Asset and Liability Management is the heart of how any bank runs its business. In simple terms, it means two things: first, how a bank raises money from customers and investors, which is called liability management. Second, how it puts that money to work by lending and investing, which is called asset management. The goal is to make as much profit as possible, while still staying liquid enough to meet customer withdrawals, staying solvent enough to absorb losses, and obeying Central Bank of Nigeria and other regulatory rules.
Banking by nature involves mismatching. Banks take short-term deposits, like your savings account that you can withdraw anytime, and use them to make long-term loans, like a 5-year business loan or a 15-year mortgage. This is called maturity transformation. The Organisation for Economic Co-operation and Development, or OECD, warned that if this is done poorly, it becomes dangerous. If a bank funds long-term assets with short-term liabilities, it can run out of cash and become illiquid. If it borrows at one interest rate and lends at another, and rates move sharply, it can make losses. If its assets are in dollars and its liabilities in naira, and exchange rates swing, it can also suffer big losses.
Looking at First City Monument Bank Group Plc’s unaudited half-year results for the period ended 30 June 2026, compared to the same period in 2025, it is clear that FCMB’s leadership used this risky environment to its advantage, while also putting buffers in place.
The biggest opportunity in 2026 was the high interest rate environment in Nigeria. When rates are high, banks that can attract cheap deposits have a major advantage. FCMB did exactly that. The bank’s net interest income, which is the difference between what it earned from loans and investments and what it paid on deposits and borrowings, rose by 71.8 percent year-on-year to 356.35 billion Naira. This happened even though the bank’s interest expense actually fell by 2.7 percent to 244.17 billion Naira. The reason was a deliberate shift in funding sources. Customer deposits, which are usually cheaper and more stable, grew by 11.4 percent since December 2025 to 4.92 trillion Naira. At the same time, FCMB reduced expensive funding from other banks by 39.8 percent and cut down debt securities issued by 64.4 percent. In plain language, the bank stopped relying on costly wholesale borrowing and leaned on its retail customers for funds. That gave it a cheaper base to lend from.
On the asset side, the bank deployed those funds. Loans and advances to customers grew by 5.2 percent to 2.49 trillion Naira, and investment securities rose by 20.4 percent to 2.45 trillion Naira. Because of this, interest income jumped 31 percent to 600.52 billion Naira. So FCMB successfully practiced maturity transformation: it took in short-term deposits and lent long, but at rates high enough to protect its margins.
The risk, of course, is that lending long can go bad, especially in a tough economy. This showed up in the numbers. The bank’s impairment charges, which are provisions set aside for loans that may not be repaid, more than doubled to 85.93 billion Naira from 36.22 billion Naira a year earlier. That reflects stress in the economy and in borrowers’ ability to pay. However, FCMB was able to absorb this because its core earnings grew so strongly. Profit before tax nearly doubled to 157.30 billion Naira, and profit for the period rose 90.5 percent to 139.86 billion Naira. Earnings per share also improved from 3.70 Naira to 4.23 Naira. The leadership clearly made a choice: accept higher credit losses in order to keep growing the loan book, but make sure the interest margin is wide enough to cover those losses. For now, that trade-off worked.
There were also risks from interest rates and foreign exchange. When market interest rates rise, the value of government bonds and other securities that a bank holds tends to fall. FCMB felt this. Net trading income dropped 65.7 percent, and the bank recorded losses of 12.82 billion Naira from selling some financial assets. Its other comprehensive income, which captures valuation changes not yet booked in profit, turned negative at minus 6.89 billion Naira, compared to a gain of 6.91 billion Naira last year. The bank also had a foreign currency translation loss of 2.11 billion Naira, up from 407 million Naira last year. This happens when assets and liabilities denominated in foreign currency are revalued due to exchange rate movements. The losses were not large relative to an 8.36 trillion Naira balance sheet, but they show the bank is not immune to rate and currency swings. To offset some of this, FCMB booked 10.05 billion Naira in other income, including a 9.30 billion Naira gain from selling part of its stake in FCMB Pensions. That shows active management of non-core assets to cushion volatility.
Perhaps the most important move was on capital and solvency. In 2026, Nigerian banks faced pressure to raise more capital to meet regulatory requirements and to support growth. FCMB responded decisively. Total equity, which is the owners’ money that acts as a buffer against losses, rose 40.4 percent to 1.17 trillion Naira. Share capital increased 54.2 percent and share premium rose 80.5 percent after the bank raised 237.91 billion Naira from issuing new shares in the period. Borrowings also went up 67 percent to 611.10 billion Naira. This stronger capital base means the bank can take more risk, absorb more loan losses, and meet regulatory ratios without panic. It also reassures depositors that the bank is safe.
Not everything was perfect. Operating costs grew faster than inflation in some areas. Personnel expenses rose 17.5 percent and general and administrative expenses rose 15.2 percent. If revenue growth slows, these costs could squeeze profits. Also, the big jump in loan loss provisions is a warning sign. If the economy worsens, those provisions may need to rise further and eat into the strong interest income.
In the end, between June 2025 and June 2026, FCMB’s leadership demonstrated what good Asset and Liability Management looks like. They raised funds more cheaply by focusing on customer deposits. They put those funds into loans and securities at higher rates. They reduced reliance on volatile wholesale funding. They raised fresh capital to stay solvent and liquid. And they accepted higher loan losses as the cost of growing in a difficult environment.
Banking will always involve mismatching maturities, rates, and currencies. FCMB did not try to avoid it. It managed it. The result was one of the strongest profit performances in the bank’s recent history. The test for the second half of 2026 will be whether credit quality holds up and whether the bank can keep its costs under control while interest rates remain high. For now, FCMB has shown that with the right funding mix, timely capital raising, and disciplined lending, a bank can borrow short, lend long, and still remain profitable and stable.
