Nigeria’s FCMB bolstering its pensions business to drive profitability

First City Monument Bank Group is set to acquire up to 96 percent of Aiico Pensions Limited, the financial services group said in a notice on the Nigerian Stock Exchange, in yet another move to expand its pensions unit.

The planned acquisition follows the company’s increase of its stake in Legacy Pensions – now FCMB Pensions – to 91.6 percent last year, giving it full control of the business. As of March, FCMB Pensions had grown its assets under management to ₦325 billion with 350,000 customers.

Subject to approvals by the National Pension Commission and the Federal Competition and Consumer Protection Commission, buying Aiico Pensions would see the company’s AUM rise to ₦451 billion with almost 600,000 customers. The entire group’s customer base will rise to 8,000,000 and its total AUM, including all investment management activities, to more than ₦560 billion. 

“It (the acquisition) is a positive move and a statement of intent from FCMB’s management to leverage its non-banking businesses to drive profitability,” an investment banking analyst cited in the bank’s disclosure said. Last year, the group saw a 9.2 percent increase in profit before tax to ₦20 billion while profit after tax rose nearly 16 percent year-on-year to ₦17 billion, according to full-year results released March.

“We believe the combined entity will be better positioned for stronger organic AUM growth and fee income contribution to the Group’s performance,” another unnamed analyst said. The enlarged pensions business will benefit from FCMB’s extensive distribution platform, comprising of 200 branches, a strong web, and mobile presence; and the recent launch of its Pensions’ online enrolment platform, the company said. 

According to Ladi Balogun, Chairman of FCMB Pensions’ Board of Directors, the business intends to “use its scale to positive effect towards investing in the growth of the Nigerian economy while ensuring safety and the most competitive returns for its customers.”

The acquisition marks the latest of several steps the company has embarked on to enhance its market position and competitiveness as the industry prepares for the commencement of Retirement Savings Account portability. In a related development, FCMB Pensions recently added Titi Odunfa Adeoye, Founder and Chief Investment Officer of Sankore, to its Board of Directors.

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