The Merchant Bank commenced its first full year of operations in January 2016 in what was a challenging year for the Nigerian economy, and by extension the financial services sector.
The year started off with very low interest rates that soon increased, resulting in very high funding costs. The foreign exchange market remained liquid, and within the year, the naira was devalued and the exchange rate moved from N199 to USD1 to N305. The currency remained weak till the end of the financial year.
By the third quarter of 2016, the Nigerian economy officially dropped into a recession, with the resultant slowdown of economic activities, lower purchasing power, increased risk in asset creation and high level of credit defaults.
Despite the challenges, FBN Merchant Bank achieved a profit before tax of N4.92bn, representing an increase of 28% compared to the performance of N3.83bn in the previous year. Total assets were N137.27bn, representing an increase from the previous year’s position of N106.47bn. Similarly, shareholders’ funds stood at N28.96bn.
Payment of interim dividend
In line with the commitment of the Board to continuously deliver shareholder value, the directors approved an interim dividend payment of N1.048billion for the period ended 30 September 2016. There was no recommendation from the Board for final dividend to allow the Bank accrue the income made between October to December 2016 to reserves.