769,009  which is expected since its interest income equally backtracked .. However , its Net interest income fell to N42,997,847 from N45,378,744  .  NII is driven by lending and interest-earning asset volumes, and the net yield available on these assets after taking into account the cost of funding.   .This subsequently impacted negatively on its net interest margins and the bottom line . This is where Yemisi Edun and her team are expected to deal with because it is the core business of the bank .

FCMB also needs better hands to handle its trading activities . Trading income is the most volatile form of bank revenue. Even a record of consistent profit in trading over a long period is no guarantee of future losses arising out of market corrections or simply making the wrong bet on financial markets. The bank’s trading incomes fell  in the period under review to 2,638,740 from 3,925,775.

 With the above developments ,the   new leadership needs to put in place a coherent, articulated strategy in place that sets the tone for the entire business, from the top down.To properly implement a coherent, articulate strategy, a bank needs to be aware of exactly what it does and does not have an expertise for undertaking, and not operate in products or markets in which it has no genuine knowledge base In the long run, this is connected with an understanding of where the bank’s real strengths lie.    

For a complete a turnaround of FCMB, its Asset and Liability Management ,ALM, department needs a turnaround too . ALM function is responsible for the overall management of the balance sheet. Assets and liabilities in the banking book generate interest-rate and credit risk exposure for the bank. They also create liquidity and term mismatch (“gap”) risks. Interest-rate risk management is a critical part of Treasury policy and ALM, while credit risk management will be set and dictated by the credit policy of the bank.

  However , there is no cause for alarm ;  with the appointment of Mrs Yemisi Edun , there is great hope for a turnaround. The choice of Mrs Yemisi Edun as the top decision-maker in the bank is undoubtedly no happenstance.

She has a long history of superlative performance in the corporate environment in her various past assignments . For many years,  she bestrode the corporate terrain like a colossus and made  her marks . But in all of these, Yemisi Edun’s success is strongly tied to his good education, team spirit and work ethic, features that distinguish  her  from other management experts . Yemisi Edun naturally is living up to the dictum: ‘knowledge of a problem is key to its solution’ with her familiarity and competence on issues in the corporate world, her versatility, temperament and ability to tackle all professional challenges  in  her current  mandate . She is indeed, a round peg in a round hole. Academically, she has the right knowledge; professionally, she is well armed with the right skills and contacts. She also possesses the right attitude for anyone destined for the top.

  Her relevant academic background remains a major fulcrum that drives her supersonic performance. Mrs Yemisi Edun holds a bachelor’s in chemistry from the University of Ife, Ile-Ife, and a master’s in international accounting and finance from the University of Liverpool, United Kingdom. A fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and a Certified Financial Analyst, CFA Charter holder, she is also an associate member of the Chartered Institute of Stockbrokers; an associate member of the Institute of Taxation of Nigeria; a member of Information Systems Audit and Control, U.S.A; and a Certified Information Systems

 For Yemisi Edun , she fits perfectly into the category of qualified women with the right skill set and experience to   lead  a corporate organization like FCMB  

Her pedigree, backed by work experience spanning nearly 35 years, is of the highest quality possible. She began her career with Akintola Williams Deloitte (member firm of Deloitte Touché Tohmatsu) in 1987, focusing on corporate finance activities. She was also involved in the audit of Banks and Other Financial Institutions. She joined FCMB in the year 2000 as Divisional Head of Internal Audit and Control before assuming the role of Chief Financial Officer of the bank.

This quintessential management and corporate expert is set re-invent FCMB with her skills and reposition it to a   world class brand .   Moreover , analysts believe she  has the wherewithal   to keep the bank’s image untainted  and  brand unique . Not only that ,she has the capability to creditably inspire others with her deeply ingrained knowledge, skill, professionalism, attitude and depth ;  her strength of conviction and exemplary drive, is expected to sustain her discipline as well as the determination towards meaningful contribution to the ultimate goal of achieving and sustaining the organization’s vision.

Among her colleagues, Yemisi Edun is perceived as a woman who combines high standards and strong values with consistent discipline and a high sense of empathy. Her managerial disposition also reflects in her carriage and relationship with other members of staff who encounter her on a daily basis. A powerful and transformative executive that she is , Yemisi Edun possesses appealing mixture of personal humility and professional outlook which engender the building and retention of an enduring brand. She is ever busy, organizing people and resources towards effective and efficient pursuit of programmed outcomes. She vigorously pursues knowledge, identifying talents and skills, good work habits, a clear and compelling vision and stimulating her staff to high performance standards.

 The above qualities notwithstanding , to rise above the treadmill and  for   a turnaround of FCMB ,  the new management needs to go extra miles doing the unusual . For the bank  or any company to achieve this ,  it needs to  take  some strategic  steps  : The new  management of FCMB  under her leadership needs to  have a clear and broadly shared understanding of how the industry may be different in the future,  ensure  its headlights shining farther out than those of its competitors,    have  point of view about the future that  is clearly reflected   in the company’s short term priorities,   and  have a  point of view of the future that is  competitively unique  . Moreover, it has   to be  influential   in setting the new rules of competition in the industry , regularly defining the new ways of doing business, building new capabilities and setting new standards for customers satisfaction  . To attain a market leadership ,,FCMB   needs to ensure that  it is more a rule maker than a rule taker within its industry ,  more intent on challenging the industry status quo than protecting it,  fully alert to the dangers posed by new ,unconventional rivals ,  keen at reinventing the current business model  ,  regenerating core strategies as it is reengineering the core processes , pursuing growth and new business development with the same passion it is pursuing operational efficiency and downsizing ,  ensure its  percentage of the bank improvement efforts is focused on creating new advantages new to the industry compared to    focusing     merely  on catching up with the competitors  ; it has to  be  driven by    its   own view of opportunities or the actions of the competitors  and  ensure   its  management is  less of a maintenance engineer keeping today’s business humming along   and more architect imagining tomorrow businesses   

To develop a prescient and distinctive view about the future , the new leadership needs to critically analyze itself  and devise appropriate strategies   and thoroughly execute  them.  This is not that easy . It takes substantial and sustained intellectual energy to develop high quality, robust  solutions  to knotty issues that will  deliver   new competencies it needs to build ,   new product concepts that should be  pioneered  and   new alliances it needs to form     

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