First City Monumental Bank
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FCMB Group Plc has sought to calm investor concerns in response to the recent directive from the Central Bank of Nigeria (CBN), which temporarily halts dividend payments and intensifies oversight on banks with unresolved forbearance-related exposures or breaches of the Single Obligor Limit (SOL).
In a statement released on Monday, the financial services group revealed that it had significantly reduced its exposure to forbearance-linked loans—cutting the figure by more than 60% from ₦538.8 billion in September 2024 to ₦207.6 billion as of May 31, 2025.
The exposures—connected to three entities and two primary obligors—are currently classified under Stage 2 of the IFRS 9 framework. However, the bank clarified that it has made consistent provisions for these accounts and anticipates a full resolution in the near term.
What FCMB Is Saying
The group emphasized that it has maintained steady provisioning against these loans over the years, and that a renewed push in resolution efforts has led to the dramatic drop in forbearance volume.
“The Bank has provided for these exposures over the last few years. With intensified resolution efforts, over 60% of our forbearance-linked credit has now been cleared,” FCMB stated.
The bank projects that the outstanding forbearance loans will soon exit the regulatory watchlist, which could result in a temporary spike in Stage 3 non-performing loans—peaking at about 11.5% of total loans. However, this figure is expected to decline to under 10% by the end of the year, supported by anticipated loan book expansion.
SOL Breach Addressed
In response to a temporary breach of the CBN’s Single Obligor Limit, FCMB disclosed that it is converting a ₦23.1 billion loan into equity. This strategic move is projected to elevate the group’s capital base to approximately ₦267 billion—keeping it comfortably above the regulatory minimum.
“CBN has approved the capital verification for the convertible loan,” the bank noted, adding that it is currently securing final regulatory approvals.
Dividend Stability Outlook
Despite the policy restrictions affecting the bank’s ability to pay dividends from its Nigerian banking arm, FCMB reassured stakeholders that its broader group earnings remain well-diversified. In 2024, 54% of dividends distributed to shareholders came from non-banking subsidiaries, while 46% came from the bank.
The group expressed strong confidence in sustaining its dividend distribution strategy in 2025 and beyond, barring any unforeseen market disruptions.
“We anticipate having sufficient capital buffers to sustain our dividend policy for FY 2025 and the near future,” the statement said.
The CBN’s June 13 regulatory update has put increased pressure on banks to clean up legacy exposures and shore up capital. FCMB’s timely communication and robust resolution roadmap may reassure investors as the market adjusts to the evolving policy landscape.
At the close of trading on June 16, 2025, FCMB shares had declined by 6.57%.
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