FCMB: The Record Profit That Changed Nothing – How N177bn Hid A Still-Broken Bank
On paper, 2025 is the year FCMB finally escaped its history. In 2014 it made N22.1bn PAT and its managing director called it the return to perpetual profitability, the end of recovery from the 2008 meltdown. What followed was the opposite. Profit crashed to N3.5bn in 2015, drifted to N12.1bn in 2016, N6.8bn in 2017, N12.4bn in 2018, N13.6bn in 2019, a rollercoaster that never returned to the 2014 peak. Gross earnings zigzagged from N148.6bn in 2014 to N147.7bn in 2015 and only N171.7bn in 2016, while assets grew from N1.169trn to N1.621trn and then N1.97trn by mid-2020 without sweating those assets to create disproportionate income. That era was named for what it was – stunted steps. Now the five-year financials to 2025 say the opposite. Assets from N2.49trn in 2021 to N7.63trn in 2025, up 206 percent. Deposits from N1.55trn to N4.42trn, up 184 percent. Gross earnings from N212bn to N1.13trn, up 434 percent. PAT from N73.3bn in 2024 to N177.27bn in 2025, up 141.7 percent, PBT N202.1bn, net interest income more than doubled to N505.9bn. Share capital doubled to N21.3bn, share premium to N267.5bn, total equity to N835.4bn, AT1 capital introduced and sustained at N46.6bn. This is giant steps, not stunted steps, and if you benchmark it historically, as FCMB does in its slides, it looks like transformation.
The problem is historical benchmarking is the most dangerous mirror in strategy, because capability is relative. You are not good because you are better than yourself last year. You are good if you are better than the person fighting for the same cheap deposit and the same investor naira. On that relative mirror, FCMB has not transformed, it has fallen further behind. It has been overtaken in size in every way that matters – assets, deposits, equity, loans, profit – by younger Tier-1 banks who are younger than it. GTB, Zenith, Access did not just become more efficient, they became bigger. And where FCMB is still sometimes bigger than some Tier-2 banks on balance sheet, the market has made its judgment. Fidelity, Stanbic IBTC, even Wema are better valued in absolute share price, because investors do not price size, they price how cheaply you make and keep money. So even its size story has expired. It is now smaller than Tier-1 and less valued than focused Tier-2, a Tier-2 that is road-heavy and factory-light, with branches, history, and subsidiaries in microfinance, investment banking, UK and fintech, but no industrial cluster that compounds – no low-cost CASA factory that stays, no blue-chip corporate franchise that pays recurring fees, no ruthless cost engine.
That position persists because the weaknesses that caused stunted steps never left, they only grew with the balance sheet. The first is asset quality. The Achilles heel from buying Cooperative Development Bank, Midas Bank, Nigerian American Bank in 2007 and FinBank in 2012 was impairments. Cumulative N71.9bn between 2016 and 2019, N35.7bn in 2016 alone, N14.6bn in September 2018, N7.8bn in September 2019. In 2025, net impairment is N81.7bn, double the N41.2bn of 2024 and higher than any year in the stunted era. Loans grew steadily to N2.36trn but the provision culture grew faster. The legacy was provisioned, not cured. The second is cost. Cost-to-income was 75.4 percent in September 2019, 71 percent in H1 2020, 87 percent per CBN, against best bank at 37.63 percent and worst at 86.29 percent. ROAE was 5.8 percent in September 2019 versus double-digit peers. In 2025, personnel is up 35.2 percent to N107.1bn, general and admin up 54.6 percent to N135.3bn. Net interest income doubled, but it was consumed before it reached the owner, which is why value was destroyed in transit from top-line to bottom-line even in 2019 when pre-tax margin fell 13.3 percent between June and September. The third is leverage and poor deployment. Debt-to-equity went from 90.3 percent in 2014 to 141.4 percent in 2019 to 190.2 percent in June 2020. In 2025, restricted reserve deposits at CBN, dead funds that earn nothing, are N1.19trn, up from N329bn in 2021. Deposits from banks, expensive interbank funding, spiked to N1.01trn from N160bn in 2021. Borrowings plus on-lending plus debt securities still N805bn combined. Customer deposits fund only 58 percent of balance sheet now versus 62 percent in 2021, so despite N4.42trn customer deposits, growth is funded with expensive money, the exact weakness that made net interest margin fail in 2019 when interest income fell 1.9 percent while interest expense rose 1.4 percent and fee income fell 4.8 percent. The fourth is investor return. EPS in 2025 is N3.99, lower than N4.48 in 2023 when PAT was only N93bn. Dividend fell from 25k in 2014 to 10k between 2015 and 2017, 14k in 2018 and 2019. ROE 9.1 percent versus industry 12.3 percent, ROA 1.0x versus 1.1x, P/E 2.4x versus 6.4x, P/B 0.2x versus 0.4x. Price fell 9.45 percent in a week in December 2019, down 29 percent between September 2018 and September 2019, down 57 percent by February 2016 to 89k, trading at 43 percent discount to book. In 2025, share capital and share premium doubled through offers, but per-share return fell. Shareholders were diluted without commensurate return, echoing the unstable dividend history that made investors dump the stock.
Those weaknesses now meet threats that will test whether N177bn is a peak. Regulatory taxes have become structural. Windfall tax N17.6bn in 2024, N7.5bn in 2025, minimum tax N4.8bn in 2025, directly cutting PAT, plus CRR at N1.19trn as permanent drag on liquidity. Interest rate and FX volatility is second. Interest expense grew 26 percent to N499bn in 2025 despite tightening. If the rate cycle reverses, the N505bn net interest income that drove profit will compress, exposing that non-interest income is still not diversified, with net trading down 29.7 percent to N37.7bn and other gains swinging from plus N39.5bn in 2024 to minus N12.1bn in 2025. FX losses explain part of that swing, the same factor that hurt 2015 to 2019. Competitive pressure is third. FCMB’s dominance in retail and SME, historically its main income driver because corporate banking requires big balance sheet and risk appetite it lacks, is now threatened by fintechs and Tier-1 banks with cost-to-income of 37 percent versus FCMB’s 71 to 87 percent history. If cost is not controlled, retail growth is unprofitable. Investment banking, where it should have edge as former merchant bank, remained weak due to capital market lull, and treasury depended on constrained liquidity. That boxed it into low-margin retail where fintechs now compete. Fourth is hidden credit risk. Acceptances and guarantees almost tripled to N830bn from N281bn in 2021, off-balance sheet that can become on-balance sheet impairment, repeating the negative quarter in 2015 that started sell-off.
What makes this position painful is that FCMB had strengths that could have neutralized every one of those issues, and failed to use them. Scale and earnings power was strength one, with investment securities up 447 percent to N2.03trn. That portfolio could have been optimized to replace risky loan growth, to generate stable trading and interest income, to reduce reliance on N2.36trn loans that need N81.7bn provisioning. Instead asset utilization stayed low at 14.8 percent, gross earnings N1.13trn on N7.63trn assets, the same failure as 2015-2019 when assets grew but earnings did not. Capital strengthening was strength two, equity to N835.4bn, enough buffer to clean the book, write off legacy, shut cost-center branches, exit unprofitable subsidiaries, force branch P&L by cheap CASA not by loans. Instead capital was used to look bigger, raising more shares that diluted EPS while keeping everything alive. No business was killed, no focus forced. Core banking base was strength three, customer deposits N4.42trn, other assets cleanup from N446bn to N68bn showing cleanup is possible, digital customers up 69 percent historically to 4.1m, digital loans N219.5m monthly and commissions N717m up 87 percent in 2019. That retail factory could have been used to kill N1.01trn expensive bank deposits, to push retail and digital deposits for low-cost funding to improve net interest margin that was historically weak. That would have required best-in-class benchmarking, not historical benchmarking, comparing not to last year’s FCMB but to how fintechs onboard and score in 3 minutes with near-zero impairment, how telcos collect airtime debt with no branch, how supermarkets run low-cost high-volume with ruthless cost-to-income, how British Airways improved turnaround by studying Formula One pit stops and how a police force improved emergency calls by studying bank call centres. FCMB called itself digital because it launched an app, but credit still took 14 days and recovery was still a phone call. The holding company structure was strength four, created in 2013, with wealth management historically at 24 percent ROAE versus 7.5 percent for commercial banking. That could have generated intra-group revenue, fee-rich income to reduce reliance on volatile trading income. Instead non-banking subsidiaries remained small and investment banking weak.
The result is a bank that finally has the scale it prayed for in 2013 when it hit N1trn balance sheet, but still carries the same cost, impairment and funding drag that made 2015 to 2019 stunted, and still measures itself against itself while investors measure it against industry norms and best-in-class. That is why it can post N177bn, a number ten times its 2019 PAT, and still be smaller than Tier-1 banks younger than it, less valued than Tier-2 banks more focused than it, and more vulnerable to rate reversal than ever. It used its strengths to grow bigger, not to become cheaper. It grew roads, not factories. Until it changes its mirror, kills what consumes profit, and forces every naira of its N835bn equity and N4.42trn deposits to obey a choice to gather cheap savings that stay, not expensive bank money that leaves, its giant steps will remain what its stunted steps were, motion mistaken for progress, and when rates fall history will stop being kind and the market will remind it that it is not competing with its past self, it is competing with banks that built factories while it built roads, and those factories have now taken both its size and its value.
