First City Monument Bank plans to raise tier II debt and retain profits this year to boost its balance sheet after the adoption of stricter accounting standards impacted its capital ratios, it said on Tuesday. The banking group said the capital adequacy ratio for the mid-tier lender FCMB Bank, stood at 15.9 per cent in 2018, down from 16.9 per cent a year earlier. It added that it expected its capital to grow throughout 2019, Reuters reported.
Nigerian banks have been adopting stricter IFRS 9 accounting standards which require lenders to model credit loss risk based on expected rather than incurred losses and has a material impact on regulatory capital requirements.
On Monday, Africa-focused Ecobank said it had injected $64 million into its Nigerian unit in a bid to raise its capital ratio above the central bank’s regulatory minimum of 16 percent. FCMB last week said its 2018 pre-tax profit grew 73 per cent to N18.44 billion, but reduced its dividend pay out to conserve capital. The bank had said it was targeting a five to 10 per cent loan growth in 2019.