FCMB's H1'22 performance reflected sustained improvements from the previous quarter. As expected, the result rode on higher yields and better NIR. In this report, we examine the impact of the bank's continued efforts to drive its digital initiative and its intention to improve capital ratios.


FCMB to leverage technology to drive digital expansion

In H1'22, digital revenue continued to maintain its growth trajectory, rising by 51.0% YoY to N17.3 billion (c.14.0% of gross earnings). Digital penetration was boosted by a 15.0% increase in customer enrollment on digital platforms to 8.3 million.

In Q3'22, the bank is expected to deploy two new technological platforms to increase accessibility to its product offerings. These platforms include:

  1. The introduction of a borderless banking platform focused on inbound remittances, investments, and payments. The platform is expected to serve the Africans in diaspora and global citizens in Nigeria.
  2. Banking As A Service (BaaS). This is expected to be a cloud-based platform offering microservices to provide improved scalability, agility, and access to new geographies.

The group aims to use these technologies to offer its non-banking subsidiaries (with a large customer base) services such as wallets, debit cards, and other payment solutions. In our view, these platforms are likely to function as one-stop shops enabling cross-selling activities across the different segments of the bank. We believe this may positively impact earnings in the medium to long term.

Despite the positive medium-to-long-term implications of digital investments, the agency banking business is likely to experience a slowdown in Q3. This slowdown is expected to reflect the bank's instituted reduction in transaction limits to strengthen its operational risk framework. That said, we do not expect any material implications for earnings, given its low contribution (1.8%) to digital revenue.