FCMBFirst City Monument Bank (FCMB) is planning to expand in two African countries as the drop in oil prices continue to reduce opportunities and income for banks operating in Nigeria.

While declining to identify the nations as the information is confidential, the FCMB’s Chief Financial Officer Patrick Iyamabo gave this information in an interview with Bloomberg:

“We have identified a key market in East Africa and another key market in West Africa.”

“While Nigeria is having trying times, the other markets can be doing great.” The expansion, which is planned over the next three to five years, will enable FCMB to “smooth revenue and profit volatility,” he said. With a return on equity that compares or exceeds what you have in Nigeria, “greater value can be created for shareholders,” Iyamabo said.

FCMB will invest mainly in retail businesses, companies that are working on products that will substitute imports and industries focused on exports. It will lessen focus on the upstream oil sector, construction and businesses that depend on government revenue owing to increased risk, he added.

Iyamabo added:

“Because of the inability to access foreign exchange, the cash flow circle of businesses has been negatively impacted, which has implications on their abilities to pay their loans,” or do more transactions from which banks can earn fees and commissions, he said.

Shortcomings by the government to meet some of its obligations to contractors and the difficulties businesses have accessing dollars “means fewer transactions and increased risk for banks,” Iyamabo said.

Africa’s biggest economy is reeling from a crash to near 12-year lows in the price of oil, which is about two-thirds of government revenue source and 90 per cent of foreign-currency earnings.

The central bank’s efforts to all but fix the naira against the dollar for the past year by restricting foreign-currency trading by banks had caused a shortage of greenbacks, hampering companies from expanding or accessing imports.

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