Can Ladi Balogun, the scion of FCMB’s founder, truly prove himself as a capable banker? Despite his stellar academic credentials and extensive experience, doubts linger about his leadership prowess. As FCMB navigates an increasingly complex financial landscape, concerns arise that the bank may follow Diamond Bank’s path and fall to a takeover, with Access Bank potentially waiting in the wings.
By their fruits you shall know them – a timeless adage that rings true in the world of banking, where the true measure of an institution’s worth lies not in its promises, but in its performance. Just as a tree is judged by the quality of its fruit, a bank’s strength and reliability are reflected in its financial metrics, such as net profit margins, return on equity and earnings per share. These tangible outcomes reveal the bank’s ability to navigate challenges, adapt to changing market conditions and deliver value to its customers and shareholders.
Four issues remain a hard nut for the management of FCMB. These are its inability to lend safely and control costs .Beyond the above two factors are the other two that are the outcomes of the leadership inability to resolve the first two : its leadership inability to grow the bank comprehensively and make impressive showing in the trading business continues to stunt the bank relative to its peers . The negative impacts are palpable in the incomes from the non interest income contribution to its income mix .
Banking is coterminous with risk management . When it is said that one is a good or astute banker ,what , in fact ,is meant is that one is a shrewd lender – lending money profitably and safely . Such a banker needs to win the battles of the risks of mismatches between assets and liabilities on one hand and that between the borrowing and lending rates .
Cost optimization enables banks to allocate resources efficiently, reduce unnecessary expenses and improve financial performance. By streamlining processes, leveraging technology and implementing lean practices, banks can minimize costs without compromising quality or customer satisfaction.By prioritizing cost optimization, banks can improve financial performance, reduce risk and maintain competitiveness in an increasingly dynamic banking landscape.
First City Monument Bank (FCMB) is not living to the above expectations. The bank facing significant challenges that threaten its financial stability and sustainability. The bank’s non-performing loan (NPL) ratio has skyrocketed to 13.08%, far exceeding the Central Bank of Nigeria’s maximum threshold of 5%. This alarming rise is attributed to the reclassification of forbearance loans as NPLs following the bank’s exit from the CBN’s loan forbearance program.
FCMB’s asset quality has been under intense pressure, with the high NPL ratio indicating potential credit risk and asset quality deterioration. The bank’s single-borrower credit concentration is high, with the 20 largest customer loans representing about 50% of gross loans, posing significant credit risk. Foreign currency lending exposure, at 34% of net loans, also exposes the bank to potential exchange rate risk.
Inability to control costs is another Achilles heel of FCMB . FCMB Group Plc’s cost-to-income ratio has shown a fluctuating trend over the years. Between 2014 and 2019, the ratio ranged from 56% to 75%, specifically 65.8%, 75%, 56%, 66.9%, 71.5%, and 74%. From 2020 to 2024, the ratios were 62.18%, 59.42%, 56.97%, 48.9%, and 59.9%. A lower cost-to-income ratio generally indicates better financial health and operational efficiency.
A bank that fails to optimize costs can face severe consequences, impacting its profitability, reputation and long-term sustainability. The consequences of failing to optimize costs can be significant. Reduced profitability can lead to decreased investment in growth initiatives, lower dividends for shareholders and reduced competitiveness. Inefficient cost structures can also increase operational risk, making banks more vulnerable to financial shocks, regulatory penalties and reputational damage.
Banks that fail to optimize costs may struggle to compete with peers who have more efficient operations, potentially leading to market share loss and decreased revenue. Non-compliance with regulatory requirements can result in fines, penalties and reputational damage, further exacerbating the consequences of poor cost management.
The above issues are merely symptoms of a laggard. Where senior management has failed to write off its depreciating intellectual capital fast enough and has under-invested in creating new intellectual capital ; a company where senior managers believe they know more about how the industry works than they actually do ,and where what they know is out of date . Where these are in existence , those two issues are the consequences .
When Buffeted by above forces only few are seem to be in control of their own destiny. The foundation of the past were shaken and fractured as the industrial terrain changed shape faster than the top management could refashion its basic beliefs and assumptions on which markets to serve ,which technologies to master ,which customers to serve and how to get the best out of employees .
FCMB’s profit after tax grew significantly from N5.95 billion in 2007 to N15.10 billion in 2008, representing a growth rate of 154%. This substantial increase in profit after tax was registered despite the global financial meltdown, which began in 2007 and intensified in 2008, had far-reaching impacts on economies worldwide, including Nigeria
However , FCMB’s financial performance from 2009 to 2011 took reversed position , starting with a profit after tax of ₦564.338 million in 2009, the bank’s profitability grew to ₦7.934 billion in 2010, then incurred a loss of ₦7.682 billion in 2011.
Though the bank rebounded with a profit after tax of ₦15.121 billion in 2012, followed by ₦16.001 billion in 2013, and ₦22.133 billion in 2014, it was believed by some analysts thst this was due to acquisition of Finbank in 2012 .
The above belief was confirmed by the lacklustre performance of the bank between 2015 and 2022. The bank’s profit after tax then declined to ₦4.760 billion in 2015, but recovered, posting profits of ₦14.338 billion in 2016 backtracked to ₦8.612 billion in 2017, and up again ₦14.971 billion in 2018.
FCMB Group’s profit after tax showed significant growth from 2019 to 2023, increasing from ₦17,337,274 in 2019 to ₦19,610,454 in 2020 and ₦20,916,725 in 2021 . It was in 2022 the woke up again from its slumber to outperform ite 2014 records of N22b and. ₦31,128,691. Bewtween 2023 and 2024, it hit ₦93,017,619 in 2023 and nosedived again to ₦73 billion, indicating a reversal of the previous year’s growth momentum.
FCMB operates on a razor-thin net profit margin of 15%, leaving it vulnerable to economic fluctuations, heightened competition, and unexpected expenses. A high cost-to-income ratio further suggests operational inefficiencies are impacting profitability, potentially stifling growth initiatives.
Sequel to the above ugly scenario, FCMB’s financial performance has raised serious concerns among stakeholders, with dismal earnings per share, return on equity and assets, dividend payout, and yields, as well as sluggish share prices.
With an EPS that suggests the bank is struggling to generate returns for its shareholders, FCMB’s underperformance may be a symptom of deeper issues such as inefficient operations, poor asset quality, or inadequate risk management.
These indicators collectively point to underlying issues affecting the bank’s financial health and profitability. If left unaddressed, these challenges could have far-reaching implications for stakeholders, including shareholders who may face significant losses, employees who could lose their jobs, and customers who may lose trust and confidence in the bank. Furthermore, a bank failure would also impact the broader economy, affecting depositors, investors, and the overall financial system. Therefore, it is imperative for FCMB’s management and regulators to take proactive measures to address these issues and restore the bank’s financial stability.
First City Monument Bank (FCMB) was established in Nigeria when it was incorporated as a private limited liability company on April 20, 1982. Its precursor, City Securities Limited, was established in 1977. The bank, originally named First City Merchant Bank, began operating in 1983 after being granted a banking license.But the bank has remained heplessly stunted in size and value for ⁹ long relative to the much younger banks established in the 1990s ; its leadership inability to grow it competitively and create commensurate value for its investors have continued to raise questions against its leaders .
FCMB’s unimpressive financial performance is confirmed by its current strategic position. Its 2024 financial performance relative to the much younger banks underscores the bank’s weak strategic positioning in the industry. Its total assets at ₦7.05 trillion, customer deposits at ₦4.30 trillion and Profit After Tax (PAT) of ₦73.34 billion , a decline of from its previous year figures of N93b , reflect FCMB’s inability to navigate a dynamic economic enviroment and deliver competitive value to stakeholders.
Compared to much younger banks like Access Holdings, Zenith Bank, and Guaranty Trust Holding Company, FCMB seems dwarfed in the industry landscape. Even more striking, Fidelity Bank and Wema Bank, the latter once demoted to regional player status, have both surpassed FCMB in numerous significant aspects.
Bank’s Established in the 1990s :2024 Full Year
The Nigerian banking sector’s landscape is dominated by Access Holdings, Zenith Bank, and GTCO, which have demonstrated remarkable financial prowess. Access Holdings’ total assets soared to ₦41.5 trillion, with customer deposits contributing significantly, while Zenith Bank’s assets reached ₦29.96 trillion, backed by ₦17.29 trillion in customer deposits. GTCO’s assets stood at ₦14.8 trillion, supported by ₦10.40 trillion in customer deposits. Profitability-wise, Zenith Bank and GTCO led the pack with ₦1.03 trillion and ₦1.01 trillion in profit after tax, respectively, showcasing significant year-on-year growth. These banks’ impressive performances underscore their strong market positioning, operational efficiency, and adaptability in a dynamic economic environment.
Among Tier 2 Bank 2024 Full Year
Among the Tier 2 category which FCMB belongs , Wema Bank, Fidelity Bank, and Stanbic IBTC have showcased impressive financial performances in 2024. Wema Bank’s total assets surged to ₦3.59 trillion, with customer deposits reaching ₦2.52 trillion, while its profit after tax jumped 140% to ₦86.28 billion. Fidelity Bank’s profit of ₦278.106 billion highlights its strong operational efficiency. Meanwhile, Stanbic IBTC’s profit after tax rose 60.23% to ₦225.311 billion, driven by a 78.26% increase in gross earnings. These banks’ remarkable growth trajectories underscore their resilience and adaptability in a dynamic economic environment, with strategic initiatives and market positioning likely fueling their continued success in the Nigerian banking sector.
First Half 2025
At the end of the first half of 2025 Wema Bank’s profit after tax surged to between ₦87.5 billion and ₦101.2 billion, showcasing significant growth momentum. Meanwhile, FCMB Group’s profit before tax reached ₦79.3 billion, reflecting a 23% year-on-year increase, with profit after tax rising to ₦73.4 billion. FCMB’s total assets and customer deposits also grew to ₦7.54 trillion and ₦4.55 trillion, respectively.
The miserable performance of FCMB is not limited to the 2024 , for decades , it has remained a perpetual and consistent weakling.
FCMB’s financial performance from 2009 to 2018 reveals a mixed trend. Starting with a profit after tax of ₦564.338 million in 2009, the bank’s profitability grew to ₦7.934 billion in 2010, then incurred a loss of ₦7.682 billion in 2011. However, the bank rebounded with a profit after tax of ₦15.121 billion in 2012, followed by ₦16.001 billion in 2013, and ₦22.133 billion in 2014. The bank’s profit after tax then declined to ₦4.760 billion in 2015, but recovered, posting profits of ₦14.338 billion in 2016, ₦8.612 billion in 2017, and ₦14.971 billion in 2018. This volatility highlights the bank’s resilience and ability to adapt to changing market conditions.
FCMB Group’s profit after tax showed significant growth from 2019 to 2023, increasing from ₦17,337,274 in 2019 to ₦19,610,454 in 2020, ₦20,916,725 in 2021, ₦31,128,691 in 2022, and ₦93,017,619 in 2023. However, in 2024, the bank’s profit after tax declined to ₦73 billion, indicating a reversal of the previous year’s growth momentum. Despite this decline, the bank’s overall performance remains strong, highlighting its resilience and adaptability in a dynamic economic environment.
Ladi Balogun’s background is certainly impressive, boasting a Harvard Business School MBA and over two decades of experience in commercial and investment banking across Europe, the US, and Africa. Before becoming FCMB Group’s CEO in 2017, he held various roles, including Executive Assistant to the bank’s Chairman and CEO, Executive Director of Institutional Banking, and Managing Director. His tenure as CEO has seen FCMB expand its operations and explore new opportunities. Mr Ladi Balogun – Non-Executive Director
Mr Ladi Balogun holds a Bachelor’s degree in Economics from the University of East Anglia, United Kingdom and an MBA from Harvard Business School, USA. He began his banking career in 1993 at Morgan Grenfell and Co Limited and worked at Citibank in New York before returning to Nigeria as an Executive Assistant to the Chairman/ Chief Executive of First City Merchant Bank Limited (which later became Plc) in 1996. He has over 20 years’ experience in commercial and investment banking in Europe, the United States of America and Africa .He is currently the Group Chief Executive of FCMB Group Plc.
Despite these achievements, questions about his leadership remain, with some speculating about the bank’s future prospects .The true test of a banker’s capabilities is the ability to lend safely and profitably, optimize cost, and innovate and grow the business. Critics argue that Ladi Balogun’s leadership at FCMB has fallen short in these key areas, citing concerns over the bank’s asset quality, provisioning, and capital adequacy. Specifically, they point to high non-performing loan ratios and inadequate risk management practices, which may undermine the bank’s long-term sustainability. These concerns raise questions about Balogun’s ability to effectively manage risk and drive growth, potentially impacting FCMB’s future prospe
n
To meet regulatory requirements, FCMB is undertaking a recapitalization drive, having already raised N144.6 billion via a public offer in 2024. The bank still needs to raise about N188 billion more to meet the regulatory threshold. This additional buffer will help improve its capital adequacy ratio and provide a buffer against potential losses.
Despite these challenges, FCMB has shown operational resilience, beating profit forecasts and projecting a profit after tax (PAT) of N58.8 billion for Q4 2025. If achieved, this would push the bank’s full-year profits to N171.5 billion, more than double the N73 billion reported in the 2024 financial year. With a forward price-to-earnings (P/E) ratio of 2.44x, FCMB trades at a steep discount relative to earnings, presenting a potential value play for investors.
To avoid these consequences, banks can implement effective cost optimization strategies. Streamlining processes through lean practices can help eliminate waste, reduce excess inventory and minimize waiting times. Investing in digital solutions can automate tasks, enhance efficiency and reduce operational costs.
